Stockland sells industrial assets to shift to residential
Property developer Stockland confirmed today in a filing with the Australian Stock Exchange that it is in discussions with a potential buyer for assets representing about 20% if its industrial portfolio. This comes as Stockland also announced that it has secured 339 hectares of residential land in south west Sydney.
John Schroder, the group's commercial property chief executive, said that Stockland was considering an offer of around $200 million and negotiations were advanced. He did not identify the potential buyer.
"We have a clearly articulated strategy to reweight our commercial portfolio towards retail and self-fund our growth opportunities," Mr. Schroder said.
Mr. Schroder said the group was also evaluating a number of acquisition opportunities for reinvestment of the proceeds into assets across the group. This was in line with Stockland's "3-R strategy", which involved investment in retail, retirement and residential property.
According to The Australian, parties believed to have shown interest in the assets include Singapore's GIC, Aviva and possibly Mapletree, also based in Singapore.
The Australian said that it has been widely understood that Stockland has been looking to offload the smaller assets in the portfolio. However, according to the Sydney-based newspaper, the interested parties are looking at Stockland's most valuable assets -- the Yenora Distribution Centre.
The Yenora Distribution Centre is one of the largest distribution centres of its kind in the southern hemisphere and is a site of state significance with almost 300,000 square metres under roof and a further 60,000 square metres of dedicated container hardstand. The site operates as an 'intermodal' rail terminal with nearly 7 kilometres of rail sidings connected to the main western rail line. Currently Stockland has a masterplan DA consent to build a 8,500 square-metre warehouse facility within the Western precinct. The property is valued at $335.7 million.
Residential land site
Stockland announced in an ASX filing on June 8 that it has secured the right to progressively acquire 339 hectares of land in south west Sydney.
The East Leppington site, expected to deliver 3,000 new homes, is just 1.5 kilometres from the proposed Leppington railway station, which forms part of the south west rail link, 14 kilometres from Liverpool and 50 kilometres south west of the Sydney CBD.
The financial details of the transaction were confidential.
Mark Hunter, residential chief executive, said, "The Transaction further increases our diversity and strengthens our presence in NSW. We have now entered into another of our targeted, strategic corridors, a corridor which is clearly undersupplied."
First settlements are expected in FY14, subject to planning approval, with the remainder of the home sites to be released over the following ten years. The community, which includes provision for a retail centere, has an end land value of over $1 billion.
The acquisition is Stockland's second in NSW this calendar year following the purchase of 40 hectares of land at Maitland in the Hunter.
Full-year results
Stockland is releasing its fiscal full year results on Oct. 8.
For the six months ended Dec. 31, 2010, Stockland's underlying profit was $380.3 million, up 14 percent on the prior corresponding period. Statutory profit was $425.1 million.
Residential communities delivered a strong first-half profit, buoyed by higher margins, solid price growth and an increase in sales of superlots. During the period, the company accelerated the expansion of its Retirement Living business, almost doubling its size with the acquisition of Aevum, a publicly-listed retirement living company. It said its commercial property business exceeded expectations for the half with a strong Retail performance underpinned by rental growth and its newly-completed developments.
Stockland's industrial portfolio was valued at about $940 million at Dec. 31, on 17 properties.
At the end of May, Stockland sold 50 percent of its stake in the entity that owns Waterfront Place, the fifth tallest building in Brisbane, to the Future Fund for $216.4 million. It also sold 50 percent of the entity that owns the adjacent Eagle Street Pier, a low-rise 6,300 square metre retail complex, to the Future Fund for $16 million.