Mirvac Group · ASX:MGR
Mirvac — FY2016 Earnings Presentation
44 slides from Mirvac's earnings presentation, Aug 16, 2016
Slide 1: FY16 Additional Information
INDUSTRIAL RESIDENTIAL 1 6 AU G U S T 2 0 1 6 FY16 Additional Information OFFICE RETAIL EVERYTHING’S connected
Slide 2: Contents
Contents Financial Retail 03 FY16 operating to statutory profit reconciliation 23 Retail: portfolio details 04 FY15 operating to statutory profit reconciliation 24 Retail: comparable sales by category 05 FY16 movement by segment 25 Retail: lease expiry profile and top 10 tenants 06 FFO and AFFO base
Slide 3: Financial
FINANCIAL MIRVAC ADDITIONAL INFORMATION 16 AUGUST 2016 02
Slide 4: FY16 operating to statutory profit reconciliation
FY16 operating to statutory profit reconciliation Corporate Office & Industrial Retail Residential & other Total Full year ended 30 June 2016 $m $m $m $m $m Property net operating income (NOI) 331 125 — 16 472 Development EBIT 33 — 209 — 242 Asset & funds management EBIT 9 3 — 1 13 Management & admi
Slide 5: FY15 operating to statutory profit reconciliation
FY15 operating to statutory profit reconciliation Corporate Office & Industrial Retail Residential & other Total Full year ended 30 June 2015 $m $m $m $m $m Property net operating income (NOI) 350 125 — 15 490 Development EBIT 52 — 142 — 194 Asset & funds management EBIT 1 2 — 1 4 Management & admin
Slide 6: FY16 movement by segment
FY16 movement by segment Operating EBIT by segment: FY15 to FY16 — Office and Industrial EBIT impacted by the full $700m year impact of FY15 disposals — Retail contribution slightly up on FY15 reflecting operating model review initiatives 650 — Residential EBIT significantly up, reflecting $66m $640
Slide 7: FFO and AFFO based on PCA guidelines
FFO and AFFO based on PCA guidelines FY16 $m Operating profit (before specific non-cash and signification items) 1 482 Including: Security based payments expense (10) Excluding: Lease amortisation expense 2 28 Funds From Operations (FFO) 3 500 Maintenance capex (53) Incentives — cash and fit-out (21
Slide 8: FY16 group management expense ratio (MER)
FY16 group management expense ratio (MER) Office & Industrial Retail Group Full year ended 30 June 2016 $m $m $m Management & administration expenses 15 11 87 Investment properties (Inc. IPUC & OOP) 4,721 2,663 7,384 Indirect investment (JVA’s etc) 564 6 1,027 Inventories 121 2 1,598 Group balance s
Slide 9: Finance costs by segment
Finance costs by segment Office & Corporate Industrial Retail Residential & other Group FY16 finance costs $m $m $m $m $m Interest expense net of impairment 10 2 59 70 140 Capitalised interest (10) (2) (38) — (49) COGS interest net of provision release 3 — 40 — 43 Borrowing costs amortised — — — 3 3
Slide 10: Employee benefits and other expenses
Employee benefits and other expenses FY16 FY15 $m $m Office & Industrial 31 32 Retail 27 30 Residential 54 56 Corporate & other 48 47 Total operating employee benefits and other expenses 160 165 Security based payments 10 6 Restructuring cost 4 7 Total statutory employee benefits and other expenses
Slide 11: Debt and hedging profile
Debt and hedging profile FY16 hedging and fixed interest profile as at 30 June 2016 2 Issue / source Maturity date Facility limit $m Drawn amount $m $2,000m 4.6% MTN IV Sep 2016 225 225 USPP 1 Nov 2016 379 379 1,500 4.2 Bank facilities Sep 2017 500 37 4.20% MTN V Dec 2017 200 200 1,000 3.8 Bank faci
