Stockland well placed to deliver earning growth

Stockland chief executive Mark Steinert has revealed that the diversified property group is well placed to deliver earning growth at the top end of its guidance.

Speaking to investors at its third quarter briefing, he said residential deposits for the year to date at 31 March 2014 were the strongest it had recorded for that period in four years.

As such, Stockland was well placed to achieve 6% EPS growth in FY14, at the top of its guidance range.

But in revealing the earnings upgrade, Steinert said the company stood firm on its proposed $2.5 billion takeover of Australand. 

“Today’s update clearly demonstrates that we are achieving strong organic growth and our business is well positioned to take advantage of improving economic conditions," said Steinert. 

Any transaction, he said, must be sustainably accretive to both earnings per security and enterprise value.

Earlier this month, Stockland launched a bid to buy the remaining shares it didn't own in Australand.

The offer was an all-scrip offer of 1.111 Stockland securities for each Australand security. Based on Stockland’s closing price of $3.78 on 22 April 2014, Australand said it implied an offer price of $4.20 per Australand stapled security.

But the Australand board rejected the bid as "incomplete" and not compelling. 

Justifying its proposal, Steinert said: “We believe the offer we presented to the Australand Board is highly compelling, representing a significant 21% premium to net tangible assets at the current Stockland security price."

“The combined group would have the largest active residential business and future pipeline in Australia, with leading capabilities across land subdivision and medium density development. It would also have the second largest Logistics and Business Parks portfolio with high quality assets and future reinvestment opportunities."