Despite a construction industry crisis that affects several sectors that property company Stockland (ASX: SGP) operates in, the diversified project builder has announced a bumper FY22 result underpinned by $1.38 billion in statutory profit.
For the full year ended 30 June 2022, Stockland’s $1.38 billion profit represented a 25% increase on FY21. Funds From Operations (FFO) came in at $851 million, up 8% higher on FY21. While also reporting Net Tangible Assets at $4.31 per share, gaining 8.3% YoY, reflecting solid gains from a high-quality real estate portfolio. These results allowed the Company to declare a total distribution of 26.6c per share.
“We delivered a strong operational and financial result for FY22, slightly above our guidance range for FFO per security, in another year of significant market disruption,” said Managing Director and CEO, Turan Gupta.
In February 2022, Stockland announced two new significant capital partnerships. One of the partnerships was Stockland Residential Rental Partnership with Mitsubishi Estate Asia, where Stockland was to develop and own land lease communities with the plan to deliver over $4 billion in development costs. The aim of the partnership was to generate new, high-quality recurring management and rental income from their substantial land bank portfolio.
The other partnership announced is with Ivanhoe Cambridge, where they planned to develop and construct a Life Sciences and Technology Precinct at M_Park corporate campus located in Macquarie Park, NSW. With an expected end value of over $2 billion, Stockland will construct three commercial buildings with the capacity to house over 13,000 workers, scheduled for completion by the end of FY24.
Stockland’s commercial properties net valuations increased 7.3% to $725 million. However, the valuation change over the past 12 months wasn’t equal across all of Stockland’s divisions. Its Logistics commercial property increased 15.9% to $391 million, compared to Workplace and Town Centres commercial properties which only increased 1.9% to $37 million and 5.4% to $297 million, respectively. These revaluation outcomes reflect a strong performance across its portfolio, but also reflects the growth in the market rental space that investors and analysts have seen throughout the previous year.
For each of the divisions, rent collection remained very strong where the Company collected over 99% of gross rent for FY22. Even when accounting for COVID-19 abatements, these figures are significant as the majority of office buildings and shopping centres have struggled to collect rent due to the current economic environment. With rent collection remaining fairly high, this signifies the reliability of the Company’s portfolio and it positions the Company to reinvest for future projects.