Stockland produced good earnings momentum during the half-year. Operation finances totalled up to $325m, an improvement of 29.5 compared to 251m. The statutory profit improved to 292m, which upwardly changed by 19.3.
Consolidated segment EBIT increased to $466m, by 26.6%. Group EBIT lifted 29.3% to $415m. Net interest expense expanded to $(90)m due to increased cost of borrowing. AFFO came in at $261m, up 26.7%.
AFFO per security rose to 10.8 cents as compared to 8.6 cents. The gearing was 28.1, which falls in the target range of 20-30. Look-through gearing was 29.5, and is lower than 35. Distribution payout was 67% of FFO, which sustains consistent revenues.
Stockland is a diversified entity that operates retail centres, logistics estates and housing communities in Australia. [Stockland]
Investment Management Delivered Stable Recurring Income
The earnings anchor was Investment Management. Segment EBIT has reached 296m as against 298m in the previous year. Logistics occupancy at 96.8 and WALE of 3.3 years. The occupancy of the workplace has been softened to 86.8, and WALE has been raised to 6.1 years.
The total retail sales that were generated in Town Centres amounted to $5,021m and increased by 3.9%. Comparable growth measured 2.8%. Food catering and food retail were on top.
The average cap rates under weighted were 6.1 and 5.9 per cent. in logistics and town centres respectively. Total net funds used in Investment Management were 10.2bn. The defensive cash flow was observed in the recurring income mix, which contributed to 83% of the group’s income.
What Drove Development Earnings Higher In 1H26?
The biggest uplift during the period was that of development. EBIT Development has increased to 221m as compared to 106m. EBIT margin has increased to 24.6 per cent as compared to 19.9 per cent. Settled total lots increased 60.5, to 3,168.
The development revenue was up by 68.6 per cent to $897m. Superlot revenue exceeded $121m. The FFO increased by 2 times to 163 m as compared to 76m. The operating profit margin was also improved to 18.1%. The net funds utilised in Masterplanned Communities were 3.0bn.
The residential pipeline is still big with an approximate of 84,720 lots, and the home sites pipeline was at an approximate of 7,540. These are some of the signs that show long-term housing demand amidst rate pressures.
Masterplanned communities still remain the foundation of housing settlements and revenue increase across the country. [Stockland]
Balance Sheet And Debt Settings Remain Controlled
Measures of capital structure remained strict. The interest-bearing liabilities totalled $7,415 m, of which $5,670m has been drawn. The cash holdings were 376m, and the headroom was 2121m. The maturity hedge profile was an average of 3.6-4.1%.
The net fixed debt and derivatives offered volatility protection. Credit ratings remained A-/A3. There was an inclination towards capital that was used in recurring income 74 and development 26.
The exposure in the sector was 38% logistics and workplace, 33% town centres, and 28% residential. Alternates accounted for 1%. These environments foster expansion and reduce leverage exposure.
Can Portfolio Diversification Support Future Growth?
The expansion across geographical boundaries enhanced the resilience. NSW held $8.6bn in book value. Queensland accounted for $4.6bn. Victoria represented $3.6bn. Western Australia had a contribution of $1.0bn.
In the first half, logistics leased 169,731 sqm. Workplace leased 29,408 sqm. Retail centres had different mixes of tenants. Land Lease Communities had 100 per cent occupancy in 3,369 developed home lots.
The net operating margins on stabilised portfolios were in the 65 range. Work-in-progress on commercial development has a value of approximately $10.0bn cost and 9.7bn end value. These figures represent the depth of pipelines by sectors.
Logistics and industrial estates continue to be heavy contributors to recurrent rental income. [Stockland]
Outlook Remains Supported By Recurring Income Mix
The management is still targeting balanced returns. Recurring is focused on 6-9 per cent returns to invested capital. Development aims for 14-18%.
The distribution ratio is still 60-80 of FFO. Settlements, momentum and leasing action are indicators of constant income. Retail demand is also supported by consumer spending and employment patterns.
The group seems to be at the place of consistent growth up to FY26 and beyond. Investors will keep a very close check on the cost of debt and property value. Nevertheless, the recent 6 months have demonstrated better profitability and controlled capital utilisation.
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FAQs
Q1: What were Stockland’s FFO in 1H26?
A1: Funds from operations were $325m, up 29.5%.
Q2: How much revenue came from development?
A2: Development revenue reached $897m, rising 68.6%.
Q3: What is the current gearing level?
A3: Gearing measured 28.1%, within the 20–30% target.
Q4: How large is the residential pipeline?
A4: The pipeline totals ~84,720 residential lots and ~7,540 home sites.
