Mirvac Group · ASX:MGR
Mirvac — Investor Presentation (May 2013)
39 slides from Mirvac's investor presentation, May 9, 2013
Slide 1: Strategic review by Mirvac
For personal use only strategic review 9 may 2013 by mirvac
Slide 2: Strategic review approach: bottom up and top down analysis
Strategic review by mirvac For personal use only Mirvac’s annual strategic review was driven by a bottom up and top down analysis of its business segments Bottom up: Top down: n Examined whether Mirvac has a competitive advantage in: n Reaffirmed what AREITs provide to investors – Office n Considere
Slide 3: Sector analysis
For personal use only sector analysis by mirvac strategic review I 9 May 2013 I page 2
Slide 4: Office portfolio: competitive advantage and returns vs IPD
Mirvac’s office portfolio by mirvac For personal use only What we determined Office total return vs IPD benchmark Mirvac has a competitive advantage in office. 12% 11.6 This is evidenced by total return outperformance 10.7 versus IPD over 1,3 and 5 years1 2.6 1.5 Measures of competitive advantage in
Slide 5: Office portfolio: drivers of competitive advantage
Mirvac’s office portfolio by mirvac For personal use only Drivers of Mirvac’s competitive advantage Mirvac re-developed office assets contribution to overall relative return – 5 years to December 2012 1 Integrated model: 0.5bp Mirvac n Internal development capability n Superior asset management 0.4
Slide 6: Future office portfolio: create and buy
Mirvac’s future office portfolio by mirvac For personal use only Strategic future direction: create and buy Acquisition mandate Investment Development Asset type strategy strategy Product Geographies Office Prime grade Long term hold Assets with Passive assets and assets Sydney, Melbourne, Core CBD
Slide 7: Retail portfolio: competitive advantage and returns vs IPD
Mirvac’s retail portfolio by mirvac For personal use only What we determined Retail total return vs IPD benchmark Mirvac does not currently have a competitive advantage in retail. 10% 9.2 This is evidenced by total return underperformance over 3 & 5 years 1 9.2 (0.6) 0.6 Measures of competitive adva
Slide 8: Retail portfolio: drivers of performance
Mirvac’s retail portfolio by mirvac For personal use only Drivers of Mirvac’s performance Integrated model: n Re-established retail redevelopment capability two years ago n Increased management focus over past two years driving improvement in portfolio metrics n Opportunities to access urban markets
Slide 9: Future retail portfolio: $800m development opportunity
Mirvac’s future retail portfolio by mirvac For personal use only $800m accretive development and expansion opportunity embedded in existing portfolio Commenced Next wave (FY14-16)1 ln preparation (FY17-19)1 Stanhope 3 Stanhope 4 Stanhope 5 Kawana 4 Kawana 5 Orion Padsites Orion 2 Orion 3 Rhodes Broa
Slide 10: Future retail portfolio: unlock value
Mirvac’s future retail portfolio by mirvac For personal use only Strategic future direction: unlock value in existing retail portfolio Acquisition mandate Investment Development Asset type strategy strategy Product Geographies Retail Sub regional Long term hold Reposition Sub regional and Sydney, Me
Slide 11: Industrial portfolio: competitive advantage and returns vs IPD
Mirvac’s industrial portfolio by mirvac For personal use only What we determined Industrial total return vs IPD benchmark Mirvac has a niche competitive advantage in industrial when it can 10% 9.7 leverage the integrated model. This is evidenced by total return 8.9 1.5 outperformance versus IPD over
Slide 12: Industrial portfolio: drivers of competitive advantage
Mirvac’s industrial portfolio by mirvac For personal use only Drivers of Mirvac’s competitive advantage M2 M7 North Penrith Ryde St Leonards Parramatta Integrated model: M4 Homebush Bay n Mirvac developed assets have delivered superior returns SYDNEY M7 Eastern Distributor n Warehousing assets on ba
Slide 13: Future industrial portfolio: create on an opportunistic basis
Mirvac’s future industrial portfolio by mirvac For personal use only Strategic future direction: create on an opportunistic basis Acquisition mandate Investment Development Asset type strategy strategy Product Geographies Industrial Infill Long term Reposition and Industrial assets in: Sydney – Sout
Slide 14: Residential market definitions
Mirvac’s residential market definitions by mirvac For personal use only Inner ring (>150 lots per Ha) Infill ring (15 – 50 lots per Ha) – Metropolitan activity centre: suburban civic centres in the infill ring Urban edge (12 – 25 lots per Ha) Rural (8 – 12 lots per Ha) Urban edge boundary Defined re
