Mirvac Group · ASX:MGR
Mirvac — FY2020 Earnings Presentation
43 slides from Mirvac's earnings presentation, Aug 20, 2020
Slide 1: FY20 Results
For personal use only FY20 Results Reimagine Urban Life 20 August 2020
Slide 2: Acknowledgement of Country
FY20 RESULTS Acknowledgement of Country For personal use only Mirvac acknowledges the Traditional Owners of the land on which we work, and pay our respect to Elders past and present 20 AUGUST 2020 — 01
Slide 3: Agenda
FY20 RESULTS Agenda For personal use only Overview Financial Results Susan Lloyd-Hurwitz Shane Gannon CEO & Managing Director Chief Financial Officer 03 11 Capital Allocation Office & Industrial Brett Draffen Campbell Hanan Chief Investment Officer Head of Office & Industrial 17 22 Retail Residentia
Slide 4: Overview
For personal use only Overview Susan Lloyd-Hurwitz CEO & Managing Director Osprey Waters, Perth 20 AUGUST 2020 — 03
Slide 5: Group well positioned leading into the crisis
FY20 RESULTS Group well positioned leading into the crisis For personal use only LEADING INTO THE CRISIS, THE GROUP HAD SOLID MOMENTUM AND A STRONG BALANCE SHEET Portfolio > Award winning modern diversified investment portfolio of 55 assets 1 ~$23bn > Long WALE of 5.6 years 2 and 98.6% occupancy 3 a
Slide 6: COVID-19 impact and response
FY20 RESULTS COVID-19 impact and response For personal use only People and safety Business operations Management response > Targeted best practice pandemic response > $86m direct impact from COVID-19 including changing > A voluntary 20% reduction in remuneration for the ELT > Focused on protecting o
Slide 7: Solid results in challenging conditions
FY20 RESULTS Solid results in challenging conditions For personal use only $602m $2.54 $796m 22.8% FY20 OPERATING PROFIT NTA1 (5%) on pcp +2% on pcp FY20 EBIT GEARING 2 (6%) on pcp 15.3c 9.1c 8.9% FY20 EPS (10%) on pcp FY20 DPS 3 YEAR ROLLING GROUP ROIC (22%) on pcp 1. NTA per stapled security exclu
Slide 8: Our purpose: to reimagine urban life
FY20 RESULTS Our purpose I To reimagine urban life For personal use only DELIVERED SIX NEW URBAN ASSETS 1 , CONTINUING TO SHAPE THE FUTURE OF AUSTRALIA’S CITIES & URBAN AREAS Olderfleet, The Foundry, The Eastbourne, Marrick & Co, St Leonards Square, Pavilions, Sydney 477 Collins Street, MEL South Ev
Slide 9: Continuing to deliver the next generation of assets and income
FY20 RESULTS Continuing to deliver the next generation of assets and income For personal use only >750,000 sqm NLA potential > Pre-let and largely de-risked developments supported GROWING PASSIVE RENTAL INCOME DRIVEN BY DEVELOPMENT 3 development 1 passive group NOI growing by $137m over FY13-20 (~4.
Slide 10: Secured development opportunities providing optionality & future value
FY20 RESULTS Secured development opportunities providing optionality & future value For personal use only Office / Mixed-use Industrial Build to Rent Residential Majority of development pipeline has in place income or is secured in capital efficient structures $5.7bn $1.2bn ~$1.3bn $15.6bn WATERLOO
Slide 11: Our culture & capability: how we work matters
FY20 RESULTS Our culture & capability I How we work matters For personal use only Health, Safety & WORK SAFE Our people 97% 3 Sustainability Innovation Environment stay safe > 97% employees employees proud to > 60% reduction in > #1 AFR Boss Most work at Mirvac > Targeted best practice proud to work
Slide 12: Financial Results
Financial Shane Gannon Chief Financial Officer Results For personal use only St Leonards Square, Sydney 20 AUGUST 2020 — 11
Slide 13: Financial results
FY20 RESULTS FY20 financial results For personal use only OPERATING RESULTS OFFICE AND INDUSTRIAL FY20 FY19 > 3% NOI growth offset by lower development earnings recognition compared $m $m to FY19, reflecting reduced development activity and COVID-19 impacts Office & Industrial 484 518 7% RETAIL > NO
Slide 14: Earnings impacted by COVID-19
FY20 RESULTS FY20 earnings impacted by COVID-19 For personal use only DIRECT AND ASSOCIATED COVID-19 IMPACT FY20 EARNINGS MOVEMENT > ($86m) net impact including: 18.0 cpss > Tenant rental assistance & ECL provisions 1 ($48m) 17.6 – 17.8c (2.2c) > New business & project costs written off ($23m) > Low
Slide 15: Accounting impact of COVID-19 and tenant support
