The Stockland Corporation Ltd (ASX: SGP) share price has edged down on a mixed Q1 result today. The property group reported its highest quarterly net sales in over three years in residential homes, strong sales in retirement living, and improved rent collections in retail. Yet, Stockland still recorded ongoing problems in rent collection in retail and workplace, or commercial real estate sectors.
Factors supporting the Stockland share price
The residential sales represent the strongest element of the company’s Q1 performance. There are a multitude of reasons for this including current very low interest rates, the government stimulus, and improved credit availability. The company has also championed the preference for its master-planned communities.
Sales moderated in August and September nationwide, although still settled above historical averages. In Victoria, trading remained subdued due to Stage 4 COVID-19 restrictions, despite enquiries remaining above pre-coronavirus levels. However, moving forward NSW is likely to continue performing strongly due to undersupply of vacant land. In addition, the company also believes Victoria is likely to see an increase in sales in Q2 FY21 as restrictions ease.
However, there are some constraints. Queensland and West Australia conversion rates are likely to moderate over the near term as some builders have reached capacity to deliver by the HomeBuilder commencement timeframe. While this is an impact on potential revenue generation, it is a better problem to have than collapsing demand.
Given the current residential demand, the company is focussing on restocking inventory with a number of significant opportunities. To clarify, the company is looking for opportunistic land acquisitions to maintain leading market share.
Retail, workplace and logistics
In the company’s retail town centres portfolio, footfall has risen to approximately 97% of pre-COVID levels. Unfortunately, Victoria represents 12% of the retail portfolio by rental income. This is likely to delay full rent recoveries further.
Lastly, logistics and workplace remain strong elements of the company’s portfolio. Logistics has a weighted average lease expiry (WALE) of 5.1 years, with a portfolio occupancy of 96.2%. Meanwhile, workplace, the companies commercial facilities, has a 93.4% occupancy, and a WALE of 2.9 years.
Stockland is progressing a $3.1 billion future development pipeline in the industrial space. Within the workplace segment, the company is planning a $2.5 billion development pipeline which is progressing in line with expectations. This will increase the weight of these two segments within the company’s overall portfolio.
Stockland company performance
The Stockland share price is slightly lower today on the mixed Q1 results, down 0.49% at $4.09. However, over the past month ths share price has risen by 12.5%. The company is currently trading at a price to earnings (P/E) ratio of 14.65 and has a trailing 12-month dividend yield of 5.9%.
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Motley Fool contributor Daryl Mather 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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