Company Interview / Solid foundations: Stockland’s $10B growth pipeline

Key points:

Stockland posts 3% earnings growth for FY25, expects 6-9% growth in FY26Strong performance from masterplanned communities and new Lendlease (ASX:LLC) acquisitionsLogistics and data centre developments emerge as key growth driversPrudent capital management and payout ratio review support future development plans

Stockland (ASX: SGP) reports 3% earnings growth for FY25, supported primarily by its masterplanned communities business. Tarun Gupta points to a boost from the acquisition of 12 masterplanned community projects from Lendlease (ASX:LLC), along with growth in management income and the logistics division. Gupta expresses confidence in Stockland’s FY26 outlook, highlighting guidance for 6-9% year-on-year growth, driven by ongoing momentum in residential markets and stronger demand particularly in Victoria after recent interest rate cuts.

Gupta shares that the company’s civil construction costs have remained largely in check, tracking at 2-3% inflation, with some prices even declining in Victoria due to a market slowdown. However, he cautions that skill shortages and higher costs are beginning to affect high-rise construction, especially in markets experiencing high demand like south-east Queensland and Western Australia. Addressing these capacity constraints is seen as essential to meeting national housing targets.

A growing focus for Stockland is the logistics and data centre segment. Gupta reveals a $10 billion pipeline of logistics projects, including a landmark development next to Sydney Airport. The collaboration with EdgeConneX aims to deliver new data centre infrastructure, tapping into strong demand in Sydney and Melbourne. Active portfolio reshaping and prudent gearing, coupled with a revised dividend payout ratio, position Stockland for further growth and capital recycling.