Stockland Corporation (ASX:SGP) has upgraded its earnings guidance for FY25. This follows the completion of all regulatory approvals for the acquisition of 12 masterplanned residential communities from Lendlease (ASX:LLC) through the Stockland Supalai Residential Communities Partnership. Valued at approximately $1.06bn, the acquisition is expected to be finalised in the second quarter of FY25, pending relevant landowner consents. The deal was first announced in December 2023.
Stockland is one of Australia's largest property groups, and is known for developing residential, retail, and workplace communities.
Previously, Stockland's FY25 funds from operations (FFO) per security guidance was projected between 32.0c and 33.0c on a post-tax basis. With the anticipated part-period earnings contribution from the newly acquired communities, the company has now raised this estimate to between 33.0c and 34.0c. Stockland also foresees a significant increase in earnings skewed towards the second half of FY25, influenced by both the new acquisitions and settlement volumes in its existing portfolio.
The acquisition is expected to temporarily increase gearing due to the initial equity contribution and development expenses, yet Stockland projects gearing to stay within its 20-30% target range by 31 December 2024. Settlement volumes for Stockland's masterplanned communities (MPC) are forecasted 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.
Distribution per security for FY25 is anticipated to align with Stockland's targeted payout ratio of 75-85% of FFO.
Shares are up 0.79% at $5.08.