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Mirvac (ASX:MGR) still enjoying the fruits of a flourishing market

Market News, Real Estate
ASX:MGR      MCAP $8.345B
12 August 2021 11:30 (AEDT)

Artist's impression of Mirvac's Liv Aston build-to-rent development in Melbourne. Source: Mirvac

The diversified property developer Mirvac Group’s (MGR) is still benefiting from Australia’s booming housing market, but not enough to prevent a slight drop in operational earnings.

Mirvac reported a statutory profit of $901 million, up 61 per cent, however, operating profit of $550 million was down nine per cent and operating earnings before interest and taxes slid 12 per cent to $704 million.

Mirvac CEO and managing director Susan Lloyd-Hurwitz said the company saw momentum accelerate across the business in FY21.

“We secured the highest number of residential sales since FY16, made key disposals well above book value, and our outperforming investment portfolio achieved significant property revaluation gains and strong cash collection rates,” she said.

“The group has shown great resilience in the face of the ongoing uncertainty and disruption caused by the pandemic and we are currently well placed to continue to build towards recovery in FY22.”

Investment property revaluations increased by $274 million, supporting the company’s bottom line, owing to robust demand for industrial property (13.1 per cent net increase) and long weighted average lease expiry office assets (3.8 per cent net increase).

“In its inaugural year, our Integrated Investment Portfolio delivered an EBIT of $576million, a 6 per cent increase on FY20,” Ms Lloyd-Hurwitz said.

“This result was driven by NOI growth from newly completed office asset developments, improved cash collections and lower COVID-19 rental relief, particularly in retail.”

Mirvac achieved earnings per share of 14 cents, exceeding earnings guidance of greater than 13.7 cents.

The group also enjoyed 3375 residential sales, extended its development pipeline to roughly $28 billion across its diversified portfolio and reduced its carbon footprint by 80 per cent across its investment portfolio.

LIV Indigo at Sydney Olympic Park, the group’s first build-to-rent project, is now 80 per cent leased, and its build-to-rent pipeline has grown to 1860 units with an anticipated ultimate value of $1.4 billion across four projects.

Mirvac has set operational earnings per share projection of at least 15.0 cents per stapled security (cpss) for FY22, representing a 7.1 per cent rise in earnings, and distribution guidance of 10.2cpss, representing a three per cent increase in dividends per share.

“We are currently in a good position to harness the strong momentum across the Group to continue into FY22 — our 50th anniversary year — when we will be ideally placed to meet the changing demands of our customers, as we continue to reimagine urban life,” Ms Lloyd-Hurwitz

Shares in Mirvac are down 0.83 per cent, sitting at $2.98 at 11:51 am AEST.

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