Stockland hit by power price rise
SURGING electricity prices will dampen earnings growth for Stockland Group this financial year, the property developer and shopping centre owner says.
After boosting its full-year net profit by 34 per cent to $1.2 billion in the year to June 30, Stockland yesterday said rising power costs in its retail portfolio – its largest asset class – will slow earnings in 2017/18. Overall funds from operations improved 8.5 per cent in 2016/17 but growth is expected to moderate to between five and 6.5 per cent over 2018.
Stockland commercial property executive John Schroder said east coast electricity costs have jumped by almost two thirds.
“The issue for FY18 is electricity,” he said. “The electricity increase in our portfolio across the nation is 48.4 per cent, or 60 per cent on the eastern seaboard.
“That also has an implication on occupancy costs and the ability to drive rent growth.”
Stockland chief executive Mark Steinert said the company was in advanced planning for 10 new solar rooftop projects to be rolled out over the coming year to help mitigate electricity costs, following the success of a rooftop installation at its Shellharbour shopping centre in NSW.
Funds from operations jumped 17 per cent in its residential communities in 2016/17, while retirement living grew 11 per cent.