A booming housing market and strong retail spending help deliver Stockland a rise in full year earnings.
The property developer’s securities soared as Stockland said it was now expecting earnings growth of between seven and 7.5 per cent for 2014/15.
Its previous forecast was for its earnings per share to grow 6.75 to 7.5 per cent. Impressed investors drove Stockland’s shares up six cents to $4.51.
Much of Stockland’s earnings growth is being driven by a strong rise in like-for-like retail speciality sales at its shopping centres, which grew 4.9 per cent in the third quarter.
The result was the strongest quarterly performance by the division since 2009.
The best performing categories were communication technology, homewares, food catering and retail services.
Cinemas and travel agents also performed strongly.
“Speciality retail growth is particularly pleasing and reflects both improving market conditions and our continued focus on creating shopping centres that are convenient,” Chief executive Mark Steinert said.
“This is the fourth consecutive quarter of growth.”
Meanwhile, deposits for residential properties being built by Stockland are at five-year highs despite limited land releases in Sydney.
Stockland says it’s on track to settle at the upper end of its 5,000 to 6,000 lots target for fiscal 2015, with strong momentum expected to continue in the 2016 financial year.
Mr Steinert said Stockland had acquired about 4,000 new lots during the quarter, including residential sites in metropolitan growth corridors supported by rail and road infrastructure.
Work on its $160 million, 200 apartment development at Ashfield, in Sydney’s inner west, is underway with the first stage of 28 units due for completion in April 2016.
“We have increased pricing, reflecting the strong market conditions which has improved our expected internal rate of return,” Mr Steinert said.