ASX property share Stockland Corporation Ltd (ASX: SGP) has just reported its HY20 result and offers a dividend yield of more than 5%.
What is Stockland Corporation?
It's a diversified property business that both develops properties and manages them. It has divisions in retirement villages, housing estates, industrial estates and shopping centres.
Stockland's HY20 result numbers
The property business reported that its statutory profit rose by 68.1% to $504 million.
Looking at the operating profit, which is called funds from operations (FFO), it fell 5.6% to $384 million with a skew expected for the second half. FFO per share fell by 4.2% to 16.1 cents.
Adjusted funds from operations (AFFO) fell by 4.2% to $338 million and AFFO per share declined by 2.7% to 14.2 cents.
Looking at the individual divisions, Logistics FFO grew to $81 million with comparable growth of 3.9%. Workplace FFO increased to $26 million with comparable growth of 6.1%. Retail town centre FFO was $209 million with comparable growth of 0.7% and an occupancy rate of 99.4% – management are assessing $500 million of non-core divestments. The Residential division experienced FFO of $134 million, down 6%, with 2,158 lots settled with a skew to the second half. Finally, Retirement Living FFO was $17 million – down 13.8% due to development product mix, second half skew and village disposal profit.
Stockland dividend and balance sheet
Stockland revealed that its net tangible assets (NTA), its underlying value per share, grew by 2% to $4.12.
The distribution for the period was 13.5 cents, the same as last year.
Its gearing was 26.1% (within its target range of 20% to 30%) compared to 26.7% at 30 June 2019 due to increased operating cash flows and commercial property revaluations.
Is Stockland a buy?
For FY20 Stockland is forecasting FFO per share of 37.4 cents and dividends of 27.6 cents, assuming no material change in market conditions.
That puts Stockland on less than 14x FY20's estimated FFO and a distribution yield of 5.4% – solid in this environment of low interest rates. However, at the pre-open price it's at a 23.8% premium to the NTA which is pretty expensive. It could be an option for a diversified property yield play, but I wouldn't buy it expecting large capital growth now.
