Mirvac Group · ASX:MGR
Mirvac — H1 2019 Earnings Presentation
34 slides from Mirvac's earnings presentation, Feb 7, 2019
Slide 1: 1H19 Results
1H19 Reimagine Urban Life 07.02.2019 For personal use only RESULTS
Slide 2: Agenda
1H19 Results AGENDA For personal use only OVERVIEW FINANCIAL OFFICE & RETAIL RESIDENTIAL SUMMARY & RESULTS INDUSTRIAL GUIDANCE Susan Lloyd-Hurwitz Shane Gannon Campbell Hanan Susan MacDonald Stuart Penklis Susan Lloyd-Hurwitz CEO & Managing Director Chief Financial Officer Head of Office & Industria
Slide 3: Overview
OVERVIEW For personal use only Susan Lloyd-Hurwitz CEO & Managing Director 367 Collins Street, Melbourne 02
Slide 4: Our Purpose: To Reimagine Urban Life
1H19 Results OUR PURPOSE: TO REIMAGINE URBAN LIFE For personal use only Shaping the future of Australia’s cities & urban areas TRAMSHEDS, SYD WOODLEA, MEL GREEN SQUARE, SYD 664 COLLINS STREET, MEL CALIBRE, SYD ATP, SOUTH EVELEIGH, SYD We leave a legacy of sustainable, connected & vibrant urban envir
Slide 5: Strategic Focus on Urban Areas in Gateway Cities Delivering Results
1H19 Results STRATEGIC FOCUS ON URBAN AREAS IN GATEWAY CITIES DELIVERING RESULTS For personal use only 5.3 CPSS 7.8 CPSS 1H19 DPS 1H19 EPS HIGHLY VISIBLE 6% growth 26% growth & DEFENSIVE on pcp on pcp CASH FLOWS, 16% SUSTAINABLE 12 month Total Return 1 DISTRIBUTION GROWTH $290m $2.44 1H19 Operating
Slide 6: Mirvac Is Well Prepared for the Cycle
1H19 Results MIRVAC IS WELL PREPARED FOR THE CYCLE For personal use only Quality will be the driver of differentiated performance EXECUTED STRATEGY TO SELL REGIONAL/NON-CORE ASSETS >> Disposed of older, suburban and regional assets no longer AND CREATE A MODERN CORE PORTFOLIO on strategy 120,000 sqm
Slide 7: Transition Continues Towards High Quality Passive Recurring Earnings
1H19 Results TRANSITION CONTINUES TOWARDS HIGH QUALITY PASSIVE RECURRING EARNINGS For personal use only >> Acceleration of passive earnings growth is delivering EPS growth despite EPS GROWTH FUELLED BY PASSIVE PORTFOLIO lower residential earnings expected in FY19 20.0 (cents) >> On track to deliver
Slide 8: Urban Focus & Asset Creation Delivering NTA Growth
1H19 Results URBAN FOCUS & ASSET CREATION DELIVERING NTA GROWTH For personal use only NTA GROWTH DRIVEN BY QUALITY INVESTMENT PORTFOLIO & COMMERCIAL OFFICE & >> $6.4bn of office assets exposed DEVELOPMENT COMPLETIONS INDUSTRIAL 84% SYD/MEL, 1 59% 95% A/Prime $2.50 $2.44 RESIDENTIAL 1 grade. Valued o
Slide 9: Culture & Capability as a Source of Competitive Advantage
1H19 Results CULTURE & CAPABILITY AS A SOURCE OF COMPETITIVE ADVANTAGE For personal use only OUR PEOPLE SUSTAINABILITY SAFETY & WELLBEING INNOVATION >> WGEA citation for gender equity for fourth year in > Climate Change & Natural Resources: >> A revised, modernised and simplified, > Expansion of the
Slide 10: Financial Results
FINANCIAL 1H19 Results For personal use only RESULTS Shane Gannon Chief Financial Officer Allendale Square, Perth 07 FEBRUARY 2019 09
Slide 11: Strong Financial Results in Line with Expectations
1H19 Results STRONG FINANCIAL RESULTS IN LINE WITH EXPECTATIONS For personal use only OPERATING RESULTS 1 1H18 1H19 $m $m Strong increase in NOI driven by 6.0% LFL growth and recent completion of 664 Collins Street, plus significant development Office & Industrial 189 265 40% EBIT driven by Calibre
Slide 12: Robust Balance Sheet
