Stockland Group says the value of some of its residential developments and UK assets has fallen, but it is on track to achieve its recent earnings guidance for 2012.
The property developer said on Tuesday that under its current accounting methods, it expected to achieve earnings per security (EPS) of 30.5 cents for the financial year.
But the group would change the accounting methodology for its retirement living business, which would reduce EPS guidance to 29.8 cents.
The forecast full year distribution per security would not be affected and was still estimated at 24 cents.
“We can confirm that we are on track to achieve our FY12 guidance that we announced last month,” Stockland managing director Matthew Quinn said during an investor briefing.
“When we made that announcement, we took account of prevailing market conditions, and took the view that we should not expect any upturn before the end of the year.
“While there has been a mild uptick in April, it has only been mild and just goes to re-affirm our guidance for the year.”
Mr Quinn said Stockland’s businesses were performing well, apart from residential.
Stockland would recognise $48 million of impairments on five residential projects, or about two per cent of total book value.
The impairments were primarily related to lifestyle projects, reflecting price pressure at the top end of the market.
Mr Quinn said the outlook for the residential market was improving as the market was now pricing in the possibility of significant interest rate cuts.
Mr Quinn said Stockland’s retail and retirement living businesses continued to perform well.
Demand for our retirement living products remained strong, and cash returns from the business were expected to grow significantly.
However Mr Quinn said market conditions in Britain had deteriorated since February, and consequently, Stockland had decided to defer its exit from the UK until 2013.
“We have taken the view that rather than have a forced sale of our assets into a very weak market, we will take another year,” he said.
Stockland had therefore decided to take impairments on some projects, totalling $15 million.
Securities in Stockland were two cents higher at $3.12 on Tuesday.
