Stockland HY FFO Down; To Sell Retirement Living Business To EQT Infrastructure

Stockland Corp. Ltd. (SGP.AX,STKAF.PK), an Australian property company, reported that its funds from operations or FFO for the half year ended 31 December 2021 was A$350 million, down 9.3% on the prior year.

FFO per security was 14.7 cents, down 9.3% on the previous year.

Statutory profit for the half year ended 31 December 2021 was A$850 million, up from A$339 million in the prior year. The statutory result included A$543 million of net commercial property revaluation gains, equating to a 5.5% uplift versus June 2021 book values.

The company declared a distribution of 12.0 cents per security, reflecting a payout ratio of 82% of FFO.

The company now expects fiscal year 2022 FFO per security to be in the range of 35.1-35.6 cents, compared to previous guidance of 34.6-35.6 cents per security.

In a separate press release, Stockland said it agreed to sell its Retirement Living business to EQT Infrastructure for A$987 million. The transaction is expected to compete in late fiscal year 2022.

As per the terms of the agreement, EQT will acquire Stockland's portfolio of 58 established Retirement Living villages,10 development projects underway and in planning, along with the associated management platform.

As a result of the transaction, over 300 employees will transfer to EQT with the business.

Separately, Stockland announced that it has entered into an agreement with Ivanhoé Cambridge which will acquire a 49% interest in the M_Park Trust or TMPT.

Ivanhoé Cambridge will initially invest on a fund-through basis in TMPT, which is focused on the delivery of the 62,500sqm M_Park Stage One in Macquarie Park, Sydney.

The stage is currently under construction, with practical completion expected in fiscal year 2024. It comprises three commercial buildings with combined NLA of 37,146sqm along with a 25,487sqm data centre.

The transaction is expected to settle in July 2022.

In addition, Stockland announced that it has entered into a binding agreement with Mitsubishi Estate Asia to establish the Stockland Residential Rental Partnership (SRRP), a long-term partnership to develop and own land lease communities.

The initial portfolio of the SRRP will comprise six land lease communities currently in development, being four communities in QLD acquired as part of the Halcyon acquisition (Greens, B by Halcyon, Rise and Promenade) and two existing Stockland communities (Nirimba, QLD and Berwick, VIC).

The total current value of the initial portfolio is about A$500 million and the six initial communities will yield approximately 2,000 home sites when complete.

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