1H19 Results ROBUST BALANCE SHEET For personal use only >> Well positioned to fund existing development pipeline and growing distribution 4.5% 24.4% 6.1YRS A3/A- >> Gearing of 24.4% and $570m of cash and undrawn committed Average Borrowing Cost 1 Gearing 2 Average Debt Maturity Moody’s/Fitch Credit
Slide 13: Pipeline Delivering Increasing Recurring Income, Supported by Active Development
1H19 Results PIPELINE DELIVERING INCREASING RECURRING INCOME, SUPPORTED BY ACTIVE DEVELOPMENT 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 >> ATP, South Eveleigh, SYD 2
Slide 14: Office & Industrial
OFFICE & For personal use only INDUSTRIAL Campbell Hanan Head of Office & Industrial Locomotive Workshops, South Eveleigh (artist impression) 13
Slide 15: Office Portfolio Transition Now Accelerating
1H19 Results OFFICE PORTFOLIO TRANSITION NOW ACCELERATING For personal use only >> Strong portfolio results supported by strategic overweight to prime OFFICE NOI ACCELERATING Sydney and Melbourne assets and development completions $170m >> Office NOI up 10% on pcp to $169m >> Like-for-like NOI growt
Slide 16: Industrial Portfolio Providing High Quality and Resilient Income
1H19 Results INDUSTRIAL PORTFOLIO PROVIDING HIGH QUALITY AND RESILIENT INCOME For personal use only >> Industrial benefiting from strong tenant demand and 100% Sydney weighting WESTERN SYDNEY FOCUS CLOSE TO TRANSPORT & INFRASTRUCTURE NODES >> Maintained 100% occupancy 1, with a WALE of 7.6 years 2 >
Slide 17: Integrated Model Creating Value – Calibre Industrial Precinct, SYD
1H19 Results INTEGRATED MODEL CREATING VALUE – CALIBRE INDUSTRIAL PRECINCT, SYD For personal use only Sydney’s Premier Industrial Precinct Value >> Located in Western Sydney growth corridor $250m 1 >> Close proximity to transport links at interchange of M4 and M7 Motorways Cap rate 5.0% >> Pre-lease
Slide 18: Building Resilient Recurring Income
1H19 Results BUILDING RESILIENT RECURRING INCOME For personal use only ADDITIONAL HIGH-QUALITY INCOME FROM OFFICE & INDUSTRIAL DEVELOPMENTS 1 $3.0bn ACTIVE DEVELOPMENT PIPELINE NOI GROWTH >$95m Potential additional annual NOI 100 ($m) NOI by FY23 from FY19 from active 66% 90 committed development pi
Slide 19: Track Record & Visible Future Opportunities
1H19 Results TRACK RECORD & VISIBLE FUTURE OPPORTUNITIES For personal use only >> As the last phase of a very strong cap rate compression cycle CREATE TO CORE plays out, returns will be driven more by income growth >> Executed a strategy to sell non-core and develop well leased, high-quality, premiu
Slide 20: Retail
RETAIL 1H19 Results For personal use only Susan MacDonald Head of Retail Kawana Shoppingworld, Sunshine Coast 07 FEBRUARY 2019 19
Slide 21: Urban Retail Delivering Solid Performance
1H19 Results URBAN RETAIL DELIVERING SOLID PERFORMANCE For personal use only >> High occupancy maintained of 99.3% 1 >> Executed ~28,800 sqm of leasing activity, with leasing spreads of 2.7% >> Valuation uplift of $69m or 2.1% reflecting a cap rate of 5.40% (9bps compression) >> Delivered solid 2.6%
Slide 22: Urban and Metropolitan Portfolio Positioned for Performance
1H19 Results URBAN AND METROPOLITAN PORTFOLIO POSITIONED FOR PERFORMANCE For personal use only Inner and middle ring Growth corridor and satellite High barriers to entry for urban retail >> High household wealth >> Strong population growth >> Deep employment bases >> Investment in infrastructure and
