Mirvac Group · ASX:MGR
Mirvac — FY2009 Earnings Presentation
52 slides from Mirvac's earnings presentation, Aug 25, 2009
Slide 1: Mirvac Group FY09 results presentation
Mirvac Group FY09 results presentation For personal use only 25 August 2009 Ephraim Island, qld
Slide 2: Disclaimer and Important Notice
DISCLAIMER AND IMPORTANT NOTICE For personal use only The information made available through this presentation and annexure, including any expression of opinion or forecast, has been obtained from or based on sources believed by Mirvac Group to be reliable. Mirvac Group does not warrant the accuracy
Slide 3: Market conditions
market conditions For personal use only Mirvac has operated through many market cycles since 1972 and its continued success is attributable to its ability to adapt to changing market conditions: > Australian economic performance has provided rationale to be cautiously optimistic > Equity pricing inc
Slide 4: Key achievements
KEY ACHIEVEMENTS For personal use only Group Financial > Achieved high end NPAT earnings guidance 3 > Achieved S&P BBB upgrade with positive outlook Capital management > Equity Issuance: 3 > $1,100m $1.00 cpss — reducing balance sheet gearing to 18.7% 1 > $500m $0.90 cpss > Revised distribution to r
Slide 5: Mirvac well positioned
mirvac well positioned For personal use only > Australian focused: 99.2% by asset value > Group earnings underpinned by secure rental income > Balance sheet strength – balance sheet gearing 18.7% 1 > Simplified operating model with 2 core Divisions: Investment and Development positioned to drive ear
Slide 6: Financial results
Financial results For personal use only justin mitchell 60 margaret street, sydney, nsw MIRVAC GROUP FY09 results presentation 25 august 2009 page 5
Slide 7: Operating result
operating result For personal use only > Achieved November 2008 NPAT guidance which equates to high range June 2009 capital raising guidance > Corporate Division’s low cycle earnings, resulted in Mirvac Property Trust accounting for 121% NPAT > Results reflect core business, no contribution from: —
Slide 8: Summary of results
summary of results For personal use only FY09 Operating profit $200.8m 1 Specific non-cash items ($756.4m) 2 Net loss from fair value of: > Investment properties > Derivative financial instruments > Share of associates profit/losses Other significant items 3 ($522.5m) 2 Impairments: > Loans > Invest
Slide 9: Debt profile
debt profile For personal use only FY09 FY08 Drawn debt facility maturity profile S&P rating BBB BBB $m (positive outlook) 1 1000 Total interest bearing debt $2,145m $2,453m 800 Avg borrowing rate 2 6.72% 7.07% Wtd avg debt maturity 3.3 yrs 3.8 yrs 600 % hedged 60.3% 79.7% Wtd avg hedged maturity 3
Slide 10: Liquidity profile
liquidity profile For personal use only > Strong liquidity profile; able to meet all debt maturities and capital commitments in FY10 and beyond FY11 > Assume no trust asset sales, no distribution reinvestment plan and no rollover of MTNs Available Assumed facility Forecast available Funding source F
Slide 11: Finance update
finance update For personal use only Key debt covenants Definition Covenant FY09 Total liabilities/total tangible assets Covenant gearing (per stat accounts) <55.0% 34.2% Adjusted EBITDA / (interest expense per stat Interest cover ratio (ICR) accounts + lease expenses) >2.25:1 3.42:1 FY09 Activities
Slide 12: Development
development For personal use only Brett Draffen the peninsula, burswood, wa MIRVAC GROUP FY09 results presentation 25 august 2009 page 11
Slide 13: Development model
development model For personal use only Residential Development Value Chain Sales and Acquisition Design Development Construction Marketing Mirvac’s competitive advantage Premium brand driving repeat customers, allows apartment de-risking via pre-sales Superior product quality and design, establishe
Slide 14: Residential pipeline
residential pipeline For personal use only Residential > Committed and in progress Lots > 4,398 (17.3% pipeline) No funding commitments for non-residential developments are in progress 1 Diversified residential pipeline of 25,353 lots 2 > 35.0%: 100% owned > 25.4%: 50% joint venture > 12.7% held thr
Slide 15: FY09 Settlements
FY09 Settlements For personal use only 1,574 lot settlements consisting of: 777 — 100% owned > 1H09 — 562 95 — joint ventures > 2H09 — 1,012 259 — MWRDP 443 — project development agreements > NSW Homes Division positioned to deliver capital repatriation, entry level price point set to drive volume >
