Property developer Stockland Group yesterday took another move to expand its share buyback by selling another asset to finance the expansion.
Stockland said it was pushing the on-market buyback of its securities to up to 10% of issued capital by selling its stake in an industrial property trust to the small listed group, Qube Logistics.
Stockland’s existing buyback of 5% was announced last August and the group has sold a string of CBD office blocks and other property and re-invested in residential land holdings in NSW and Victoria, as well as running the buyback.
Stockland said yesterday the extension of the buyback would be funded by its ongoing program of asset sales.
Stockland managing director Matthew Quinn said in a statement the group was committed to growing its returns by selling lower-yielding assets to invest in its own securities and to fund future growth.
So far this financial year it has sold just over $900 million in assets, and re-invested a substantial amount of that into expanding its residential land banks around Sydney and Melbourne in particular.
So far, Stockland has bought back 113.2 million securities, amounting to 4.75% of its issued capital, at an average price of $3.02 per security.
Stockland said its gearing at December 31, 2011 was 23%.
"Taking into consideration the asset sales program and the full cost of the extended buyback, pro forma gearing will remain around this level.
"A minimum liquidity buffer of at least $500 million will continue to be maintained," the company said yesterday.
The securities rose 9c yesterday to $3.16, so the buyback has been helpful in keeping the price of the securities above $3.
Stockland sold its 55% stake in the Moorebank Industrial Property Trust (MIPT) based in Sydney’s southwest for $123 million – about $10 million below book value.
The buyer is the Chris Corrigan-chaired Qube Logistics, one of the shareholders in the Trust, along with AR National, the big Brisbane-based rail group that was floated late last year.
The 83-hectare property at Moorebank is the site of a proposed intermodal terminal and port-linked industrial facility, an idea that Corrigan was a supporter of when he ran Patricks before its takeover by Toll in 2006.
Shares in Qube ended half a cent lower at $1.715.
Qube’s share in the trust will rise to 85%, but QRN has the right to buy a proportionate holding in the next few weeks. If that right is exercised, Qube will own 67% of the site and QRN 33%.
Earlier this month Qube bought an 18-year lease at Melbourne’s Victoria Dock – including 17 hectares of land, two rail sidings and two general cargo booths – for $50 million.
And last month Qube bought Giacci Holdings – a WA bulk commodities transport and storage operator – for $119 million in cash.
Its earnings should start appearing in QUBE’s accounts in the current half year.
