Mirvac Group · ASX:MGR
Mirvac — H1 2008 Earnings Presentation
31 slides from Mirvac's earnings presentation, Feb 12, 2008
Slide 1: 1H08 Results Presentation
1H08 Results Presentation 12 February 2008 1H08 Results Presentation Agenda > Market & group overview > Financial results > Capital management > Divisional performance > Outlook & strategy 1H08 Results Presentation Page 2 1
Slide 2: Market conditions; Mirvac platform delivers stability
Market conditions > Repricing of risk: fallout from US subprime shock to continue through 2008: - Australia well insulated but not immune from impact - Flight to quality and liquidity will impact real estate; with implications for secondary grade assets - Tighter credit conditions in 2008 for busine
Slide 3: Operational highlights
Operational highlights > Mirvac Property Trust continued to improve portfolio quality via $126m of acquisitions and $306m1 of disposals > External Funds Management: - Acquired remaining 50% of Mirvac PFA and Mirvac Domaine - MWRDP acquired Austral Brickworks site for approx. $100m (post 31 Dec 07) -
Slide 4: Financial Results: Headline financial result
Justin Mitchell Financial Results Diversified platform delivering strong earnings 1H08 Results Presentation Headline financial result 1H08 1H07 Change Revenue $1,228.5m $905.5m 35.7% NPAT $388.4m $208.3m 86.4% EPS 38.65c 22.96c 68.3% NTA1 $4.02 $3.80 5.8% 1. NTA based on issued securities excluding
Slide 5: Strong operating performance; Funds Management
Strong operating performance 1. Includes gain on assets classified as held for sale relating to 101 Miller Street and Greenwood Plaza totalling $48.6m which is conditional as at 31 Dec 07. 2. Operating profit after tax adjusting for specific non-cash items. 1H08 Results Presentation Page 9 Funds Man
Slide 6: Development results
Development 1H08 1H07 Change Net profit before tax $51.0m $49.3m 3.4% Operating profit before tax $51.4m $49.3m 4.3% EBIT1 $87.0m $82.4m 5.5% Settlements 1,072 lots 799 lots Exchanged contracts $1.05bn $816.4m Gross margin on revenue (residential)2 19.6% Operating contribution 20.1% 20.2% 1. EBIT ex
Slide 7: Capital management; Debt maturity profile
Capital management Post Capital Dec 07 Jun 07 Raising S&P rating BBB BBB BBB Total interest bearing debt $2,283m $2,583m $2,553m % hedged 94.4% 83.4% 80.5% Wtd avg hedged maturity 4.5 yrs 4.5 yrs 4.5 yrs Avg borrowing rate1 6.75% 6.89% 6.79% Gearing2 29.8% 33.8% 35.3% See-through gearing 33.0% 36.7%
Slide 8: Funds Management: Key achievements
Nick Collishaw Funds Management 1H08 Results Presentation Key achievements Internal Management > Completed 726 lease reviews across the portfolio and executed 174 leasing transactions over 115,546sqm of space > Improved and continued to de-risk the portfolio via $306m1 of asset sales and $126m of ac
Slide 9: Internal Funds Management: Quality + Stability = Total Return
1. Funds under management before adjusting for joint venture interests. 1H08 Results Presentation Page 17 Internal Funds Management Quality + Stability = Total Return 1H08 Results Presentation 9
Slide 10: Mirvac Property Trust valuation
Mirvac Property Trust valuation 1. Excluding 101 Miller Street as under full refurbishment. 2. 12.1% of portfolio book value represented by hotel, carparks and co-investments. 1H08 Results Presentation Page 19 Stable earnings platform Mirvac Property Trust total portfolio value. 1H08 Results Present
Slide 11: Sector diversification; Internal Funds Management case study
Sector diversification1 1. By book value. Excludes development. 2. Other includes hotels and parking. 1H08 Results Presentation Page 21 Internal Funds Management case study Realising gains and securing new income > Strategy: Manage for a total return, provide predictable income and maximise capital
Slide 12: MPT development pipeline; Suite of entities
MPT development pipeline No. of Area sqm Book value $m projects Commercial 0 0 0 Industrial 1 16,650 26 Retail 1 20,932 47 Completions 2 37,582 731 Commercial 2 56,872 173 Industrial 3 55,271 93 Retail 2 30,374 81 Current 7 142,517 3462 Commercial 1 37,000 260 Industrial 3 41,575 110 Retail 5 79,551
Slide 13: External funds; External Funds Management case study
External funds 1. Funds under management before adjusting for joint venture interests. 1H08 Results Presentation Page 25 External Funds Management case study Utilising Mirvac’s integrated model to deliver annuity income growth > Mirvac Wholesale Residential Partnership, $300m equity commitment – Thr
Slide 14: Funds Management outlook
Funds Management outlook > Expand Mirvac’s offer via: – Expansion of strategic partnerships – Maintaining focus on retail investor needs – Creating new wholesale investment vehicles > Use Mirvac’s intellectual capital to enhance investment returns 1H08 Results Presentation Page 27 Adrian Fini Develo
Slide 15: Development key achievements
Key achievements > $1.05bn exchanged contracts1 - Tennyson Reach, QLD $203m - Beachside Leighton, WA $192m - Peninsula Burswood, WA $146m - The Point, Mandurah, WA $137m - Waverley Park, VIC $60m - Rhodes, NSW $24m > 1,072 residential settlements > Continued focus on non-residential development pipe