Slide 16: Securing future earnings
Securing future earnings For personal use only Mirvac’s position as Australia’s pre-eminent residential developer is evidenced by $759m 1 of exchanged residential pre-sales contracts 6 month exchanged contract reconciliation 1H09 exchanged contracts $955m Net settlements and exchanges ($196m) FY09 e
Slide 17: Major FY10 projects
Major FY10 projects For personal use only Top 10 projects make up 65% of Development Division’s forecast FY10 EBIT 53% 1 of Development Division’s budgeted FY10 EBIT is contracted pre-sales FY10 concludes restructuring as Division will be ‘right sized’ and streamlined to pursue next cycle opportunit
Slide 18: Positioned for residential recovery
positioned for residential recovery For personal use only FY10, including one-off restructuring charges, forecast to be the low point of the cycle for Development Division’s operating earnings Settlement date Lots settled Operating profit 1 FY06 2,463 $91.7m FY07 1,958 $140.1m FY08 2,089 $154.1m FY0
Slide 19: Investment
investment For personal use only nick collishaw 60 margaret street, sydney, nsw MIRVAC GROUP FY09 results presentation 25 august 2009 page 18
Slide 20: Mirvac Property Trust valuation
MIRVAC PROPERTY TRUST VALUATION For personal use only All properties have been valued in the 6 months to 30 June 2009 1 In the year to 30 June 2009 the portfolio weighted average capitalisation rate (WACR) has expanded by 100 basis points External valuations were undertaken on 83.0% of the portfolio
Slide 21: Mirvac Property Trust underpins group earnings
Mirvac property trust underpins group earnings For personal use only > 56.8% of revenue derived from Australian Government, ASX listed and multinational tenants > Earnings highly visible with 94% of rent reviews fixed or CPI > Commercial portfolio 3.3% under rented 1 > 26% of FY10 portfolio gross in
Slide 22: Secure portfolio
secure portfolio For personal use only > Stable Investment Division is well positioned to deliver FY10 earnings Key FY10 assumptions for MPT > Rental abatement contingency increased > High proportion of fixed and CPI reviews and benefit of development completions > 18% decrease in profits from joint
Slide 23: Streamlining investment management
streamlining investment management For personal use only Progressing alignment of Investment Management with Group’s core competencies > Domaine Funds – Responsible entity disposed > Mirvac AQUA – Heads of Agreement has been entered into to dispose of the joint venture > Mirvac Tourist Park Fund – D
Slide 24: Hotel management
Hotel management For personal use only > Achieved 5 new management contracts in the year to 30 June 2009 > Achieved 73% occupancy > Achieved $177 average room rate > Focused on Australian expansion in existing sub-markets — 4 hotels over next 2 years Hotels as at Rooms as at Mirvac Hotels & Resorts
Slide 25: Strategy
strategy For personal use only 101 miller street, north sydney, nsw MIRVAC GROUP FY09 results presentation 25 august 2009 page 24
Slide 26: Strategy: A Simplified Approach
Strategy A Simplified Approach For personal use only > Investment — Secure recurring income through ownership of Australian investment grade assets — Active portfolio management, maximising returns — Recycle assets that face income, obsolescence or asset class risk > Development — Maintain pre-emine
Slide 27: FY10 Operating Earnings Guidance
FY10 Operating Earnings Guidance For personal use only Guidance FY10 guidance Group $253m 1 Group EPS / DPS EPS 9 cpss 2 DPS 8 – 9 cpss Assuming no material change to market conditions 1) Excluding specific, non-cash and other significant items. 2) Diluted earnings excluding specific, non-cash and o
Slide 28: Our strategy
our strategy For personal use only Our strategy continues to be realistic and relevant, it brings simplicity to our model, focusing on our two core divisions, Investment and Development with Investment Management facilitating capital interaction. Mirvac has operated through many market cycles since
Slide 29: Annexures
annexures For personal use only Newington, nsw MIRVAC GROUP FY09 results presentation 25 august 2009 page 28
Slide 30: FY09 AIFRS reconciliation
FY09 aifrs reconciliation Investment Management For personal use only External Hotel Development Investment Funds Mgt Unallocated Eliminations Tax Total NPAT before OEI - AIFRS (354.7) (546.3) (221.0) 12.3 (42.2) 7.4 65.3 (1,079.2) Less: OEI 0.1 1.0 1.1 NPAT - AIFRS (354.7) (546.2) (221.0) 12.3 (42.
