This article is from the Australian Property Journal archive
PROPERTY devaluations have resulted in a statutory loss of $201 million for Mirvac Group (ASX: MGR) for 1H24.
Mirvac’s interim result for the six months ended 31 December 2023 saw an operating profit of $252 million, down 17% on 1H23’s $305 million, representing an operating EPS of 6.4cpss.
With operating earnings before interest and tax (EBIT) of $372 million, down from $387 million in 1H23.
Mirvac posted a half-year distribution of $178 million, representing DPS of 4.5cpss.
“We delivered a solid first-half result, executing our key strategic objectives,” said Campbell Hanan, group CEO and managing director at Mirvac.
“This included progressing our $1.2bn non-core asset sales program, expanding into the land lease sector through the acquisition of Serenitas, and increasing our industrial exposure with the completion of Switchyard in Sydney.”
The group executed circa $480 million in non-core asset sales. With net tangible assets were at $2.56, down from 1H23’s $2.79.
Mirvac maintained high occupancy of 96.9% in its investment portfolio and leased circa 90,000sqm of net lettable area across the office, industrial and retail sectors.
“Our high-quality investment portfolio remains resilient, with a particularly strong period of leasing, high occupancy of 97 per cent, continued like-for-like NOI growth, and positive momentum across our build to rent assets, with LIV Munro 92 per cent leased at the end of January and LIV Indigo 98 per cent occupied.”
Mirvac saw investment property devaluations of $396 million over the period, with 198 leasing deals completed across circa 90,000sqm.
With leasing particularly strong across the office portfolio, with circa 36,000sqm leased during the period and a further 32,500sqm under heads of agreement.
The group also settled 1,131 residential lots, with defaults remaining low at 0.7%. While also restocking its residential pipeline with circa 8,400 lots, securing circa 7,200 lots on capital efficient terms in Queensland and circa 1,200 lots in Mulgoa, NSW.
“Despite subdued sales activity over the period, we are encouraged by underlying residential market fundamentals and high levels of enquiry at our projects, particularly from upgraders and right-sizers – who make up the majority of our customer base and are attracted to Mirvac’s track record for delivery and reputation for quality,” added Hanan.
Gearing was at 27.2%, sitting within the group’s target range of 20 to 30%, while weighted average debt maturity of 4.7 years, with no debt maturing in FY24 and 73% of debt hedged.
Available liquidity was at circa $1.1 billion in cash and committed undrawn bank facilities.
Average borrowing costs increased to 5.5% as at 31 December 2023, up from 5.4% in FY23, with market total debt portfolio now comprised of 43% green loans.
Mirvac reaffirmed a guidance of operating earnings per security of 14.0-14.3 cents in FY24 and distribution per security of at least 10.5 cents.
“Signs that interest rates are at or near peak level and falling inflation are positive, and we are well positioned to capitalise on a market recovery across all of our operating segments. Our modern investment portfolio, with low capital expenditure, is well located and will continue to deliver a resilient and stable passive income stream over time,” concluded Hanan.