Slide 16: Lot reconciliation; Residential activities under control
Lot reconciliation 1H08 Results Presentation Page 31 Residential activities under control 1H08 Results Presentation Page 32 16
Slide 17: Residential and non-residential development pipeline
Residential pipeline- 29,067 lots under control 1H08 Results Presentation Page 33 Non-residential development pipeline1 No of projects Project value Commercial 9 $613m Industrial 11 $734m Retail 5 $266m Current2 25 $1,612m Commercial 1 $260m Industrial 3 $110m Retail 5 $225m Future 9 $595m Total cur
Slide 18: Divisional outlook
Divisional outlook > Flexible residential development pipeline - Adapt product mix to meet market demand - Control stage releases to meet market cycle > $1.05bn1 in exchanged contracts, securing future income > Pursuing acquisitions across all sectors, diversifying the pipeline > Continue to focus o
Slide 19: The economy; Residential market outlook
The economy > Economic outlook remains positive - Global and domestic growth to moderate in FY08 - Inflation pressure a key risk factor - Labour markets extremely tight – recruitment strategies essential - Business investment and construction activity will remain strong - Rising interest rates will
Slide 20: Group strategy; Reaffirming FY08 guidance
Group strategy > Prudently manage capital - Strong balance sheet and global partners > Leverage integrated platform - Across Funds Management and Development > Strong team culture - Extensive experience working collaboratively 1H08 Results Presentation Page 39 Reaffirming FY08 guidance 1H08 Results
Slide 21: Annexures
1H08 Results Presentation Annexures 1H08 Results Presentation 21
Slide 22: 1H08 and 1H07 AIFRS reconciliation
1H08 AIFRS reconciliation $m INT FM EX FM HOT DEV CORP TOTAL NPAT (AIFRS) 383.9 1.8 7.5 51.0 (55.9) 388.4 Investment property revaluations (179.1) - - - 35.7 (143.4) Unrealised gains on financial instruments (14.2) - - - (39.7) (53.8) Expensing share based payments - - - - 4.6 4.6 Depreciating owner
Slide 23: Hedging profile; Interest reconciliation
Hedging profile Weighted average: 4.5 Swaps Fixed 1H08 Results Presentation Page 45 Interest reconciliation $m 1HY08 1HY07 Net borrowing costs 87.6 80.6 Less: capitalised interest (34.5) (39.6) Capitalised interest expense to COGS 23.2 25.1 Borrowing costs amortised 2.2 1.7 Net interest expense 78.5
Slide 24: MPT disposals; MPT acquisitions
MPT disposals Book Disposal Proceeds $m value proceeds above BV1 40 Macquarie Street , Barton, ACT 19.0 24.3 4.9 127 Creek Street, Brisbane, QLD 89.0 133.0 41.9 101 Miller Street, North Sydney, NSW2 124.0 157.3 32.5 Greenwood Plaza, North Sydney, NSW2 62.0 79.3 16.5 Mirvac Wholesale Hotel Fund 12.0
Slide 25: Commercial overview and performance
Commercial overview Properties owned 21 NLA 347,068 sqm Asset value $1,645.5m Gross revaluation1 $123.1m Net income growth 4.4% (like for like) Occupancy 90.3% Occupancy (excluding 101 Miller Street)2 98.9% 1. Excluding OEI and includes joint ventures 101 Miller Street under full refurbishment. 2. 1
Slide 26: Commercial lease expiry; Commercial market
Commercial lease expiry 60% 50% lettable area sqm 40% 30% 20% 10% 0% Vacant FY08 FY09 FY10 FY11 FY12 Beyond 1H08 Results Presentation Page 51 Commercial market > Underlying demand strong – white collar employment growing above trend > Supply increasing in most markets but no near-term threat to rent
Slide 27: Industrial overview and performance
Industrial overview Properties owned 11 NLA 163,240 sqm Asset value $282.3m Gross revaluation1 $13.6m Net income growth 0.1% (like for like) Occupancy 94.9% 1. Excluding OEI and includes joint ventures. 1H08 Results Presentation Page 53 Industrial performance Leasing transactions 18,808 sqm (11.5% o
Slide 28: Industrial lease expiry; Industrial market
Industrial lease expiry 80% 70% 60% 50% 40% lettable area sqm 30% 20% 10% 0% Vacant FY08 FY09 FY10 FY11 FY12 Beyond 1H08 Results Presentation Page 55 Industrial market > Underlying drivers point to growth in demand for modern, well-located facilities – imports forecast to rise, stock-to-sales ratio
Slide 29: Retail overview and performance
Retail overview Retail centres owned 21 GLA 450,519 sqm Asset value $1,628.4m Gross revaluation1 $42.5m Net income growth 2.8% (like for like) Occupancy 99.5% Group MAT 5.1% (like for like) Specialty sales2 $8,213 per sqm 1. Excluding OEI and includes joint ventures 2. Includes GST. 1H08 Results Pre
Slide 30: Retail lease expiry; Retail market
Retail lease expiry 60% 50% 40% lettable area sqm 30% 20% 10% 0% Vacant FY08 FY09 FY10 FY11 FY12 Beyond 1H08 Results Presentation Page 59 Retail market > Retail spending to moderate in 2008 after strong growth in 2007 > Short term, impact of higher mortgage rates, petrol prices etc. may offset other
Slide 31: Residential pipeline: lots under control and forecast revenue
Residential pipeline - lots under control1 Houses/Land % split Apartments % split Total % split NSW 5,868 25% 1,301 25% 7,169 25% VIC 8,010 33% 921 17% 8,931 30% WA 6,195 26% 1,584 30% 7,779 27% QLD 3,111 13% 1,478 28% 4,589 16% SA 599 3% - - 599 2% Total 23,783 100% 5,284 100% 29,067 100% 1. Repres