Slide 23: Creating an Urban Town Centre – Orion Springfield Central
1H19 Results CREATING AN URBAN TOWN CENTRE – ORION SPRINGFIELD CENTRAL For personal use only Rapidly growing suburban Key management initiatives Significant 3 year 2 Future growth potential town centre >> Developed by Mirvac in March performance enhancement >> MTA population forecast to grow >> Main
Slide 24: Residential
RESIDENTIAL For personal use only Stuart Penklis Head of Residential The Eastbourne, Melbourne (artist impression) 23
Slide 25: Residential Results on Target
1H19 Results RESIDENTIAL RESULTS ON TARGET For personal use only On track to achieve >2,500 lot settlements for FY19 >> Completed 1,067 settlements in 1H19 and over 110 settlements in January 2019 >> 1H19 gross margins of 25% and EBIT margin of 16% >> $2bn of residential pre-sales securing future ea
Slide 26: Strategy Focused on Long Term Urbanisation
1H19 Results STRATEGY FOCUSED ON LONG TERM URBANISATION For personal use only >> Strategic weighting to NSW and VIC representing 74% of residential lots PRECONDITIONS FOR NEXT CYCLE UNDERWAY AS DWELLING COMPLETIONS >> In the 10 years to 2028, Australia’s population is projected to increase by over F
Slide 27: The Mirvac Difference – Quality, Customer, Placemaking
1H19 Results THE MIRVAC DIFFERENCE – QUALITY, CUSTOMER, PLACEMAKING For personal use only Mirvac Strategy – At the right time and right price KEY MIRVAC PROJECTS IN RESILIENT LOCATIONS – >> Mirvac projects are well positioned, typically located in postcodes with lower LOW MORTGAGE ARREARS & UNEMPLOY
Slide 28: Urban Mixed Use Development Reimagined
1H19 Results BEFORE URBAN MIXED USE DEVELOPMENT REIMAGINED For personal use only PROVEN TRACK RECORD OF DELIVERING Proven capability to deliver returns from complex urban developments SUSTAINABLE URBAN >> Ability to manage multiple stakeholders and work with local councils to deliver superior result
Slide 29: Residential Outlook – High Quality Product & Pipeline
1H19 Results RESIDENTIAL OUTLOOK – HIGH QUALITY PRODUCT & PIPELINE For personal use only >> Average prices and volumes are falling in many corridors – increasing SHIFTING TO GREATER MPC EBIT CONTRIBUTION importance of location, design and quality >> Lending conditions across all purchaser groups hav
Slide 30: Summary & Guidance
SUMMARY & Susan Lloyd-Hurwitz CEO & Managing Director For personal use only GUIDANCE Locomotive Workshops, South Eveleigh (artist impression) 29
Slide 31: Mirvac Well Placed to Take Advantage of Opportunities
1H19 Results MIRVAC WELL PLACED TO TAKE ADVANTAGE OF OPPORTUNITIES For personal use only 664 Collins Street, Melbourne Broadway, Sydney Greenbank, Brisbane (artist impression) OFFICE & INDUSTRIAL RETAIL RESIDENTIAL >> Creating Australia’s youngest, lowest >> Maintaining our bespoke urban >> Quality
Slide 32: FY19 Guidance Tightened
1H19 Results FY19 GUIDANCE TIGHTENED For personal use only DPS 12.0 cents 1 11.6 AGR r DPS C a FY19 guidance 6 ye FY19 guidance 5% 5% 3-4% 11.0 11.0 DPS growth 10.4 10.0 9.9 9.4 EPS growth (16.9-17.1 cpss) 9.0 9.0 8.7 8.0 FY13 FY14 FY15 FY16 FY17 FY18 FY19 Guidance 1. Period of FY13 (DPS 8.7 cpss) t
Slide 33: Important Notice
1H19 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 34: Thank You
THANK YOU For personal use only 477 Collins Street, Melbourne (artist impression)