Two statements from Stockland Holdings yesterday failed to have a dramatic impact on the share price, but they did show the way the company is changing its orientation.
The shared edged up a cent to $3.47 in reaction to the two statements, which was a reasonable outcome given the wider market was off more than half a per cent in another dull day of trading.
The two announcements confirm the property group is winding back its exposure to industrial property, and expanding in home building.
That news came on the same day as official figures (see separate story) showed a solid rise in new home loan approvals in April, the first real move upwards for three months.
It was also the best monthly rise for new owner-occupied dwelling approvals for more than two years.
First up Stockland revealed that it was in advanced negotiations to sell about 20% of its industrial portfolio for $200 million.
Stockland did not name the possible buyer in the statement, but said negotiations were advanced.
"We have a clearly articulated strategy to reweight our commercial portfolio towards Retail and self-fund our growth opportunities," Stockland’s commercial property chief executive, John Schroder, said in the statement.
"This offer is consistent with our strategic objectives and we are assessing the opportunity.
"We are also evaluating a number of acquisition opportunities for reinvestment of the proceeds into assets across the group in line with our 3-R strategy."
The three R strategy is based on growing Stockland’s presence in residential communities, retail development and retirement living.
The company’s industrial portfolio was valued at about $940 million at December 31 last year, based on 17 properties.
And the second announcement revealed that the company had made a major land purchase in Sydney’s south west, which is one of the few growth areas in the metro area.
Stockland said it had secured the "right to progressively acquire 339 hectares of land in south west Sydney".
The East Leppington site is expected to deliver approximately 3,000 new homes, and 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 approximately 50 kilometres south west of the Sydney CBD.
The acquisition meets all of Stockland’s investment hurdles and through its progressive nature represents an efficient use of capital. The financial details of the transaction remain confidential.
Stockland CEO Residential Mark Hunter said in the statement: “East Leppington will be a new master planned community for Sydney, which delivers on Stockland’s commitment to provide sustainable and affordable places to live.
“The transaction further increases our geographic diversity and strengthens our presence in NSW. We have now entered into another of our targeted, strategic corridors, a corridor which is clearly under supplied.
"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 centre, 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.
That was the first land acquisition Stockland has made in NSW since 2007.
This transaction brings the total number of residential lots Stockland has secured in FY11, mostly on deferred payment terms, to over 22,000 with an end value of around $7 billion.
Much of that $7 billion is in the Melbourne area where, last December, the company revealed a huge land purchase to the north of the city.
Stockland said the areas will ultimately be home to 30,000 people," the company’s largest ever individual land transaction".
The Lockerbie site is a 1,121 hectare land parcel with a total end land value of around $4 billion.
"The proposed master plan includes around 11,500 residential lots, plus an 85 hectare city centre including provision for a large regional shopping centre, neighbourhood centres and retirement living, as well as schools, healthcare, childcare and other community facilities.
"Subject to planning approvals, the land is expected to be brought to market over the next 30 years with the first settlements due to occur in late 2014 or early 2015," Stockland said.
