Stockland Announces the Sale of $143 million of Retail Assets

Australia’s leading diversified property group, Stockland (ASX: SGP) has announced the sale of its additional $143 million of retail assets, taking it closer to the target of $400 million target. With this announcement, the company has made further progress on its non-core retail divestment strategy, taking the total asset sales for FY19 to $256.1 million.

Following the release of this announcement, the share price of the company increased by 0.27% in the intraday trade as on 14 March 2019.

As part of its non-core retail divestment strategy, Stockland has decided to sell its 100% interest in both the Stockland Cleveland shopping centre in Brisbane and the Toowong retail and commercial centre in Brisbane’s southern suburbs. According to the company’s Managing Director and CEO, Mr. Mark Steinert, these sales are in line with the company’s strategy to divest non-core assets in a disciplined way. He further told that the company is focussing on recycling capital where expected internal rates of return for divested assets are below its investment hurdle rates. The sale of $143 million of retail assets is representing 64% of the company’s target $400 million of divestments.

It is expected that the proceeds of these sales will strengthen the company’s balance sheet. Further, the proceeds will be reinvested into its workplace and logistics development pipeline and its securities buyback. It is expected that both the transaction will be settled by 30 June 2019.

Stockland’s Group Executive and CEO of Commercial Property told that the company is strategically repositioning its centres, with a focus on customer experience, place-making and retail remixing towards growth categories, to ensure the resilience of the company’s portfolio into the future.

The company recently released its half-year results for FY 2019 in which it reported Funds from operations (FFO) of $407 million in 1H FY19, which were 6.7% lesser than 1H18 reflecting residential profit skew to 2H19. The company further reported a Statutory profit of $300 Mn which was 56.2% less than the previous corresponding period (pcp). The company reported FFO per security of 16.8 cents in H1 FY19 which is 6.7% less than pcp. For FY 2019, the company is expecting its FFO per security growth to be around 5%.

Now, let’s have a glance at the company’s stock performance and the return it has posted over the past few months. The stock is trading at a price of $3.710, up by 0.27% during the day’s trade with a market capitalisation of ~$8.9 billion as on 14 March 2019 (AEST 1:34 PM). The counter opened the day at $3.700 and reached the day’s high of $3.725 and touched a day’s low of $3.690 with a daily volume of ~ 1,591,711. The stock has provided a year till date return of 7.25% & also posted returns of -11.9%, -1.33% & -1.07% over the past six months, three & one-months period respectively. It had a 52-week high price of $4.360 and touched 52 weeks low of $3.420, with an average volume of ~ 7,224,025.


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