FY20 RESULTS Accounting impact of COVID-19 and tenant support For personal use only PRIORITY TO SUPPORT THE ONGOING VIABILITY OF SMALL BUSINESS CUSTOMERS RENTAL ASSISTANCE AND PROVISION FOR RECEIVABLES > Rental assistance provided on a case by case basis and focused on SME tenants Tenant rent Provis
Slide 16: Prudent balance sheet management given volatile market conditions
FY20 RESULTS Prudent balance sheet management given volatile market conditions For personal use only A3/A- $1.4bn 22.8% 6.7yrs CREDIT RATINGS CASH & MOODY’S/ FITCH UNDRAWN FACILITIES Stable Outlook GEARING 1 AVERAGE DEBT MATURITY PROFILE 4.0%AVERAGE No $455m FY20 OPERATING Access BORROWING COST 2 si
Slide 17: Distributions funded from operating cash flow
FY20 RESULTS Distributions funded from operating cash flow For personal use only > Lower FY20 operating cash flow and distributions due to COVID-19 impact, DISTRIBUTIONS SUPPORTED BY TRUST OPERATING CASH FLOWS including rental assistance packages $663m > FY20 distribution of 9.1c approximately in li
Slide 18: Capital Allocation
Capital Brett Draffen Allocation For personal use only Chief Investment Officer Harbourside, Sydney (concept only, subject to planning approvals) 20 AUGUST 2020 — 17
Slide 19: Capital allocation focused on urbanisation and growth of gateway cities
FY20 RESULTS Capital allocation focused on urbanisation and growth of gateway cities For personal use only 82% OF GROUP CAPITAL ALLOCATED TO SYDNEY AND MELBOURNE Australia’s largest Main contributors Australia’s largest Australia’s Australia’s key and most important to Australia’s GDP populations wi
Slide 20: Targeting sustainable returns above our cost of capital
FY20 RESULTS Targeting sustainable returns above our cost of capital For personal use only FY20 OFFICE & INDUSTRIAL ROIC FY20 RETAIL ROIC 9.1% 3.8% ROIC % 8.9% 5.9% (Non-operating) ROIC % ROIC % 3.2% (Operating) (5.6%) ROIC % ROIC % ROIC % (Operating) (Non-operating) (9.4%) 18.1% 5.9% 13.8% 5.2% 12.
Slide 21: Flexibility and increasing exposure to mixed-use, build to rent and industrial
FY20 RESULTS Flexibility and increasing exposure to mixed-use, build to rent and industrial For personal use only > Optimising and flexing the allocation of capital across our portfolio, including INCREASING EXPOSURE TO MIXED-USE/PRECINCTS, BUILD TO RENT between our passive investment and active dev
Slide 22: Continuing to progress Build to Rent strategy
FY20 RESULTS Continuing to progress Build to Rent strategy For personal use only > Secured two additional Build to Rent projects during the year adding over 900 apartments to our pipeline and contributing WHY CUSTOMERS PREFER BUILD TO RENT 1 to our medium term target of 5,000 operational units 28% >
Slide 23: Office & Industrial
Office & For personal use only Industrial Campbell Hanan Head of Office & Industrial Olderfleet, 477 Collins Street, Melbourne 20 AUGUST 2020 — 22
Slide 24: Resilient office portfolio
FY20 RESULTS Resilient office portfolio For personal use only COVID-19 IMPACT OFFICE LEASE EXPIRY PROFILE 7 > 93% of rent collected in June quarter and 98% for FY20 1 60% > 145 rent assistance requests with ~56% processed to date 52% > Only 2.3% of income exposed to tenants less than 400sqm and less
Slide 25: Growing industrial portfolio with $1.2bn pipeline
FY20 RESULTS Growing industrial portfolio with $1.2bn pipeline 1 For personal use only COVID-19 IMPACTS INDUSTRIAL LEASE EXPIRY PROFILE 3 > COVID-19 has accelerated the adoption of e-commerce, and the demand for last 60% 61% mile logistics locations INDUSTRIAL PORTFOLIO PROVIDING HIGH QUALITY INCOME
Slide 26: Creating new modern assets: The Foundry
FY20 RESULTS Creating new modern assets I The Foundry “Groundscraper” Sydney For personal use only Achieved practical completion of The Foundry, the third new building to be delivered as part of the revitalised technology and innovation hub at South Eveleigh MAXIMISE INCOME AND DE-RISK LEASING > Bui
Slide 27: Substantial value and recurring income from asset creation
FY20 RESULTS Substantial value and recurring income from asset creation For personal use only 29% Development Total return 1 EBIT Targeting $465m $524m 1 1 >10% $5.6bn Development Net valuation EBIT uplift on 6.8% PRE-DA PLANNING 3 IRR completion Targeting $4.1bn ~5.5% Yield on cost END VALUE 1 Net
Slide 28: Future of office
