This article is from the Australian Property Journal archive
STRONG residential sales and improving rent collection rates have prompted Mirvac to upgrade its full year earnings and distributions guidance, as the federal government’s HomeBuilder grant and incentives spurred activity in the detached housing market.
The diversified group is now expecting “at least” 13.7 cents per security in earnings, up from 13.1 to 13.5 cps, while distributions guidance was upgraded from 9.9 cps, from 9.6 to 9.8 cps, reflecting the improved outlook for the business.
The developer expects to “comfortably” exceed guidance of over 2,200 lot settlements in the full year, with 1,791 tallied so far.
“During the quarter, our business has performed well and has strong momentum leading into the final quarter with rent collection rates improving, and residential settlements and sales ahead of expectations,” Mirvac’s CEO & managing director, Susan Lloyd-Hurwitz said.
Mirvac’s share price jumped 3.125% over the day in response to the announcement, to $2.64.
The 2,282 lot sales recorded in the financial year to date is 67% higher on the previous corresponding period. A further 550 lots are on deposit, putting it on track to match the highest level of sales since FY17.
The guidance accounts for the return of JobKeeper payments and the expected delay of the sale of 50% of the Locomotive Workshops in Sydney’s South Eveleigh to occur early in the first quarter of the new financial year.
Its LIV Indigo build-to-rent project at Sydney Olympic Park is now 63 per cent leased and its $1.4 billion development pipeline of about 1,900 build-to-rent apartments remains on track.
“We continue to focus on assessing new site opportunities to meet our target of extending our portfolio from its current pipeline size of 2,200 units to 5,000 units in the medium term,” Lloyd-Hurwitz said. Its projects in the fledgling sector include a Newstead development as part of a Queensland government pilot project, while it has gained approval for a $1 billion development in Melbourne that will include a 32-storey build-to-rent tower, and is moving forward with a northern suburbs project in partnership with Milieu.
Mirvac is seeing domestic owner occupiers continue to drive activity in the residential sector, with lending volumes and sales increasing during the quarter, although investors have begun to return to the market – primarily focused on masterplanned communities, while demand is also gathering pace in the apartment markets, Mirvac said.
“Demand for quality built form continues to accelerate across both middle ring and inner ring markets as the established housing market experiences significant price growth.
Its $15 billion office portfolio occupancy is 95.3% with a weighted average lease expiry of 6.5 years. Rent collection rate is 98% for the nine months to the end of March.
“Several lead indicators of office demand have now turned positive including elevated business confidence for the financial and professional services sectors and higher levels of job vacancies,” Lloyd-Hurwitz said.
Industrial occupancy is 99.7% with a WALE of 7.3 years and the group has collected all rent.
Moving annual turnover across its $3.1 billion retail portfolio fell 10.4% during the quarter.
“Office worker, student and tourist consumer behaviours continue to be impacted by government restrictions, but the level of underperformance has moderated in assets that rely heavily on these customer segment,” it said.
Mirvac has a $12 billion commercial development pipeline that includes the Locomotive Workshops and the 80 Ann Street office tower in Brisbane, which is now 80% leased after a new heads of agreement spanning 4,000 sqm was secured.
