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UPDATE 1-Australia's Stockland says ready to walk away from Australand
April 30, 2014 / 1:41 AM / 4 years ago

UPDATE 1-Australia's Stockland says ready to walk away from Australand

* Says to achieve 6 pct EPS growth in FY14

* To be disciplined in possible transaction with Australand

* Residential business strong, well placed for long-term growth (Adds quarterly update details, comments, share moves)

SYDNEY, April 30 (Reuters) - Australian property group Stockland Corp Ltd on Wednesday said it expected to achieve earnings growth of 6 percent in the 2014 financial year, at the top of its guidance range, supported by a strong residential market.

The quarterly update may increase pressure on smaller peer Australand Property Group to accept a A$1.95 billion ($1.81 billion) all-script takeover bid from Stockland, a week after it rejected the offer as undervalued.

Stockland managing director and chief executive Mark Steinert gave no indication Australia’s second-biggest property group was prepared to lift the offer, saying he was happy with the outlook for organic growth in the residential business.

“We will continue to be disciplined in all potential acquisitions, including any possible transaction with Australand,” Steinert said in a statement.

“We believe the offer we presented to the Australand Board is highly compelling ... If price expectations are too high we are quite prepared to sell down our holding and realise a profit.”

Stockland currently holds 19.9 percent of Australand, which makes about half its revenue from the residential sector.

If the deal went ahead, it would create a combined group with the largest residential business in Australia at a time of record low interest rates and booming house prices in key markets such as Sydney.

Morningstar analyst Tony Sherlock said he would prefer to Stockland to walk away.

“It’s a waiting game unfortunately at this point. We’ve got no clarity,” he said.

“I would say they should take the profits and walk away. I think that’s a full price, they are buying the assets at the top of the market value.”

Stockland said its residential deposits for the year to March 31 were the strongest the company had seen for the period in four years.

Stockland’s retail and retirement living businesses also reported positive quarterly results, the company added.

“We are well placed to achieve sustainable long-term growth in line with our objective of 5 percent annual EPS (earnings per share) growth through the cycle,” Steinert said.

Stockland shares slipped 0.5 percent as of 0126 GMT, compared with a 0.1 fall in the broader market, while Australand was flat. ($1 = 1.0789 Australian Dollars) (Reporting by Maggie Lu Yueyang; Editing by Stephen Coates)

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