Stockland Corporation (ASX:SGP) has updated earnings guidance for fiscal 2025. This follows the completion of all regulatory approvals for the acquisition of 12 master-planned residential communities by Lendlease (ASX:LLC) through the Stockland Supalai Residential Communities Partnership. The acquisition, valued at approximately $1.06 billion, is expected to be finalized in Q2FY25, pending consent from the relevant landowners. The deal was first announced in December 2023.
Stockland is one of Australia’s largest real estate groups and is known for developing residential, commercial and workplace communities.
Previously, Stockland’s funds from operations (FFO) for fiscal 2025 under securities guidance was expected to be between 32.0c and 33.0c after tax. With expected partial profit contribution from newly acquired communities, the company has now increased this estimate to between 33.0c and 34.0c. Stockland also expects significant earnings growth, biased towards the second half of fiscal 2025, impacted by both new acquisitions and liquidation volumes in its existing portfolio.
The acquisition is expected to temporarily increase leverage due to initial capital contribution and development expenses, but Stockland expects to remain within the target range of 20-30% by December 31, 2024. Settlement volumes for Stockland master-planned communities (MPCs) are planned for between 6,200 and 6,700 lots, with average profit margins in the low 20% range – an increase from previous expectations of 5,300 to 5,700 lots.
The distribution per title for FY25 is expected to align with Stockland’s target payout ratio of 75-85% of FFO.
Shares rise 0.79% to $5.08.