Stockland Continues To Execute Its 3-R Growth Strategy
Stockland is acquiring two major residential projects in Western Australia and a new shopping centre in one of Victoria's fastest-growing corridors.
- (1888PressRelease) June 23, 2011 - Stockland is acquiring two major residential projects in Western Australia and a new shopping centre in one of Victoria's fastest-growing corridors, in two separate transactions involving asset swaps for office assets.
In a transaction with Brookfield, Stockland will acquire two residential projects in the north east corridor of Perth for $271 million, and sell its 50 per cent holding in Perth's BankWest Tower for $130 million, giving Brookfield sole ownership of the building.
In a separate transaction with the Walker Corporation, Stockland will acquire the Point Cook Town Centre in the fast growing Wyndham region in south west Melbourne for $176 million. It will also acquire a 17 hectare parcel of land at East Leppington in south west Sydney for $10 million. In return Walker Corporation will buy 150 Charlotte Street in Brisbane for $54 million on completion of a refurbishment and the Myuna Complex in Canberra for $24 million.
Stockland Managing Director Matthew Quinn said the transactions were strategically significant for the group.
"We have repeatedly signalled our intention to reweight our portfolio towards our 3-R strategy, focusing on residential, retail and retirement living," he said.
"Both transactions involve asset swaps, and the reinvestment of capital from non-core, management intensive assets into projects that fit Stockland's long-term strategic growth objectives.
"These transactions are in line with our strategy to self-fund our growth and represent efficient use of capital as we recycle funds from the sale of non-core, office assets into good quality, strategic residential and retail assets."
The total cost of the acquisitions is $457 million, however Stockland's net cash outlay will be around $280 million1. The net outlay will be funded from the sale of other assets, and from cash reserves.
Stockland remains within its target earnings range of 60-80 per cent of recurring income and 20-40 per cent from trading.
These transactions will have a negligible impact on the company's gearing and are expected to be mildly earnings accretive in FY12.
Acquisition of Perth residential projects and divestment of BankWest Tower
The acquisition of the two Perth projects, The Vale and Whiteman Edge, is Stockland's biggest residential acquisition in Perth and will significantly increase the size and scale of its WA business, further enhancing the business's geographic diversity.
This acquisition represents a significant investment in the WA residential market, capitalising on the major investment currently being made in the resource sector and the associated jobs and population growth in Perth.
The two projects are located in the fast-growing north eastern corridor of Perth and together comprise around 340 hectares yielding approximately 3,900 lots. These two communities are within four kilometres of each other and will be positioned to target different market segments giving Stockland exposure to a broader demographic.
The Vale is a high quality award-winning estate which commenced trading in 2005 and has built a strong market position. The project has around 2,700 lots remaining with an end value of approximately $780 million. As a going concern, it will start to contribute to earnings immediately.
Whiteman Edge is a new residential community approximately 17 kilometres from the Perth CBD. It will yield around 1,200 lots with an end value of approximately $310 million. The project launch is imminent and it will contribute to earnings in FY12.
This transaction brings the total number of residential lots Stockland has secured in FY11 to date to approximately 26,500 with an end value of more than $8 billion.
BankWest Tower is an A-grade office building located in the Perth CBD and has been co-owned with Brookfield since 2007. The building is currently undergoing a major refurbishment and upgrade. The sale price is in line with 31 December 2010 book value and reflects a capitalisation rate of 7.75%. The initial yield is 8.87% which reflects the significant capital expenditure required for the upgrade and to re-let the building when BankWest vacates.
Stockland still holds four office properties in Perth, with book value of $352 million at 31 December 2010, providing exposure to potential upside from the mining and resources boom.
The settlement date for the Brookfield transaction is 1 July 2011.
Acquisition of Point Cook Town Centre and Leppington land and divestment of office assets
Point Cook Town Centre is a newly constructed two-level town centre-style, sub-regional shopping centre. It is located south of the Princes Highway in an area with average household income 26 per cent higher than the Melbourne metropolitan average and strong population growth.
The acquisition has an initial cash yield of 7.7 per cent. In the short to medium term, there is opportunity to add significant value to the asset through remixing the retailer tenant base. The centre also has three hectares of vacant land for future development, currently used as surface car parking. The acquisition fits well with Stockland's strategy to acquire and manage high performing retail assets with development potential in large and growing population catchments.
The main trade area has 64,000 people and is expected to reach 93,000 in the next 15 years.
Settlement on Point Cook Town Centre is due on 30 June 2011.
The 17 hectare residential site being acquired at East Leppington in Sydney's south west abuts a 339 hectare site secured earlier this month from a private vendor. Together, the East Leppington sites have the potential for around 3,200 lots and could accommodate both additional retail and retirement uses. Settlement is due on 31 July 2011.
The Myuna Complex and Charlotte Street properties are obsolete office buildings recently or soon to be vacated by major tenants and therefore largely non-income producing. The sale prices are below the 31 December 2010 book values reflecting the vacancies.
A refurbishment of 150 Charlotte Street is about to commence and Stockland will retain title until the earlier of the completion of the refurbishment, or 30 June 2012. Walker Corporation will manage the development, taking on all construction and leasing risk.
The Myuna Complex is earmarked for redevelopment. Stockland will retain title until the earlier of the approval of a revised Development Application or 30 June 2012.
For media enquiries contact:
Karyn Munsie
- EGM - Corporate Affairs
- Stockland
- T +61 (0)2 9035 2180
- M +61 (0)421 050 430
Sally-ann Parker
- Senior Manager Communications
- Stockland
- T +61 (0)2 9035 2462
- M +61 (0)401 167 401
For investor enquiries contact:
Karyn Munsie
- EGM - Corporate Affairs
- Stockland
- T +61 (0)2 9035 2180
- M +61 (0)421 050 430
Linda Assatoury
- Senior Manager Investor Relations
- Stockland
- T +61 (0)2 9035 2553
- M +61 (0)402 283
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