Why the Stockland Corporation Ltd share price is up

Credit: Diliff

The Stockland Corporation Ltd (ASX: SGP) share price is up 2% at $4.09, after the property group updated the market with results for the first half of FY 2018.  

Statutory profit suffered a 2.6% decline from the previous corresponding period, but other important metrics improved. Funds from operations (FFO) – the key indicator of financial performance of REITs – grew 18.2% to $436 million, with FFO per security up 16.9% to 18 cents. Gearing is down 0.9 percentage points to 23% and the cost of debt decreased from 5.6% to 5.3%. 

The company benefited from its diversified portfolio of real estate assets, as the 82% operating profit growth in residential property abundantly exceeded the negative results from the office and retirement living segments. FFO of retail town centres, Stockland’s main source of income, remained nearly unchanged at $209 million. 

Stockland noted that profit from residential property is skewed to the first half year, and growth is expected to moderate in the second half. However, the company reaffirmed its 5% to 6.5% guidance on FFO per security growth over the full year. 

Stockland will pay an unfranked 13 cents interim dividend and expects a full year distribution of 26.5 cents per security, providing a 6.5% dividend yield based on the current share price.  

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Motley Fool contributor Tommaso Autorino has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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