Mirvac maintains profit at $A1 billion
Australian developer Mirvac Group has made a profit of over $A1 billion for the fourth consecutive year.
Chief executive & managing director Susan Lloyd-Hurwitz said on Thursday: “The strategic weighting in our office portfolio of 85% to the Sydney & Melbourne central business districts maximised our exposure to the favourable market conditions in these locations. This is reflected in our strong leasing performance, high occupancy & net revaluation gains.
“We are now Australia’s second largest office manager, with $A15 billion of assets under management. Our young, low-capex portfolio attracts high calibre customers who typically prefer long lease periods and share our vision to reimagine the future of work.
“We continue to deploy our unique asset creation capability to improve the quality of our portfolio and generate increasing passive earnings for the group.
“Our robust development pipeline, which includes South Eveleigh, Sydney, 477 Collins St, Melbourne, & 80 Ann St, Brisbane, is expected to add about $A90 million in additional recurring net operating income by the 2023 financial year, as well as over $A200 million in fair value uplift and over $A130 million in development profit.”
- 250,000m² leased (excluding assets under development)
- Occupancy maintained at 99%, weighted average lease term 5.7 years
- Group return on invested capital 10.1%
- Settled 2611 residential lots, $A1.7 billion in residential presales secured
- Further extended the build:rent (BTR) development pipeline, with a second purpose-built BTR project confirmed near Queen Victoria Market in Melbourne
- Completed a fully underwritten $A750 million institutional placement & a $A46 million security purchase plan
- Set out the steps to become net positive carbon by 2030, including developing buildings powered by 100% renewable energy.
Group financial highlights:
- Total comprehensive income, down 7.7% to $A1.006 billion ($A1.083 billion)
- Total revenue, down 0.86% to $A2.78 billion ($A2.8 billion)
- Pretax profit, down 0.81% to $A1.07 billion ($A1.17 billion)
- Operating profit up 3.8% to $A631 million ($A608 million)
- Basic & diluted earnings/share down 6.1% to A27.6c/stapled security (A29.4c)
- Dividend up 5% to A11.6c/stapled security
- Net property revaluation gain, up 8% to $A516 million ($A478 million)
- Net tangible assets/stapled security up 8.2% to $A2.50 ($A2.31)
- Operating cashflow $ A518 million ($A663 million)
- Debt:equity ratio 33.2% (35.1%)
- Weighted average debt maturity 8.5 years (6.8 years)
- Average borrowing costs stable at 4.8%/year, including margins & line fees
- Increased liquidity to $A1.4 billion in cash & committed undrawn bank facilities
- Operating earnings guidance of A17.6-17.8c/stapled security for the 2020 financial year, representing a 3-4% increase in earnings
- distribution guidance A12.2 c/stapled security, representing 5% growth.
Office portfolio highlights:
- Occupancy 98.2%
- Weighted average lease term 6.4 years
- Net operating income $A338 million, like-for-like net operating income growth 5.7%
- Completed 82 leasing deals over 96,400m²
- Total office asset revaluations up 6.3% ($A392 million) over previous book value
- Assets under management increased to $A15 billion
- Asset management fees increased to $A19 million
- Reached practical completion in March on Buildings 1 & 3 at the reimagined South Eveleigh precinct, Sydney
- Acquired 383 La Trobe St, Melbourne, with potential to create a 40,000m² A grade office tower
- Maintained a 5.0 star NABERS energy rating average across the office portfolio.
Industrial portfolio highlights:
- Occupancy 99.7%
- Weighted average lease term 7.7 years
- 91,700m² leased
- Increased industrial development pipeline in Sydney to $A1.2 billion by securing the following sites:
- Stage 1 of a future 244ha industrial estate at Badgerys Creek in Western Sydney, 800m from the new Western Sydney International Airport, for a total consideration of $71 million under a put-&-call option arrangement
- A 56ha future industrial estate & logistics hub at Mamre Rd, Kemps Creek, 6km from the new Western Sydney International Airport
- A 14ha future industrial estate & logistics hub at Manchester Rd, Auburn, Sydney, 3.3km from the Parramatta cbd & 18km from the Sydney cbd, for $A94 million; the project is a joint venture with an investment vehicle sponsored by Morgan Stanley Real Estate Investing and has an estimated end value of $A250 million, and
- Sold a 50% interest in Calibre at Eastern Creek, Sydney, to the Mirvac Industrial Logistics Partnership for $A125 million; practical completion was achieved on the estate during the year and the development is 100% leased.
Retail portfolio highlights:
- Net revaluation gains 2.2%
- Like for like income growth 2.6%
- Occupancy 99.2%
- Comparable moving annual total sales growth 2.7%
- Comparable specialty sales growth 2.0%
- Comparable specialty sales productivity $10,063/m²
- Increased specialty occupancy costs to 15.5%
- Closed a record 432 leasing transactions (including 36 across the office portfolio)
- Completed construction of a 6900m² expansion of Kawana Shoppingworld on the Sunshine Coast, Completed construction of a 3700m² redevelopment of Rhodes Waterside, Sydney
- Progressed a $A43 million, 4500m² redevelopment of Toombul, Brisbane.
- Settled 2611 residential lots, exceeding target; defaults remained below 2%
- Secured $A1.7 billion of residential presales; Mirvac’s existing pipeline supports the ability to release over 10,000 lots over the next 4 years
- Gross development margins 27%
- Released 1280 residential lots in new & existing projects and exchanged over 1700 lots
- Residential pipeline 28,000 lots
- Acquired 33.5ha site at Henley Brook, 22km north of Perth, and a 171ha quarry site at Wantirna South, 25km south-east of Melbourne.