FY20 RESULTS Future of office For personal use only THE FUTURE OF WORK WILL INCLUDE A MIX OF THE HOME AND OFFICE 89% 1 3:1 1 > Technology has enabled and accelerated flexible working and the “omnichannel” of respondents people favour worker, a trend which started pre-COVID-19 believe the office will
Slide 29: Retail
For personal use only Retail Susan MacDonald Head of Retail Tramsheds, Sydney 20 AUGUST 2020 — 28
Slide 30: Supporting retail partners through to recovery
FY20 RESULTS Supporting retail partners through to recovery For personal use only RESULT IMPACTED BY COVID-19 RETAIL NOI SUMMARY: FY19 TO FY20 > Significant financial support recognised in late FY20 $200m > 58% of retail rent collected in Q4 1, 54% collected in July > Provisions made for ongoing sup
Slide 31: Portfolio impact varies by location and category
FY20 RESULTS Portfolio impact varies by location and category For personal use only CENTRE TYPE AND LOCATION A MAJOR PERFORMANCE FACTOR CATEGORIES TRENDS REFLECT CHANGING CONSUMER PRIORITIES > Preference for smaller, local centres > Fresh food, essential services, hobbies and leisure activities hold
Slide 32: Staying connected to our partners and communities during COVID-19
FY20 RESULTS Staying connected to our partners and communities during COVID-19 For personal use only OVER 260 HOURS OF INTERVIEWS WITH RETAIL PARTNERS, AGILE SOLUTIONS TO CONNECT RETAILERS AND CUSTOMERS… LOCAL CONSUMERS, MARKET EXPERTS… Retailers shared learnings and how they are thinking about the
Slide 33: Operating environment remaining uncertain into FY21
FY20 RESULTS Operating environment remaining uncertain into FY21 For personal use only MARKET OBSERVATIONS STEADY GROWTH BEFORE SIGNIFICANT COVID-19 IMPACTS 1 > Steady improvement from April to June followed by slowing of recovery in July 10% 1.9% 2.2% 2.9% > Specialty sales lagging store re-opening
Slide 34: Residential
Residential For personal use only Stuart Penklis Head of Residential St Leonards Square, Sydney 20 AUGUST 2020 — 33
Slide 35: Strong FY20 results delivered in a challenging macro environment
FY20 RESULTS Strong FY20 results delivered in a challenging macro environment For personal use only DELIVERING HIGH QUALITY PRODUCT AND RETURNS Marrick & Co, Sydney > Mirvac remained resilient despite COVID-19 impacts > Residential EBIT increased 12% to $225m in FY20 > Completed settlements of all r
Slide 36: Sales impacted by COVID-19 and government stimulus
FY20 RESULTS Sales impacted by COVID-19 and government stimulus For personal use only SALES SUPPORTED BY STIMULUS EXCHANGES AND DEPOSITS INCREASED SIGNIFICANTLY IN JUNE > Achieved more than 1,800 sales in FY20 despite bushfires and COVID-19 500 Lots > Federal and state stimulus packages supported in
Slide 37: Restocking at the right time and right place
FY20 RESULTS Restocking at the right time and right place For personal use only PRUDENT APPROACH TO RESTOCKING PRUDENT HISTORICAL RESTOCKING OF RESIDENTIAL LANDBANK > Mirvac secured ~25,000 lots between FY11-15 when pricing and returns were attractive 12,000 Lots 150 > High embedded margins given pi
Slide 38: Built-form capability delivers competitive advantage
FY20 RESULTS Built-form capability delivers competitive advantage For personal use only FLEXIBILITY TO ADAPT AND CAPTURE THE FULL VALUE CHAIN WITH INTERNAL BUILT-FORM CAPABILITY LAND SUBDIVISION HOMES TERRACES MID-RISE APT HIGH-RISE APT Gumnut Park, Olivine, MEL Tullamore Built-Form, MEL Green Squar
Slide 39: Residential outlook
FY20 RESULTS Residential outlook For personal use only > Mirvac's proven track-record, quality product and delivery PIPELINE IN A STRONG POSITION WITH NEW PROJECTS EXPECTED TO SETTLE FROM FY21 1 of upfront amenity is a clear differentiator in the market FY21 FY22 FY23 FY24 FY25+ > Diversified produc
Slide 40: Summary & Outlook
For personal use only Summary & Susan Lloyd-Hurwitz CEO & Managing Director Outlook Iluma Private Estate, Perth 20 AUGUST 2020 — 39
Slide 41: Outlook
FY20 RESULTS Outlook For personal use only POSITIONED TO CAPTURE OPPORTUNITIES AND GENERATE VALUE OVER THE LONG TERM > We remain confident of the portfolio quality, long WALE, low capex, and the expected embedded value in our development pipeline > Measured approach to deploying capital selectively
Slide 42: Important Notice
FY20 RESULTS Important Notice For personal use only 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 b
Slide 43: Thank you
For personal use only Thank Reimagine Urban Life you South Eveleigh, Sydney