Slide 12: Liquidity profile
Liquidity profile Facility limit Drawn amount Available liquidity As at 30 June 2016 $m $m $m Facilities due within 12 months 1 604 604 — Facilities due post 12 months 1 2,936 2,103 833 Total 3,540 2,707 833 Cash on hand 354 Total Liquidity 1,187 Less facilities maturing < 12 months 1 (604) Funding
Slide 13: NTA and securities on issue reconciliation
NTA and securities on issue reconciliation Net tangible assets $m $ per security As at 1 July 2015 6,423 1.74 Operating profit for the year 482 0.13 Net gain on fair value of investment properties and IPUC 497 0.13 Net gain on fair value of investment properties included in equity accounted profit 1
Slide 14: Investment portfolio: acquisitions and disposals
Investment portfolio: acquisitions and disposals Acquisition price Acquisitions FY16 State Sector $m Settlement date Toombul Shopping Centre, Nundah QLD Retail 233 1 June 2016 Innovation Centre & Carpark, Australian Technology Park NSW Office 81 April 2016 26-38 Harcourt Road, Altona VIC Industrial
Slide 15: Invested capital
Invested capital OFFICE: 56% Apartments: 55% PASSIVE ACTIVE RESIDENTIAL INVESTED INVESTED RETAIL: 33% CAPITAL CAPITAL 93% Masterplanned communities: 38% INDUSTRIAL: 9% $8,044m $1,751m COMMERCIAL Office: 4% OTHER: 2% 82% 18% 7% Industrial: 3% Active invested capital 1 100% Commercial 7% WA 11% Provis
Slide 16: FY16 return on invested capital
FY16 return on invested capital (based on new segment structure) Office & Industrial Retail Residential Group $m $m $m $m Profit for the year attributable to stapled securityholders 796 243 135 1,033 Add back: Development interest costs and other net interest costs 3 — 61 122 Net loss on foreign exc
Slide 17: FY16 development ROIC
FY16 development ROIC (based on previous structure) Items excluded from Fund through Total invested development Development adjustments Deferred land development capital invested capital eliminations (deferred revenue) adjustments at 30 June 2016 Reconciliation to development invested capital $m $m
Slide 18: Office & Industrial
OFFICE & INDUSTRIAL MIRVAC ADDITIONAL INFORMATION 16 AUGUST 2016 17
Slide 19: Office: portfolio details
Office: portfolio details Office geographic diversity 5 Office diversity by grade 5 FY16 FY15 No. of properties 1 28 27 NLA 613,326 sqm 691,202 sqm Portfolio value 2 $4,402m $4,108m WACR 6.23% 7.01% Property NOI $285m $309m Like-for-like NOI growth 0.8% 2.6% Maintenance capex 3 $28m $26m Tenant ince
Slide 20: Office: lease expiry profile and top 10 tenants
Office: lease expiry profile and top 10 tenants Office lease expiry profile 1 50% 49% Office top 10 tenants 2 Percentage 3 S&P Rating 1 Government 15% AAA 40 2 Westpac Bank Corporation 8% AA- 3 Fairfax Media Limited 5% BB+ 4 EY 4% — 30 5 AGL Energy 3% — 6 IBM Australia Limited 2% AA- 20 7 Sportsbet
Slide 21: Industrial: portfolio details
Industrial: portfolio details Industrial lease expiry profile 2 FY16 FY15 60% 57% No. of properties 1 16 15 50 NLA 432,265 sqm 393,416 sqm 40 Portfolio value 1 $729m $661m WACR 6.56% 7.02% 30 Property NOI $46m $41m 20 Like-for-like NOI growth 3.2% 3.4% 15% 10 8% 11% Maintenance capex $1m $2m 6% 3% T
Slide 22: Office & Industrial: developments
