Office, industrial boosts Mirvac to fourth year of $1b profit
The rising tide of strong office and industrial markets has lifted diversified developer Mirvac’s profit above $1 billion for the fourth consecutive year, allowing the fund manager to deliver at the top end of its guidance.
The developer, now the second largest office landlord in the country, delivered a statutory profit of $1.02 billion for the year ending 30 June.
Mirvac’s underlying profit, the figure on which it calculates distributions, was $631 million, up 4 per cent from $608 million the previous financial year, allowing it to declare earnings per security of 17.1￠.
“Our robust capital position and the acceleration of passive earnings growth means we are well placed to continue to generate strong returns for our securityholders,” Mirvac’s chief executive Susan Lloyd-Hurwitz said.
The result was driven by a strong performance in the group’s office and industrial business.
Office revaluations provided an uplift of $392 million, a rise of 6.3 per cent over the previous book value, supported by the concentration of its portfolio in premium towers in Sydney and Melbourne, both of which are seeing record low vacancy rates.
“We are now Australia’s second largest office manager, with $15 billion of assets under management. Our young, low capex portfolio attracts high calibre customers who typically prefer long lease periods,” Ms Lloyd-Hurwitz said.
The group’s warehouses are 99.7 per cent full and have a weighted average lease expiry of 7.7 years. Around 91,700 square metres of industrial space was leased over the year.
Like many other developers around the country, Mirvac faces challenging times in its shopping centre and residential developments.
The group maintained occupancy in its retail division around 99.2 per cent and moving annual turnover - the industry’s key metric for determining the health of sales - grew 2.7 per cent. Specialty sales - which tracks the health of small retailers - were up by 2 per cent, it said.
Defaults in Mirvac’s new house and land estates on the outskirts of Sydney, Melbourne and Brisbane stayed under 2 per cent.
"Despite a challenging market, we have seen sustained sales throughout the financial year, and we achieved our settlement target and maintained our default rate at less than 2 per cent," Ms Lloyd-Hurwitz said.
Full-year distributions increased 5 per cent to $440 million.
The group increased its earnings per security guidance range for 2020 to between 17.6￠ to 17.8￠, an increase of 3 to 4 per cent, and upped its distribution guidance to 12.2￠ per security, a rise of 5 per cent.