Mirvac shopping centres lag as recovery continues
Property developer Mirvac Group has become the latest residential player to report strong home sales on the back of government stimulus, as the company also makes a push into the build-to-rent sector.
But investors sold down the stock on the back of worries that its more up-market shopping centres would take longer than everyday needs centres to recover from the pandemic hit.
Mirvac was off by 2.4% to $2.22 in midmorning trade and analysts said sales had softened in the company’s retail portfolio but a recovery was appearing.
Mirvac chief executive Susan Lloyd-Hurwitz backed the expansion of federal and state government packages that have lifted listed players, including Stockland, and private developers selling land on estates around the country.
“In addition to existing stimulus from both federal and state governments, recent announcements in the federal budget to assist a further 10,000 homebuyers through the first home loan deposit scheme will continue to support demand. The changes made to include off-the-plan purchases as well as adjustments to qualifying prices are welcome expansions to the original scheme,“ Ms Lloyd-Hurwitz said.
Exchanges were up 40% compared to the previous quarter as 660 lots sold, above pre-COVID-19 volumes, with the increase primarily driven by land projects benefiting from government stimulus as well as apartment projects in Western Australia and Queensland.
The company is targeting a payout ratio of 65-75% of operating earnings in line with its policy to pay up to a maximum of 80 per cent of operating earnings, but did not set guidance.
“It is impossible to predict the length, nature and effects of the ongoing pandemic and as such, Mirvac does not have sufficient certainty to provide earnings and distributions guidance for fiscal 2021,“ Ms Lloyd-Hurwitz said.
But signs are positive, with the residential unit recording a 34% jump in leads in the September quarter and completed 483 settlements, with defaults kept in check at 1.9%.
Mirvac’s build-to-rent ambitions are picking up steam with the company’s first build-to-rent property, LIV Indigo, Sydney Olympic Park with 27 per cent of leases signed and prices ahead of expectations. The developer is also part of the Queensland government’s build-to-rent pilot project at its LIV Newstead proposal in Brisbane.
The company‘s shopping centres are lagging, collecting just 64% of rents, partly due to its focus on CBDs, but 92 per cent of shops are open.
Mirvac was hit by a comparable moving annual turnover sales drop of 7.8% and specialty MAT fall of 15.6 per cent.
The office towers the company owns performed well, with rent collection running at 93% and occupancy at 97.4%.
The Olderfleet building at 477 Collins Street, Melbourne, and The Foundry at South Eveleigh, Sydney, have been finished and leases are due to start early next year. The Locomotive Workshops at South Eveleigh and 80 Ann Street, in Brisbane, are both on track.
The industrial portfolio is running hot with rent collection at 95% and the company received rezoning approval for Elizabeth Enterprise, the 54-hectare industrial estate in Badgerys Creek near the planned Western Sydney Airport.
Macquarie analysts said the uptick in residential sales was the highlight of the quarter and they said the slight moderation in office occupancy was “not a surprise” given current market conditions.
This article originally appeared on www.theaustralian.com.au/property.
