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Stockland today announced it had exchanged contracts with Frasers Property Australia for the sale of The Grove residential community in Melbourne for $202.5 million, a 59% premium to book value.
Stockland acquired the land under option contracts in 2010 from a range of local farm owners for a total price of circa $75M and achieved development consent in 2014.
Since its launch in 2014 almost 1300 lots in the estate have been sold, with more than two thirds of these settled. When complete, the project is expected to include more than 2500 homes, alongside a supermarket, specialty stores, primary and secondary schools, a community centre and retirement village.
Stockland has been under pressure to improve its balance sheet following the recent downturn in the market and the sale of The Grove was an obvious choice for Stockland given it's other land holdings in Victoria.
Stockland Managing Director and CEO Mark Steinert said: “This sale enables us to capitalise on market strength, and bring forward profits on a project that has scale and where we have already created significant value through buying well and creating an exemplar masterplanned community"
Mr Steinert said: “Stockland retains a strong and long-standing investment in Victoria, with over 50 assets in the State valued at over $2.5 billion. Following this sale, we will continue to focus on developing our portfolio of 11 active residential communities in Victoria where we have a pipeline of over 24,000 lots, with over 5,600 lots remaining in the western corridor of Melbourne."
The sale of The Grove will result in gross profit realisation of $75 million, to be released over FY19-21 in line with the settlement timing of various parcels.