This article is from the Australian Property Journal archive
DESPITE strong residential sales, Mirvac (ASX: MGR) had a rocky start to FY22 with cash collection across the group’s portfolio impacted by Sydney’s lockdown measures.
The group’s cash collection took the sharpest hit, dropping by 10% from the end of FY21 to 88% for Q1. This was largely due to impacts on retail where cash collection was at 71%, while office and industrial remained relatively steady at 97% and 98% respectively.
“There is no doubt the first quarter of FY22 was challenging,” said Susan Lloyd-Hurwitz, CEO and managing director at Mirvac.
“As we expected, government-mandated lockdowns in Sydney and Melbourne have slowed our recovery, with cash collection rates in our integrated investment portfolio down 10% during the quarter, impacted by retail,” said Lloyd-Hurwitz.
Mirvac also saw marginal declines in occupancy by area, falling from 97.4% to 96.8%, with industrial remaining fully occupied, while retail was at 97.8% and office was down to 94.4%.
WALE by income was also down marginally, from 5.6 years to 5.5 years, with industrial and retail at 7.3 years and 3.5 years respectively and office falling from 6.3 years to 6.1 years.
“Nevertheless, Mirvac’s forward momentum continues. We maintained strong sales across our residential business, continued to progress our diversified commercial and mixed use development pipeline, and further expanded our funds under management,” said Lloyd-Hurwitz.
The group transacted 902 residential sales, up from 661 in the previous corresponding period, with pre-sales up to circa $1.3 billion for the quarter, up from $921 million in the pcp.
551 residential lots were also settled, up from 483 in the pcp, with more than 2,500 lot settlements scheduled for FY22.
Across the residential portfolio sales were driven by a significant margin by owner-occupiers, representing 76% of total sales. While investors represented 24% and offshore buyers less than 1%.
“With buoyant market conditions in the residential sector expected to continue, we are on track to launch a number of exciting projects over the course of FY22, which will underpin earnings from FY23 onwards,” said Stuart Penklis, head of residential at Mirvac.
Further, Mirvac completed 61 leasing deals over the quarter, spanning around 23,100sqm in its Integrated Investment Portfolio (IIP).
“Last year, we saw weakened cash collection rates in the retail sector quickly improve once restrictions eased and normalised trading conditions returned,” said Campbell Hanan, head of IIP at Mirvac.
In the retail sector of the IIP, which was most greatly impacted by restrictions over the quarter, foot traffic was down 24%, with 39% of all stores closed.
“While we expect to see a similar recovery in the second half of the financial year, supported by pent up demand for physical retail, we will continue to apply caution until we have more certainty,” said Hanan.
Mirvac reaffirmed its operating EPS guidance of at minimum 15.0cps for FY22 and a distribution guidance of 10.2cps.
