Stockland’s retirement living six-month operating profit: $17M, up 42%

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Improved sales of established units and a focus on efficiencies delivered a 42% increase in operating profit for June to December 2013. $17M was delivered from their 62 villages, with 8,208 units and four care facilities with 366 beds. This compares to $12M for the same period in 2012.
Stockland predicts stronger seasonal performance in the January to June half. They are focusing on their development pipeline; they have new stages under development at five villages.
Their 520 vacancies represent 6% of the established portfolio.
Both DMF and developers margin were squeezed (see chart opposite). In the six months they sold 424 units, with three quarters being established units at an average price of $320K, generating DMF related cash of $75K each (a 23.5% margin). The average resale price increased by just 1.6% over the six months.
122 new units were sold at an average price of $383K, delivering a developer’s margin of 16.5% or $63K (pre-overheads).
Return on assets was 4.8%. They have a long way to go to achieve the 16 – 18% desired by 2018. The stronger sales in the January – June Half should assist.
The Stockland retirement living portfolio was revalued up by $3M compared to a $61M write-down 12 months ago.

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