Stockland Profits Down $1bn as Devaluations Wash Through

Stockland has reported a $440-million statutory profit in its end of financial year results, down from $1.38 billion in 2022. 

The ASX-listed developer reported a $250-million net commercial property devaluation, but finished the year in a strong capital position with gearing of 21.9 per cent.

Stockland chairman Tom Pockett said it was a “year of solid achievement”.

Pockett said the strong results were off the back of “disciplined efforts by the Stockland team to create a high quality, resilient portfolio and development pipeline”.

“In recent months the more restrictive interest rate environment has also started to impact discretionary consumption, and a combination of higher return requirements and greater uncertainty regarding the growth outlook has also led to valuation declines across some sectors of the real estate market,” he said. 

Pockett said town centres had benefited from their higher exposure to ‘essentials’ categories, while strong demand for logistics had underpinned assets and development pipeline. 

He said the company continued to increase its logistics and land lease communities portfolios, while the masterplanned communities business was in the “recovery phase of the residential cycle”. 

Pockett said Stockland would leverage the scale and breadth of its landbank to provide affordable product to the market. 

▲ A render of an outdoor area at a land lease community by Stockland.

Stockland chief executive Tarun Gupta said that although the macroeconomic backdrop remained unstable, Stockland was focused on a strategy informed by “longer-term structural and demographic drivers that are shaping the real estate industry”.

Gupta said the developer’s diversified portfolio was designed to produce sustainable returns through various stages of the real estate economic cycles. 

Following the sale of its retirement living business in July last year, Stockland returned to an income-tax-paying position during the year, which also impacted its bottom line. 

Gupta said that although demand for its masterplanned communities had improved in the second half of the financial year, Stockland was not forecasting an improved sales rate “until the interest rate environment stabilises”.

The group’s logistics assets were the best performing across the financial year, according to Gupta. 

“Our $3.4-billion logistics portfolio delivered funds from operations growth of 11.5 per cent versus FY22,” he said. 

“Occupancy was maintained at over 99 per cent over the period and new leases and renewals negotiated over the year saw an average uplift of 21.1 per cent relative to previous in-place rents. 

“With a weighted average lease duration of 3.3 years our portfolio is well positioned to capture positive rental reversion and to benefit from strong near-term demand-supply dynamics for the logistics sector.”

Stockland delivered about $450 million in logistics developments since June 2022, and are forecast to reproduce these efforts across the next financial year, with 62 per cent of that pipeline pre-leased or subject to signed heads of agreement.