Slide 31: FY08 AIFRS reconciliation
FY08 aifrs reconciliation Investment Management For personal use only External Hotel Development Investment Funds Mgt Unallocated Eliminations Tax Total NPAT before OEI - AIFRS (65.8) 404.0 (93.9) 13.6 (40.1) (65.3) 22.9 175.4 Less: OEI (1.9) (1.7) (3.6) NPAT - AIFRS (65.8) 402.1 (93.9) 13.6 (40.1)
Slide 32: Balance sheet sensitivity
balance sheet sensitivity For personal use only Mirvac’s covenant gearing of <55% can withstand significant asset value deterioration Capitalisation rate and inventory sensitivity Assumed capitalisation rate expansion Base case +50bps +100bps +150bps Implied capitalisation rate 7.55% 8.05% 8.55% 9.0
Slide 33: MPT sector diversification
mpt SECTOR DIVERSIFICATION 1 For personal use only 30 Jun 09 2 30 Jun 09 1 1 NSW 53.8% COMMERCIAL 44.4% VIC 22.1% RETAIL 40.3% WA 0.7% INDIRECT PROPERTY QLD 16.5% INVESTMENTS 5.2% ACT 5.6% INDUSTRIAL 7.3% US 1.2% HOTELS AND CAR PARKS 2.8% 1) By book value. Excluding development. 2) Excluding indirec
Slide 34: MPT FY10 rental review structure by gross income
MPT FY10 rental review structure by gross income For personal use only FY10 review types Percentage CPI linked 17.5% Fixed reviews 76.4% Market reviews 5.4% Other/miscellaneous reviews 0.6% MIRVAC GROUP FY09 results presentation 25 august 2009 page 33
Slide 35: MPT top ten tenants by gross income
MPT top ten tenants by gross income For personal use only Rank Tenant Percentage 1 Government 8.1% 2 Coles Group 5.1% 3 Woolworths Limited 4.2% 4 Fairfax Holdings Limited 3.2% 5 Insurance Australia Limited 2.3% 6 GM Holden Limited 2.2% 7 United Group 1.8% 8 Telstra Corporation Limited 1.2% 9 Genwort
Slide 36: MPT stable earnings platform
MPT Stable earnings platform For personal use only $4,102m ($521m) ($121m) $229m $3,690m 30 Jun 08 Revaluations Equity Develoments, 30 Jun 09 accounted CAPEX and investments incentives MIRVAC GROUP FY09 results presentation 25 august 2009 page 35
Slide 37: MPT Commercial overview
MPT Commercial overview For personal use only Properties owned 21 NLA 359,634 sqm Asset value $1,597.6m Gross revaluation ($118.1m) Net income growth 5.8% (like for like) Occupancy 98.1% MIRVAC GROUP FY09 results presentation 25 august 2009 page 36
Slide 38: MPT Commercial performance
MPT Commercial performance For personal use only Leasing transactions 82,877 sqm (23.0% of portfolio) Tenant rent reviews 261 (210,976 sqm) WALE (area) 6.05 yrs WALE (income) 5.96 yrs MIRVAC GROUP FY09 results presentation 25 august 2009 page 37
Slide 39: MPT Commercial lease expiry
MPT Commercial lease expiry For personal use only 60% LETTABLE AREA SQM 50 40 30 20 10 0 VACANT FY10 FY11 FY12 FY13 FY14 BEYOND MIRVAC GROUP FY09 results presentation 25 august 2009 page 38
Slide 40: MPT Industrial overview
MPT Industrial overview For personal use only Properties owned 12 NLA 221,957 sqm Asset value $261.6m Gross revaluation ($31.9m) Net income growth (5.2%) 1 (like for like) Occupancy 90.8% 1) Excluding 44 Biloela Street, Villawood, NSW like for like increases to 8.6% as asset is currently vacant. MIR
Slide 41: MPT Industrial performance
MPT Industrial performance For personal use only Leasing transactions 31,087 sqm (14.0% of portfolio) Tenant rent reviews 25 (107,645 sqm) WALE (area) 5.09 yrs WALE (income) 5.01 yrs MIRVAC GROUP FY09 results presentation 25 august 2009 page 40
