Australia's Stockland sees EPS falling 7 pct

MELBOURNE, Oct 21 (Reuters) - Stockland Group (SGP.AX), Australia's second-largest listed property trust, said it expects earnings per share to fall 7 percent in fiscal 2009, factoring in its forecast for nominal earnings growth, previously flagged writedowns on its UK assets and a share sale last week.

Managing Director Matthew Quinn reaffirmed earnings would be skewed to the second half of the financial year, aided by stronger residential markets following interest rate cuts and Australian government incentives to first home buyers.

Stockland warned this month it would take A$110 million in charges on its struggling UK residential development business.

It also raised A$300 million ($211 million) last week through a share sale and set itself up to expand in retirement villages with stakes in FKP Properties (FKP.AX) and smaller Aevum Ltd (AVE.AX).

The group, Australia's top residential developer, is considered one of the strongest property groups in the beleaguered sector, with the firepower to pick up cheap assets from weakened rivals hungry for capital.

"While we're realistic about the possibility that the property market may take some time to bounce back, we believe that we are well positioned for the recovery, and that we may, in fact, be able to take advantage of opportunities to acquire some high quality long-term assets at good prices in the months ahead," Chairman Graham Bradley said at the group's annual meeting.

Stockland shares surged 7.5 percent to A$5.05, outperforming a 2 percent rise in the A-REIT index .AXPJ. ($1=A$1.42) (Reporting by Sonali Paul)