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Stockland on track to meet full year guidance

StocklandProperty developer Stockland announced it is on track to meet its full-year guidance and expects positive economic conditions and relatively stable interest rates to remain in place.

The company said it expects total funds from operations to grow by between 5.0 and 6.5 per cent from $802 million in 2016/17, and to lift distribution per security by four per cent to 26.5 cents.

Mark Steinert, company CEO, said the company has had a positive start to the financial year, driven by all business units – particularly its residential communities division.

“Our diverse portfolio allows us to deliver our purpose of creating a better way to live, and build thriving, affordable communities while continuing to deliver strong profit and sustained growth,” Steinert said in a statement.

He noted the strength of the residential market as a key driver of growth for the quarter and forecast Stockland to achieve about 6,500 settlements in year.

Stockland forecasts residential profit margin of over 17 per cent, given broad market strength and higher rates of Sydney settlements, Steinert said.

He said conditions remain favourable in Melbourne and Sydney, where the markets are undersupplied and solid price growth continues.

Stockland took 1,672 net deposits for lots and townhomes during the first quarter, a slight reduction on a year ago due to project timing, with a number of projects set to launch later in the financial year.

Its retail town centres division recorded flat sales growth across the quarter due to an overall subdued environment for retail sales, impacted by some price deflation, low wages growth and energy price hikes.

“Retail conditions remain challenging, however services, food, lifestyle, mini-majors, entertainment and leisure offerings continue to perform well and these categories remain the focus for our centre remixing,” Steinert said. “Our major redevelopment of Stockland Green Hills (NSW) is already 82 per cent pre-leased to high quality tenants, with the next stage due to open on November 30.

“We continue to strategically reposition our retail town centres, recycling capital into leading assets, and in line with this strategy we can confirm the recent unconditional exchange of the contract to sell Corrimal Shopping Centre,” he said. “We also celebrated the opening of H&M at Stockland Townsville last week and look forward to the opening in Rockhampton next month,” Steinert said.

The property developer stated it has maintained positive leasing momentum within its Logistics and Business Parks business, with leases executed on 102,200 square metres of floor space and high occupancy across the portfolio.

“We recently signed a new seven year lease to Australia Post at Oakleigh in Melbourne, renewed key leases in Adelaide and Melbourne, and we’ve seen positive enquiry following the launch of the Aura business park development on the Sunshine Coast in August,” Steinert said.

At 1127 AEDT Wednesday, Stockland shares were up 12.5 cents, or 2.88 per cent, at $4.465.

Meanwhile Stockland’s sustainability credentials have been further recognised on the world stage as the only Australian company to be included on the 2017 Climate A list released by CDP, the non-profit global environmental disclosure platform.

Stockland is one of only 112 companies to make the Climate A list internationally from a field of 2,418 respondents.

According to CDP, reporting companies now represent 56 per cent of global market capitalisation.

“From our FY06 baseline, energy efficiency improvements across our assets have saved our business and tenants over $78 million, and we are well on our way to achieving our 2025 target of a 60 per cent reduction in Stockland’s carbon emissions intensity,” said Steinert.

“Already this year we have announced a $23.5 million solar rooftop investment across ten retail town centres.”

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