This article is from the Australian Property Journal archive
MIRVAC has made a key Sydney retail play just one day after announcing its strong full-year results, acquiring the balance of the East Village shopping centre in Zetland and the proposed South Village Shopping Centre in Kirrawee.
Mirvac will pay $155.3 million for the remaining 50.1% interest of the East Village shopping centre after it acquired 49.9% in July last year.
The South Village shopping centre agreement will see Mirvac take the remaining half-stake from Payce Consolidated after it purchased its currently owned 50% in October. Payce will develop the project and Mirvac will pay an amount based on a 6.0% cap rate of the leased net income on completion.
Mirvac will also provide development leasing services and retain management rights leasing services after completion.
Mirvac CEO Susan Lloyd-Hurwitz said the off-market transactions reflected the group’s ambition to increase its urban footprint in catchments with strong market fundamentals.
“East Village in particular has proven to be an exceptional asset, delivering sales productivity of $14,950 per sqm after less than three years of trade, and ranking No.1 in the Shopping Centre News’ Little Guns Awards in its first year of entry. Moving annual turnover is also growing strongly at approximately 8% per annum.
“Meanwhile, South Village shopping centre is set to benefit from its location in an undersupplied, densifying and affluent trade area, with household incomes well above the Australian average,” she added.
Mirvac’s retail business has a portfolio occupancy of 99.4% and leasing spreads of 3.2%, ahead of the group’s target of more than 2%. The portfolio achieved total sales productivity of $10,048 per sqm in the 2017 financial year, in line with its target, and increased specialty sales productivity to $9,864 per sqm.
It also recorded comparable MAT sales growth of 4.1% and comparable specialty sales growth of 5.6%.
“Our focus on urban markets with strong fundamentals ensured we realised all of our FY17 targets, including occupancy of greater than 99%; leasing spreads of 2%; EBIT growth of 25% or more; and sales productivity of over $10,000 per sqm,” Lloyd-Hurwitz said.
The announcement came the day after the diversified group posted strong growth in operating profit after tax to $537 million, and adjusted funds to $487 million. This was largely owing to its residential business, which posted a 54% jump in earnings from $192 million to $302 million, but its retail portfolio played its part with a 33% increase to $156 million.
Australian Property Journal