Office & Industrial: developments Estimated Estimated Estimated Estimated project timing value on cost to yield on Committed pipeline Sector Area Ownership % pre-leased 2 completion3 complete 4 Cost 5 FY17 FY18 FY19 FY20+ Internal developments 2 Riverside Quay, VIC Office 21,000 sqm 50% 100% $212m $
Slide 23: Retail
RETAIL MIRVAC ADDITIONAL INFORMATION 16 AUGUST 2016 22
Slide 24: Retail: portfolio details
Retail: portfolio details FY16 FY15 Retail diversity by grade 4 No. of properties 1 15 14 Regional 42% GLA 2 373,210 sqm 306,719 sqm Sub Regional 22% Portfolio value 2 $2,663m $2,140m CBD Retail 17% WACR 6.10% 6.49% Outlet 13% Property NOI $125m $125m Neighbourhood 6% Like-for-like NOI growth 2.4% 2
Slide 25: Retail: comparable sales by category
Retail: comparable sales by category FY16 FY15 FY16 FY15 FY16 Comparable Comparable FY16 Comparable Comparable Retail sales by category Total MAT MAT growth 1 MAT growth Specialty sales by category Total MAT MAT growth MAT growth Supermarkets $944m 3.9% 7.3% Food Retail $124m 5.4% 3.0% Discount depa
Slide 26: Retail: lease expiry profile and top 10 tenants
Retail: lease expiry profile and top 10 tenants Retail lease expiry profile – by income 40% Retail top 10 tenants Percentage 1 S&P Rating 33% 1 Wesfarmers Limited 10.4% A- 30 2 Woolworths Limited 4.4% BBB 20 18% 3 Aldi Food Stores 1.7% — 12% 13% 12% 12% 10 4 Cotton On Group 1.6% — <1% 5 Events Cinem
Slide 27: Retail: developments
Retail: developments Estimated Estimated Estimated project timing Development Incremental cost to yield Committed pipeline area GLA Ownership % Pre-leased complete 1 on cost 1H17 2H17 FY18+ Existing balance sheet assets Broadway Sydney, Broadway, NSW 8,500 sqm 3,300 sqm 50% 100% $16m ~6.5% Greenwood
Slide 28: Residential
RESIDENTIAL MIRVAC ADDITIONAL INFORMATION 16 AUGUST 2016 27
Slide 29: Residential: market overview
Residential: market overview SYDNEY MIRVAC PIPELINE 1 > Momentum eased but remaining solid, supported by strong economy — Sydney accounting for 4 in every 5 new residents to NSW, highest in over 10 years 33% NSW — Sydney unemployment rate virtually ‘full’ – averaging 5.0% for FY16; total NSW unemplo
Slide 30: Residential: pipeline positioning
Residential: pipeline positioning 31,981 lots under control. Share of expected future revenue by product 1 Lots under control by product Lots under control by price point Masterplanned communities: 50% Masterplanned communities: 77% Masterplanned communities Apartments: 50% Apartments: 23% < $250k:
Slide 31: Residential: masterplanned communities pipeline
Residential: masterplanned communities pipeline Expected settlement profile (lots) Masterplanned communities project Major projects State Stage Ownership Type 1H17 2H17 FY18 FY19 FY20 FY21 pipeline analysis Alex Avenue NSW Multiple stages 100% House & Land 4 16 Greystone Terraces QLD Multiple stages
Slide 32: Residential: apartments pipeline
Residential: apartments pipeline Expected settlement profile (lots) Major projects State Stage Pre-sales Ownership 1H17 2H17 FY18 FY19 FY20 FY21 Apartment project pipeline analysis Harold Park NSW Precinct 4A 100% 100% 49 Harold Park NSW Precinct 4B 100% 100% 10 % of total FY17 expected Unison Water
Slide 33: Residential: pre-sales detail
Residential: pre-sales detail Reconciliation of movement in exchanged Pre-sales by geography 1 Pre-sales by type 1 pre-sales contracts to FY16 NSW: 41% Apartments: 76% $3,000m $1,892m $2,858m VIC: 39% Masterplanned communities: 24% QLD: 16% 2,000 $1,987m ($1,021m) WA: 4% 1,000 0 FY15 Settled Net Sal