Slide 42: MPT Industrial lease expiry
MPT Industrial lease expiry For personal use only 60% LETTABLE AREA SQM 50 40 30 20 10 0 VACANT FY10 FY11 FY12 FY13 FY14 BEYOND MIRVAC GROUP FY09 results presentation 25 august 2009 page 41
Slide 43: MPT Retail overview
MPT Retail overview For personal use only Retail centres owned 21 GLA 467,430 sqm Asset value $1,448.3 m Gross revaluation ($123.7m) Net income growth > Shopping centres 0.3% (like for like) > Bulky goods centres (1.6%) (like for like) > Total Retail (0.3%) (like for like) Occupancy 1 97.8% MAT 3.8%
Slide 44: MPT Retail performance
MPT Retail performance For personal use only Leasing transactions 46,026 sqm (9.8% of portfolio) Tenant rent reviews 1,077 (265,761 sqm) Occupancy costs 13.0% WALE (area) 5.89 yrs WALE (income) 4.55 yrs MIRVAC GROUP FY09 results presentation 25 august 2009 page 43
Slide 45: MPT Retail lease expiry
MPT Retail lease expiry For personal use only 50% LETTABLE AREA SQM 40 30 20 10 0 VACANT FY10 FY11 FY12 FY13 FY14 BEYOND MIRVAC GROUP FY09 results presentation 25 august 2009 page 44
Slide 46: Residential activities under control
residential activities under control For personal use only Total project Mirvac’s share of forecast revenue 1 forecast revenue $9.6bn $6.1bn 1 1 NSW 21.1% NSW 22.3% VIC 5.6% VIC 8.4% QLD 32.5% QLD 43.9% WA 40.6% WA 25.1% SA 0.2% SA 0.2% 1) Represents Mirvac’s total share of development revenue assoc
Slide 47: Gross margin
Gross margin For personal use only Revenue ($m) Costs ($m) Margin ($m) Margin (%) Adjusted 721,988 (602,551) 119,437 16.5% Cost recovery activities 494,458 (494,458) Eliminations (125,637) 125,819 Group P&L 1,090,809 (971,190) 119,619 11.0% MIRVAC GROUP FY09 results presentation 25 august 2009 page
Slide 48: Inventory carrying values
inventory carrying values For personal use only > Carrying value assessment: — Forecast cost < net realisable value (forecast revenue) — results in profit — Forecast cost > net realisable value — results in impairment > FY08 Mirvac impaired $219.9m or 11.5% of gross inventory year end balance 1 > FY
Slide 49: Residential pipeline – 25,353 lots under control
Residential pipeline – 25,353 lots under control For personal use only House/Land Apartments 21,342 lots 4,011 1 NSW 16.2% NSW 23.8% VIC 36.0% VIC 25.0% WA 30.9% WA 19.7% QLD 14.1% QLD 31.4% SA 2.8% MIRVAC GROUP FY09 results presentation 25 august 2009 page 48
Slide 50: Investment management
investment management For personal use only Revenue Equity Funds Management Revenue Management Transaction Interest accounted Source Summary by Fund / Mandate fees fees 1 income 2 income Retail / Listed Mirvac Real Estate Investment Trust 4 4 I Mirvac Industrial Trust 4 4 I Mirvac PFA Diversified Pr
Slide 51: Investment management
investment management For personal use only Revenue Equity Funds Management Revenue Management Transaction Interest accounted Source Summary by Fund / Mandate fees fees 1 income 2 income Joint Ventures International Parking Group 4 JF Infrastructure Yield Fund 4 I JF Stadium Trust 4 JF Infrastructur
Slide 52: www.mirvac.com
For personal use only www.mirvac.com MIRVAC GROUP FY09 results presentation 25 august 2009 page 51