Mirvac Group · ASX:MGR
Mirvac — H1 2018 Earnings Presentation
31 slides from Mirvac's earnings presentation, Feb 8, 2018
Slide 1: 1H18 Results
1H18 For personal use only RESULTS 08.02.2018 08 FEBRUARY 2018 1
Slide 2: Agenda
1H18 Results AGENDA For personal use only Overview Susan Lloyd-Hurwitz, CEO and Managing Director 03 Financial Shane Gannon, Chief Financial Officer 07 Office & Industrial Campbell Hanan, Head of Office & Industrial 11 Retail Susan MacDonald, Head of Retail 16 Residential Stuart Penklis, Head of Res
Slide 3: Overview
1H18 Results For personal use only OVERVIEW Susan Lloyd-Hurwitz, CEO and Managing Director 08 FEBRUARY 2018 3
Slide 4: Our urban strategy & integrated capabilities delivering results
1H18 Results OUR URBAN STRATEGY & INTEGRATED CAPABILITIES DELIVERING RESULTS For personal use only Strong Integrated Urban Strategy 7.0-7.4% Capabilities >> Strong ongoing population 5yr EPS >> Proven development capabilities growth in Sydney and Melbourne CAGR1 across office, industrial, retail >>
Slide 5: Cycle progressing as expected, Mirvac well positioned to benefit
1H18 Results CYCLE PROGRESSING AS EXPECTED, MIRVAC WELL POSITIONED TO BENEFIT For personal use only Consistent execution of disciplined urban strategy to deliver earnings, distribution growth and ROIC above WACC Office & Industrial Retail Residential >> Strategic overweight to Sydney >> Challenging
Slide 6: 'How we do it' driving 'what we achieve'
1H18 Results ‘HOW WE DO IT’ DRIVING ‘WHAT WE ACHIEVE’ For personal use only Our people are key >> Employee engagement of 88% 1 >> Attracting talent as an employer of choice >> Launched industry leading Shared Care Parental Leave Policy >> Successful progress with our Transforming the Way We Work str
Slide 7: Financial
FINANCIAL 1H18 Results For personal use only Shane Gannon, Chief Financial Officer Locomotive Shed, Sydney (artists impression) 08 FEBRUARY 2018 7
Slide 8: Group financial results in line with expectations
1H18 Results GROUP FINANCIAL RESULTS IN LINE WITH EXPECTATIONS For personal use only OPERATING RESULTS 1H18 1H17 $m $m Office NOI growth of 21% partially offset by lower development profit from skew to 2H18 Office & Industrial 173 166 4% Modest contribution from transactions and Retail 83 81 3% deve
Slide 9: Conservative balance sheet underpins earnings growth
1H18 Results CONSERVATIVE BALANCE SHEET UNDERPINS EARNINGS GROWTH For personal use only Continued execution of capital management strategy >> Strong capital position and flexible balance sheet >> Upgraded credit rating to A3 from Baa1 by Moody's and $2.20 4.8% 23.8% 6.8yrs NTA increased Average Gear
Slide 10: Excellent visibility of future earnings growth
1H18 Results EXCELLENT VISIBILITY OF FUTURE EARNINGS GROWTH For personal use only MAJOR CONTRIBUTORS 1 FY19 FY20 FUTURE PIPELINE Development Profits & Fair Value Uplifts 2 Development Profits & Fair Value Uplifts 2 Development Pipeline 84% >> Australian Technology Park, SYD – Building 2 >> Australia
Slide 11: Office & Industrial
OFFICE & 1H18 Results For personal use only INDUSTRIAL Campbell Hanan, Head of Office and Industrial 477 Collins Street, Melbourne (artists impression) 08 FEBRUARY 2018 11
Slide 12: Office portfolio transition now accelerating
1H18 Results OFFICE PORTFOLIO TRANSITION NOW ACCELERATING For personal use only Strategic overweight Sydney and Melbourne delivering OFFICE NOI ACCELERATING exceptional results >> Office NOI up 21% on pcp to $138m 82% 145 ($m) Sydney & 140 >> Occupancy up to 98.1% from 97.6% at FY17 1 Melbourne expo
Slide 13: Industrial portfolio providing high quality and resilient income
1H18 Results INDUSTRIAL PORTFOLIO PROVIDING HIGH QUALITY AND RESILIENT INCOME For personal use only Disciplined strategy execution capitalising on strong markets IMPROVED PERFORMANCE OF INDUSTRIAL PORTFOLIO >> Delivered strong 4.6% like-for-like income growth with occupancy increasing 400bps to 99.3
Slide 14: High future earnings visibility from committed development pipeline
1H18 Results HIGH FUTURE EARNINGS VISIBILITY FROM COMMITTED DEVELOPMENT PIPELINE For personal use only ADDITIONAL HIGH QUALITY INCOME FROM OFFICE AND INDUSTRIAL DEVELOPMENTS 1 90 ($m) NOI RECENT COMPLETIONS $2.3BN ACTIVE DEVELOPMENT PIPELINE 49% committed NOI GROWTH ~$60m >$200m 80 potential additio
Slide 15: Asset creation model important at this point in the cycle
1H18 Results ASSET CREATION MODEL IMPORTANT AT THIS POINT IN THE CYCLE For personal use only >> As the last phase of a very strong cap rate compression cycle plays out, MIRVAC OFFICE DEVELOPMENT YIELD ON COST VS SYD/MEL UPPER PRIME OFFICE CAP RATES returns will be driven more by income growth DMJC*
Slide 16: Retail
