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Stockland share price jumps over 6% following solid FY 2020 result


The Stockland Corporation Ltd (ASX: SGP) share price was one of the strongest performers on the S&P/ASX 200 Index (ASX: XJO) on Tuesday following the release of its full year results.

The diversified property company’s shares ended the day with a gain of almost 6.5% to $3.86.

How did Stockland perform in FY 2020?

Stockland was a relatively solid performer in FY 2020, all things considered.

For the 12 months ended 30 June 2020, it reported an 8% decline in funds from operations (FFO) to $825 million. This decline was largely the result of COVID-19 impacts on its business. Stockland’s FFO per share fell 7.2% to 34.7 cents or 4.6% to 31 cents on an adjusted basis.

As with many other property companies, the pandemic has led to a sizeable devaluation of its commercial property. It recorded a net Commercial Property devaluation of $464 million during the year and a net fair value decline of $116 million in Retirement Living. This ultimately led to Stockland reporting a statutory loss of $14 million for the year.

Nevertheless, its net operating cashflows were robust at $1.1 billion in FY 2020, which reflects strong residential settlements.

This allowed Stockland to declare a full year distribution per security of 24.1 cents, which represents a distribution payout ratio of 70% and is fully covered by its operating cashflows

Managing Director and CEO, Mark Steinert, said: “I am pleased to announce a full year result which reflects the benefits of our diversified portfolio, particularly in light of the economic challenges presented by the Australian bushfires and the COVID-19 pandemic. We have tackled these challenges proactively and decisively, responding to these unprecedented events to both protect our business and position us well for the future.”

“We continued to successfully execute our group strategy throughout the year despite these challenges and this is reflected in the underlying performance of the business. FFO was down 8.0% to $825 million and FFO per security was 34.7 cents down 7.2%, reflecting COVID-19 impacts across our business particularly on our Retail Town Centres, offset by growth in Communities, Workplace and Logistics,” he added.

FY 2021 outlook.

As with many of its peers, Stockland will not be providing guidance for FY 2021 at this stage due to the uncertainty around COVID-19 impacts.

It intends to continue to monitor the impact of the pandemic and its implications for its strategy and business.

Mr Steinert commented: “We remain focused on creating Australia’s most liveable and sustainable communities, accelerating our Logistics development pipeline and future proofing our Retail Town Centres.”

“The impact of COVID-19 is extensive and has created significant and continuing uncertainty. We have seen reasonable resilience to the impact of the pandemic due to the provision of essential services, our sub-regional and non-metropolitan retail exposure, and the strength of our leading Communities business.”

“Nonetheless, there have been significant impacts on our people, customers, residents and different parts of our business. We will continue to monitor the impacts of COVID-19 and the implications for our business, while remaining agile in our execution of strategic priorities,” he added.

Positively, the chief executive believes Stockland is well-positioned to ride out the storm.

“With a strong liquidity position, we are well placed to respond to increased demand in housing and logistics and relative strength of convenience based retail centres. I am incredibly proud of how the team and business is performing. Whilst it is difficult to predict the outcome of FY21 with certainty, in the coming months, we are committed to the continuing execution of our strategy and positioning the business for the future,“ Mr Steinert concluded.

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Motley Fool contributor James Mickleboro 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 Scott Phillips.

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