This article is from the Australian Property Journal archive
DIVERSIFIED property group Mirvac has maintained its full-year residential settlements target despite its first-half total being slashed by labour shortages, wet weather, inflation and rising interest rates.
Interim operating profit lifted 3% on the prior corresponding period to $305 million, representing 7.7c per stapled security, driven by its integrated investment portfolio.
Statutory profit tumbled from $565 million to $215 million primarily due to lower investment property revaluations.
Mirvac reaffirmed its target of operating earnings in FY23 of at least 15.5c per stapled security and distributions of at least 10.5c per stapled security.
In its residential division, Mirvac settled 807 residential lots during the period, down from 1,303, while the 845 residential lots were exchanged, down from 1,814.
“While ongoing supply chain constraints, labour shortages, wet weather, inflationary pressures, and higher interest rates continued to impact our business, our integrated and diverse business model, the quality of our portfolio, our strong balance sheet, and disciplined capital management have positioned us well to navigate through the cycle,” said outgoing chief executive and managing director Susan Lloyd-Hurwitz, who will be replaced by Campbell Hanan next month.
“The fundamentals supporting the outlook for the residential sector remain positive, with immigration forecast to return to pre-COVID levels, coupled with low upcoming supply. Relative affordability of apartments is also expected to underpin demand for our apartment projects, with the potential for five project releases over the next 12 months,” she said.
Matthew Moore, senior vice president, Moody’s Investors Service, Mirvac’s results were in line with our expectations, with a solid operating performance and earnings growth from the investments segment offsetting lower overall earnings from the development segment.
“While we expect challenging market conditions to persist, the diversity of Mirvac’s portfolio, combined with the quality of its investment properties and development offerings, should enable the group to continue to outperform the broader sector.”
Revaluation gains tumbled from $306 million to $17 million, with falls in each of industrial, office and retail.
Mirvac’s investment portfolio delivered a 24% uplift in EBIT to $335 million, driven by improved cash collections, additional income from completed developments, like-for-like NOI growth of $9 million, and higher fees from growth in asset and funds under management. Leasing and occupancy improved in all asset classes while retail sales have recovered to pre-COVID levels.
In its commercial and mixed-use portfolio, its LIV Munro build-to-rent project in Melbourne reached completion during the period, and is now 32% leased. Mirvac has been one of the most prominent players in Australia’s build-to-rent sector, and has $740 million of assets under construction currently.
For Lloyd-Hurwitz, the results were her last to be presented as CEO and managing director before Hanan takes on the role at the beginning of March.
“It has been a remarkable decade for Mirvac, during which the team has driven a deep-seated transformation. Over the past 10 years, we have delivered $6 billion of commercial assets, $14.8 billion of residential dwellings, and grown our third-party capital to approximately $18 billion,” Lloyd-Hurwitz said.
“I leave the group in the very capable hands of Campbell and the rest of the executive leadership team, and I have no doubt that they will do an outstanding job driving this next phase of Mirvac’s next evolution.”