1H18 Results RETAIL For personal use only Susan MacDonald, Head of Retail Toombul Shopping Centre, Brisbane 08 FEBRUARY 2018 16
Slide 17: Quality urban retail delivering solid results
1H18 Results QUALITY URBAN RETAIL DELIVERING SOLID RESULTS For personal use only Urban and metro focus delivering performance 3.1% Inner urban 3 >> Solid comparable MAT sales growth of 3.7%, with specialty MAT growth of 5.2% exposure >$10,000/sqm >> Strong comparable specialty sales productivity at
Slide 18: Not all retail is created equal
1H18 Results NOT ALL RETAIL IS CREATED EQUAL Delivers Outperformance For personal use only Stay relevant, stay productive 3 YEAR AVG. COMPARABLE TOTAL SALES GROWTH6 Management >> Active adapting mix, over 170 new retail brands introduced in past 18 months via development and remixing Astute 5.0 (%)
Slide 19: Successful capital recycling enhancing portfolio quality
1H18 Results SUCCESSFUL CAPITAL RECYCLING ENHANCING PORTFOLIO QUALITY For personal use only TRANSACTIONS – INCREASINGLY URBAN JUNE 2017 5 DECEMBER 2017 5 Location Transaction Price 1 Date Cap Rate East Village Sydney 50% acquisition $155m Aug 17 5.25% 6% 64% 70% South Village Sydney 50% acquisition
Slide 20: Remaining relevant – Rhodes Waterside (case study)
1H18 Results REMAINING RELEVANT – RHODES WATERSIDE (CASE STUDY) For personal use only 5 Yr CAGR > 6.0% sales > 4.7% traffic Driving value within the existing centre envelope > 10.7% value Customer driven evolution Key Management Initiatives Significant 5-year 2 performance enhancement >> Growing cat
Slide 21: Residential
RESIDENTIAL 1H18 Results For personal use only Stuart Penklis, Head of Residential Green Square, Sydney (artists impression) 08 FEBRUARY 2018 21
Slide 22: Residential results on track
1H18 Results RESIDENTIAL RESULTS ON TRACK For personal use only On track to achieve ~3,400 lot settlements for FY18 STRONG RESIDENTIAL PERFORMANCE >> Completed 735 settlements in 1H18 and a further 4000 lots settled 30% 92% 429 settlements in January 2018 25 >> 1H18 gross margins of 22% 1 due to mix
Slide 23: Residential strategy centred on urbanisation and growth of Sydney & Melbourne
1H18 Results RESIDENTIAL STRATEGY CENTERED ON CONTINUED URBANISATION AND GROWTH OF SYDNEY & MELBOURNE For personal use only >> Mirvac benefiting from mixed use capability and strategic weighting to Sydney and Melbourne, SHOWGROUND STATION CASTLE HILL representing 72% of total residential lots T STAT
Slide 24: Mixed use urban development - Green Square (case study)
1H18 Results MIXED USE URBAN DEVELOPMENT- GREEN SQUARE (CASE STUDY) For personal use only Proven capability to deliver returns from complex mixed use developments >> Urban regeneration, densification and mixed-use development driven by population growth, employment hubs and Green Square government i
Slide 25: High quality product and pipeline
1H18 Results HIGH QUALITY PRODUCT AND PIPELINE Capital efficient projects For personal use only Strategic locations, quality product and brand strength will continue to drive outperformance Strong embedded margins >> Control 28,207 lots with an overweight exposure to NSW and VIC >> 15,760 lots acqui
Slide 26: Sydney and Melbourne to drive future residential earnings
1H18 Results SYDNEY AND MELBOURNE TO DRIVE FUTURE RESIDENTIAL EARNINGS For personal use only >> The residential market is moderating in line with expectations EXPECTED RESIDENTIAL EBIT CONTRIBUTION FY18-20 1 >> Continued demand despite shifting market conditions reflects quality Other (WA & QLD MPC)
Slide 27: Summary & Guidance
1H18 Results SUMMARY & For personal use only GUIDANCE Susan Lloyd-Hurwitz, CEO and Managing Director 08 FEBRUARY 2018 27
Slide 28: Outlook – disciplined urban strategy will deliver earnings and distribution growth
1H18 Results OUTLOOK – DISCIPLINED URBAN STRATEGY WILL DELIVER EARNINGS AND DISTRIBUTION GROWTH For personal use only Strong earnings visibility from our diversified urban portfolio and asset creation capability Office and Industrial >> Strategic overweight to Sydney and Melbourne delivering results
Slide 29: Reaffirmed FY18 guidance
1H18 Results REAFFIRMED FY18 GUIDANCE For personal use only FY18 EPS FY18 DPS 6-8% 6% Growth Growth on FY17 on FY17 OPERATING EPS DPS 15.3-15.6c 16.0 cents 12.0 cents R 1 14.4c FY18 guidance PS CAG 5 year E 11.0c 7.0-7.4% (FY17 guidance: 2 14.0-14.4c) AGR PS C FY18 guidance 13.0c ear D 10.4c 14.0 (F
Slide 30: Important notice
1H18 Results IMPORTANT NOTICE For personal use only Mirvac Group comprises Mirvac Limited (ABN 92 003 280 699) and Mirvac Property Trust (ARSN 086 780 645). An investment in Mirvac stapled securities is subject to investment and other known and unknown risks, some of This presentation (“Presentation
Slide 31: Thank you
THANK For personal use only YOU 08.02.2018 08 FEBRUARY 2018 31