11.1% increase in Retirement Living operating profit
6.2% cash return on assets
84% resident satisfaction
|($m, unless otherwise stated)||FY17||FY16||Change|
|Operating profit (FFO)1||63||57||11.1% ↑|
|Cash ROA||6.2%||5.8%|| ↑
|- Established settlements (units)||731||716||2.1% ↑|
|- Withheld settlements (units)||49||19||↑|
|Total sales volume (units)||780||735||6.1% ↑|
|Average re-sale price||$339k||$329k||3.3% ↑|
|Turnover cash per unit||$86k||$81k||6.2% ↑
|Turnover cash margin||25.4%|| 24.7%
|Reservations on hand (units)||128||155||17.4% ↓|
|Average price per unit||$539k|| $509k
|Average margin - excludes Deferred Management Fee (DMF)||19.1%||16.8%||↑|
|Development settlements (units)||270||297|| 9.1% ↓
|Reservations on hand (units)||58||67|| 13.4% ↓
1 Operating profit is equal to FFO for the Retirement Living business.
Operating profit (FFO) in Retirement Living was up 11.1% on FY16, reflecting strong sales, active management of our portfolio and improved margins. Reservations on hand reflect the availability of stock in key markets. Cash ROA increased to 6.2%, from 5.8% in FY16.
This is the fourth consecutive year of double-digit operating profit growth for our business, driven by our focus on resident satisfaction underpinned by a customer-centric culture.
Our development pipeline is proceeding well, with the delivery of our UDIA award winning apartments at Cardinal Freeman The Residences in Sydney’s inner-west. We are also making good progress on our new vertical village at Birtinya, in the heart of the Sunshine Coast’s new health hub.
We continue to invest in new projects, with planning underway on a number of brownfield redevelopments at existing villages.
Development margins were high this year at 19.1% due to project delivery mix, but will normalise in FY18 to around 15 -17%.
We are further extending our reputation for quality villages and broadening our customer reach through our new, non-deferred management fee communities for over 55s, called ‘Aspire’. We have two projects currently underway, at our Elara residential community in Sydney and Calleya in Perth, and the initiative will be rolled out at other locations in our portfolio over the coming years.
We understand there is a lot of focus on the sector at the moment. We take pride in our Retirement Living business, and we are committed to open, transparent and respectful relationships with our residents. Every year we engage independent consultants to assess resident satisfaction. Last year, more than 6,800 residents participated in the survey, and rated their overall satisfaction with Stockland as 8.4 out of 10.
The business remains focused on being a preferred operator and developer of Retirement Living villages by creating high quality retirement villages in Australia. The business has a clear strategy to continue to improve its return on assets by: