Stockland (ASX:SGP): Working on a $30.7bn portfolio of communities

Stockland is one of the largest ASX property stocks as well as one of the longest listed (having joined the bourse in the 1950s). Australians have an obsession with investing with properties, but not so much property listed companies – many are below pre-pandemic levels.

But Stockland is one exemption to that rule. It is above pre-pandemic levels and it claims there is a big opportunity ahead of it.

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Overview of Stockland

Stockland initially focused on commercial property development before expanding into residential and broader property sectors over subsequent decades. Over the decades it evolved from traditional retail and office property development into a broader “community creator,” building residential estates, retail town centres, industrial and logistics precincts, and specialised residential assets.

The company’s property portfolio as of 30 June 2025 reflects this diversified footprint. The portfolio is weighted across five major segments: logistics (about 26 % of net funds employed, ~$3.7bn), workplace assets (13 %, ~$1.9bn), town centres (33 %, ~$4.7bn), masterplanned communities (19 %, ~$2.8bn) and land lease communities (8 %, ~$1.3bn).

Stockland claims to have a forecast pipeline of $30.7bn, spread across 49 total communities with 83,600 lots remaining.

Focusing on ‘communities’

Many will be familiar with Stockland-branded shopping centres and these are called ‘communities’ because they are not just shopping centres, but places where people can live, work, shop and connect, with a purpose rooted in long-term community and economic value.

The masterplanned and land lease communities segment is a particularly strategic focus for the company. Within masterplanned communities (MPCs), Stockland oversees a nationally diversified portfolio that includes dozens of communities at different stages of development and settlement, with total project values spread across NSW/ACT, Queensland, Victoria and Western Australia.

Leading projects range from newly acquired or released communities like Calderwood Valley, Elara Place, Figtree Hill and The Gables in NSW, through to major Victorian communities such as Craigieburn, Mt Atkinson, Katalia and others. The portfolio’s total project value stretches into the tens of billions in expected end revenue, reflecting the scale of Stockland’s residential pipeline

Land lease communities, which provide housing and lifestyle solutions for older buyers seeking community living, contribute additional depth to Stockland’s residential offering, with established and in-development communities across Queensland, Victoria and Western Australia.

Stockland’s strategy

Stockland is focused on releasing lots in well-located, community-oriented estates that cater to broad demographic demand — from first home buyers to families — while maintaining development margins in the low-20 % range and managing inventory release timing to align with market conditions. Stockland has also pointed to the strength of demand in markets such as Queensland and Victoria, and the importance of partnerships that can drive scale and capital efficiency in residential delivery.

Beyond its core operating segments, Stockland has also signalled strategic diversification into adjacent areas such as data centres and large-scale logistics precincts through partnerships with global operators, indicating an aspiration to capture growth in specialised property sectors alongside its traditional residential and retail operations. This broader outlook reflects a balancing of stable income-generating assets with development-led growth opportunities.

Stockland’s FY25 financial results reflected both this strategic execution and the broader recovery in residential markets. The company delivered a significant uplift in profit for the 2025 financial year, reporting a statutory profit of approximately A$826 million — well above the prior year — supported by higher settlement volumes from the masterplanned communities business, increased development fee income and strong performance across the logistics portfolio, alongside positive revaluations of its assets.

Funds From Operations (FFO) for FY25 rose modestly year-on-year to around 33.9 cents per security, at the upper end of guidance. The result also showcased successful integration of the acquired MPC portfolio, which performed ahead of assumptions, with settlement volumes comfortably above target. Distributions for FY25 were maintained in line with company policy, providing a stable payout reflective of underlying earnings.

What does the future hold?

Looking into FY26 and beyond, Stockland has reaffirmed guidance for growth in funds from operations and settlement activity. The company’s operational updates indicate targeted MPC settlements of between roughly 7,500 and 8,500 lots in FY26, up on the prior year, supported by ongoing demand for housing product and enhanced by contributions from the acquired communities.

Logistics continued to show strong leasing spreads and high occupancy, while town centres delivered solid comparable sales growth, underpinned by an essentials-based tenant mix.

Management has maintained FFO guidance in the mid-30 cents per security range for FY26 with distributions expected to remain steady, while confirming its target gearing range and balance sheet strength. Tailwinds from lower interest rates and demographic drivers have been cited as supportive of residential demand, though affordability headwinds and cost pressures remain considerations.

Analyst consensus for FY26 calls for a $600m increase in revenue from $3.13bn to $3.71bn and FFO in line with the company’s guidance with $0.36 per share. For FY27, $3.9bn revenue and $0.39 FFO. The mean target price of $6.23 per share, up 16% from the current price. Stockland’s P/E is 14.9x, its EV/EBITDA 16.7x and its PEG 2.4x.

A potential solution to the housing crisis?

Let’s talk about the crisis. It is a real thing – a persistent mismatch between how many homes are being delivered and how many are needed.

Independent housing supply data, industry forecasts and national housing accords all point to structural shortfalls that have accumulated over many years and are expected to continue unless transformative change occurs.

At a national level, reports from bodies such as the National Housing Supply and Affordability Council show that in recent years new housing production has lagged behind demand, with dwellings completed well short of annual targets under the National Housing Accord and demand projections. For example, in 2024–25 housing completions were below both the 240,000 target set by the Accord and the actual level of new households forming — indicating a shortfall of tens of thousands of homes per year.

In that context, Stockland — as one of Australia’s largest residential developers and a major masterplanned communities builder — could play a meaningful role in helping increase supply.

Its approach to residential land release and community development is exactly the type of large-scale supply activity the market needs: by acquiring and servicing greenfield land, bringing infrastructure to sites, and releasing lots for housing construction at scale, companies like Stockland help increase the quantity of homes entering the market.

Greenfield activity, in particular, is seen as a key lever for supply because it can deliver large numbers of lots more rapidly than fragmented infill development and helps address affordability in growth regions.

Conclusion

Stockland is a unique ASX property stock with good growth prospects in the months and years ahead. Investors can rely on dividend payouts, but they also have opportunity to realise share upside if it can execute on its ambitions.