Stockland’s Shares Uplifted after Announcing Divestment of its Two Shopping Centres

  • Nov 21, 2018 AEDT
  • Team Kalkine
Stockland’s Shares Uplifted after Announcing Divestment of its Two Shopping Centres

On 21 November 2018, Stockland (ASX: SGP) confirmed that it has exchanged contracts to divest two regional shopping centres for combined proceeds of $113.1 million. Following the release of this news, the share price of the company increased by 2.528 percent as on 21 November 2018.

As per the Company’s announcement on ASX, Stockland is all set to divest its Stockland Bathurst Shopping Centre and Stockland South in Caloundra for combined proceeds of $113.1 Mn, which reflects a 5.3 percent discount to the combined book value. These asset sales will contribute to the company’s on-market buy-back program of up to $350mn in Stockland securities. Further, these divestments will take the total value of the company’s commercial property divestments to $448 Mn over the past fifteen months.

According to the company’s Managing Director and CEO Mr. Mark Steinert, these divestments are in line with the company’s strategy to release capital for reinvestment and reshape the Commercial Property portfolio. With this divestment, the company is on track to meet its current retail divestments targets, with a further $290 Mn expected to be achieved within the next 12-24 months. As part of the ongoing company’s strategy, the company is intending to reweight the national workplace and logistics portfolio to greater than 25% of total assets primarily by progressing its $600 Mn workplace and logistics development pipeline. Mr. Mark Steinert also told that the company is focused on delivering community orientated, convenient and curated retail town centres that will stand the test of time. To ensure the resilience of the company’s portfolio, the company is strategically repositioning its centres by focusing on customer experience and retail remixing.

In the recently released September quarter report, the company disclosed that it is on track to achieve more than 6,000 settlements for FY 2019, including 400 townhomes, with 1,293 net deposits for lots and townhomes during 1Q FY19. In the September quarter, the company achieved a 4.3% growth in specialty sales to $9,313 per square metre in a year to 1Q19. The company also confirmed that it is on track to deliver profit in line with its guidance for FY 2019 and it is expecting to achieve FFO per security growth of 5-7 percent for FY 2019, and it is targeting a distribution per security of 27.6 cents, representing 4% growth on FY 2018.  In FY 2018, the revenue of the company increased by 1.1 percent to $2,775 million and the net profit after tax reduced by 14.2 percent to $1,025 million as compared to the previous year. The net intangible assets per security increased from $4.04 in FY 2017 to $4.18 in FY 2018. The funds from operations increased by 7.5 percent to $863 million in FY 2018.

In the last six months, the share price of the company decreased by 14.63 percent as on 20 November 2018. SGP’s shares traded at $3.650 with a market capitalization of circa $8.6 billion as on 21 November 2018 (AEST 4:00 PM).


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