Stockland May Expand Retirement Business in Australia, CEO Says

By Angela Macdonald-Smith

Oct. 12 (Bloomberg) -- Stockland, Australia's largest housing developer, may expand its domestic retirement business after raising A$300 million ($193 million) in equity last week.

The company is ``very keen to grow'' in the retirement industry in its home market, Chief Executive Matthew Quinn told Australian Broadcasting Corp.'s Inside Business program today. Sydney-based Stockland is more cautious in the U.K., where it will focus for the next 6-12 months on shoring up the business after writing down the value of assets there, he said.

Property values globally have dropped in the wake of the U.S. subprime crisis, which has led to the collapse of Lehman Brothers Holdings Inc. and Bear Stearns & Co. and prompted financial companies to post losses or writedowns of more than $630 billion since the start of 2007. Stockland said it will initially use the proceeds of the share sale to repay debt.

``The last position we want to be in is to be a slave to the debt markets, and only beholden to the debt providers, who are charging very high rates at the moment,'' Quinn said. ``It's about what happens in the future and building in some contingency into the business plan, and also making sure that we've got enough capital to fund the growth of the business.''

Stockland acquired its first retirement village owner in February 2007 and since then the market has been ``nothing but upside for us,'' Quinn said.

Stockland on Oct. 3 cut the earnings forecast for its U.K. unit on signs that country is heading into a recession. It said it would write down U.K. inventory by about A$50 million and take a charge of A$60 million in its first-half results.

The U.K. market has ``fallen like a knife that nobody now wants to catch, and the whole banking sector has literally ground to a standstill,'' Quinn said. ``We are caught by that because we are an active developer and trader of real estate that needs finance.''

It's too early to consider any acquisitions in the U.K., even as prices sink, Quinn said. Should any opportunities arise in the next 6-12 months ``they would have to be absolutely rip- snorting compelling to make us move in that market,'' he said.

To contact the reporter on this story: Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net