Slide 34: Residential: FY16 acquisitions
Residential: FY16 acquisitions Estimated settlement Project State Ownership No. of lots 1 Product type commencement 1 Ascot Green (Eagle Farm) QLD PDA 1,172 Apartments FY18 Marrickville NSW 100% 2 223 Apartments FY19 Piara Waters WA 100% 436 MPC FY18 West Swan (Additional lots) WA 100% 89 MPC FY17 T
Slide 35: Residential: FY17 expected major releases
Residential: FY17 expected major releases FY17 expected major releases 1 State Type Approximate lots 1 Woodlea VIC MPC 520 St Leonards Square NSW Apartments 310 Gainsborough Greens QLD MPC 214 Marrickville NSW Apartments 223 Brighton Lakes NSW MPC 185 Tullamore VIC MPC 180 Googong NSW MPC 176 Sydney
Slide 36: Residential: FY16 settlements
Residential: FY16 settlements 2,824 lot settlements consisting of: Apartments Masterplanned Communities Total FY16 settlements by lots Lots % Lots % Lots % NSW 520 18% 817 29% 1,337 47% QLD 4 — 324 12% 328 12% VIC 21 1% 792 28% 813 29% WA 5 — 341 12% 346 12% Total 550 19% 2,274 81% 2,824 100% FY16 l
Slide 37: Residential: FY16 settlements detail
Residential: FY16 settlements detail FY16 average sales price FY16 major settlements Product type Ownership Lots $ Googong, NSW Masterplanned Communities 50% 525 House $650k Land $274k Harold Park, NSW Apartments 100% 520 Apartments $1,001k Woodlea, VIC Masterplanned Communities 50% 415 Harcrest, VI
Slide 38: Residential: EBIT reconciliation and gross development margin
Residential: EBIT reconciliation and gross development margin Residential gross development margins FY16 residential EBIT reconciliation $m 30% Development revenue 1,079 Management fee revenue 12 25 24.3% 24.4% Total development revenue 1,091 23.6% JV and other revenue 28 20 Total operating revenue
Slide 39: Residential: provisions — roll off
Residential: provisions — roll off 1 > $27m in provision utilisation during FY16 > Remaining residential inventory provision balance of $132m at 30 Jun 16 Expected provision release profile Expected closing provision balance roll off $80m $200m 60 150 40 100 20 50 0 0 FY17 FY18 FY19 FY20 FY17 FY18 F
Slide 40: Calendar
CALENDAR MIRVAC ADDITIONAL INFORMATION 16 AUGUST 2016 39
Slide 41: 1H17 Calendar
1H17 Calendar Event Location Date1 Private roadshow Sydney 17-19 August 2016 Private roadshow Melbourne 22-23 August 2016 Private roadshow Asia 29 August — 2 September 2016 Citibank’s 8th Annual Australian and New Zealand Investment Conference Sydney 18 October 2016 1Q17 Update Sydney 25 October 201
Slide 42: Glossary
Glossary Term Meaning Term Meaning A-REIT Australian Real Estate Investment Trust LPT Listed Property Trust AFFO Adjusted Funds from Operations LTIFR Lost Time Injury Frequency Rate BPS Basis Points MAT Moving Annual Turnover CBD Central Business District MGR Mirvac Group ASX code COGS Cost of Goods
Slide 43: Important Notice
Important Notice Mirvac Group comprises Mirvac Limited (ABN 92 003 280 699) and Mirvac Property Trust (ARSN 086 780 An investment in Mirvac stapled securities is subject to investment and other known and unknown risks, 645). This presentation (“Presentation”) has been prepared by Mirvac Limited and
Slide 44: Thank you
INDUSTRIAL RESIDENTIAL THANK YOU OFFICE RETAIL EVERYTHING’S connected