Real estate management group Stockland Corp [ASX:SGP] has released its half-year results, revealing that its statutory profit has taken a sharp dive to $301 million, not even half from which it earned a year ago.
Stockland declared 14.8 cents in FFO (funds from operations) for each security, which had increased by 0.7% to the first half 2022.
SGP’s share price fell 4% Tuesday afternoon, sitting at $3.73.
The property company has inched up this year so far but is still trading down more than 9% in the full year.
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Stockland’s FFO slightly up but profits askew
For the first half of fiscal 2023, Stockland announced that FFO went slightly up in the half year, by 0.7%, totalling $353 million, which the company said reflected a skew to its 2H FY22 results.
Adjusted funds from operations (AFFO) totalled $310 million and AFFO per security came to 13.0 cents each in 1H23, up by 5.7% compared with 1H22. SGP said this was due to lower tenant incentives offered over the period.
Net tangible assets (NTAs) totalled $4.31 per security, which was in line with the company’s previous report in June last year.
Stockland revealed that its statutory profit dove to $301 million, way down from the $850 million posted in the first half of 2022.
The statutory result for this period includes $30 million of net commercial property revaluation gains, compared with a net uplift of $543 million in the previous corresponding period.
Even so, Stockland refused to let shareholders take the brunt, and the property group ended up declaring a 14.8 cent FFO for each security, which had increased by 0.7% to those declared a year before.
Distributions per security still sat within Stockland’s goal payout ratio plan, between 75–85% of earnings. This time around, even in the face of a much lower profit compared with 2021, the company said it will distribute 11.8 cents per security, the middle of its payout ratio range.
Managing Director and CEO Tarun Gupta commented:
‘We have continued to progress the execution of our strategy while delivering solid operational and financial results in an uncertain macroeconomic environment.
‘Our 1H23 financial result reflects the strength of our diversified business model. 1H23 FFO was up slightly despite a significant expected earnings skew to 2H for our MPC business. The earnings impact of this skew was offset by a higher contribution from our Commercial Property investment portfolio. This reflects solid like-for-like net operating income growth and the contributions from Logistics developments completed over FY22 and 1H23.’
Stockland has extended its existing partnership with Mitsubishi Estate Asia, which is expected to take effect mid-2023. The partnership includes a mandate to invest in Stockland-owned and original market ‘master planned’ communities.
The company’s divestment of its retirement living business in July last year has allowed the company to reshape its portfolio to better suit its priorities and has already allowed $266 million in non-core asset sales.
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