This article is from the Australian Property Journal archive
MIRVAC has flagged a greater involvement on Australia’s build to rent sector, which has offered a promising avenue for diversification of its $9.2 billion portfolio.
A 45% fall in residential pre-sales during the first half saw the group post an interim statutory profit of $396 million, below the $613 million posted in the prior corresponding period.
Its operating profit came in at $276 million, down from $352 million. Full year guidance was offered for operating earnings per share of between 13.1 to 13.5 cents per stapled security, and distribution guidance was 9.6 to 9.8c.
“The emergence of the build to rent sector is gathering pace in Australia. LIV Indigo, Mirvac’s first build to rent property, is now 48% leased and we are gaining valuable insights that will inform the rollout of our growing pipeline,” Mirvac chief executive Susan Loyd-Hurwitz said.
Mirvac expanded its build to rent development portfolio during the half with the addition of LIV Newstead in Brisbane, taking its future portfolio to approximately 2,200 units across five sites with an estimated total end value of $1.6 billion.
It has just gained approval for a $1 billion development in Melbourne that will include a 32-storey build-to-rent tower, and Mirvac continues to invest in Melbourne’s emerging BTR sector, and is moving forward with a northern suburbs project in partnership with Milieu.
Its first Melbourne development in the sector will be built opposite the Queen Victoria Market.
Mirvac settled 1,076 residential lots and exchanged 1,365 lots during the half, and anticipates more than 2,200 residential settlements for the full year. Its pipeline is 27,800 lots.
“Our residential division continues to benefit from current government housing stimulus measures which have boosted residential housing demand and the economy,” Lloyd-Hurwitz said.
Defaults were 3.5% due to market factors exacerbated by COVID-19.
“Industrial and build to rent are both important growth areas for our business.
“COVID-19 has accelerated the growth in e-commerce which is in turn driving demand for high quality logistics facilities in Sydney. Our Industrial team remains focused on progressing our strategically located sites through the planning process,” she added.
The industrial portfolio saw 100% of rent collected, high occupancy of 99.7% with a weighted average lease expiry of 7.3 years, and like for like net operating income growth of 3.3%, an increase from 3.1%.
Numbers across the office and retail portfolios were softer. Office rent collection rate was 97%, with occupancy at 96%, a WALE of 6.7 years and like-for-like net operating income growth of 0.5%, including COVID-19 impacts. This was down from 5.6% 12 months earlier.
Across its retail assets, rent collection was at just 84% as shopping centre foot traffic suffered from travel and trading restrictions.
Occupancy was 98.4%, but store openings were dragged down by CBD centres to 95 per cent – excluding CBD assets, which other landlords have found to present more troubles than suburban malls, this would have been 98%.
Lloyd-Hurwitz said Mirvac’s portfolio of urban shopping centres is well positioned for the future because of its focus on higher income, higher growth and densely populated catchment areas.
Mirvac’s operating cash flow increased from $354 million to $450 million. Net tangible assets per stapled security increased from $2.54 to $2.585.
Gearing is 21.4%, at the lower end of the group’s target range of 20 to 30%.