Slide 15: Residential business: competitive advantage
Mirvac’s residential business by mirvac For personal use only What we determined Measures of competitive advantage in residential Mirvac has a competitive advantage in the All MPC MPC urban following areas: apartments infill ring edge & rural n Apartments in inner ring 1) Quality of location n n n n
Slide 16: Residential business: performance by product type
Mirvac’s residential business by mirvac For personal use only Performance by product type Capital employed Historical weighted IRRs by product type 2 Non- 18% impaired Impaired Total lots Total 1 projects projects remaining 15.7% 15 14.0% All apartments $827.0m 88% 12% 5,997 12 Masterplanned communi
Slide 17: Future residential business: create and sell
Mirvac’s future residential business by mirvac For personal use only Strategic future direction: create and sell Current Product Description portfolio strategy Acquisition mandate Apartments Inner ring Develop out Inner ring Metropolitan activity centre projects current pipeline Metropolitan activit
Slide 18: Operational efficiency
Operational efficiency by mirvac For personal use only Focus on cost: n Significant cost management program delivered post GFC n Continue to focus on costs n Program in place to embed continuous process re‑engineering to reduce costs and increase efficiencies (B14 programs) n Areas of current focus:
Slide 19: Outcome
by mirvac For personal use only outcome by mirvac strategic review I 9 May 2013 I page 18
Slide 20: Summary of sector findings
Summary of sector findings by mirvac For personal use only New sector directional mandates have been developed to deliver a more focused and disciplined approach New directional mandates Create and buy: n Prime grade CBD Office (development + repositioning + passive) n Prime grade non-CBD (developme
Slide 21: Capital
by mirvac For personal use only capital by mirvac strategic review I 9 May 2013 I page 20
Slide 22: Capital allocation
Capital allocation by mirvac For personal use only Capital allocation process has been re-engineered Needed to break down silos and encourage competition for capital across the business n Process, structure and accountability developed and enforced n Capital allocation process and structure will dri
Slide 23: Capital allocation structure
Capital allocation structure by mirvac For personal use only Annual review of Strategy and Group Mandates MGR Board Executive Leadership Team Purchase Approve/ Approval (Chair – Susan Lloyd-Hurwitz) Level 3 Investment Committee (Chair – Susan Lloyd-Hurwitz) Due Diligence team formed as a function of
Slide 24: Targets for capital allocation and returns
Targets for capital allocation and returns by mirvac For personal use only Passive invested capital Active invested capital Target: 80% Target: 20% Minimum: 75% Maximum: 25% Target average returns: Target average returns: n Office n Residential development – Average 10 year IRR: 8.5% – Average IRR:
Slide 25: Capital sources to deliver strategy
Capital sources to deliver strategy by mirvac For personal use only Diversified capital sources to deliver the strategy over the long term Funding sources: n Retained earnings n Debt – 20-30% gearing target – Average debt maturity >3.5 years n Equity n Capital partnering Diversified funding sources
Slide 26: Capital partnering
Capital partnering by mirvac For personal use only Strategy: expand wholesale capital relationships to enable growth through cycles. Mirvac will look to secure a select number of capital partners for each sector of the business By expanding our relationships with capital partners Mirvac will have th
Slide 27: Value proposition to investors
Mirvac’s value proposition to investors by mirvac For personal use only Value Proposition Mirvac’s business model provides investors with a balance of: Stable Income + Focused Growth Stable income provided by: Focused growth provided by: n High quality diversified portfolio n Core development capabi
Slide 28: Vision
Mirvac’s vision by mirvac For personal use only Setting the standard as a world-class Australian property group that attracts the best Integrated Leveraging our integrated model to create, own, manage Diversified Maintaining an appropriate balance of passive and active invested capital through cycle
Slide 29: Additional information
For personal use only additional by mirvac information strategic review I 9 May 2013 I page 28
Slide 30: Sector and geographic diversification
Sector and geographic diversification by mirvac For personal use only Sector diversification 1 58.9% Office 59.0% 28.1% Retail 27.7% 7.5% Industrial 6.8% LPT/ 3.8% unlisted funds 4.8% 1.7% IH13 Other 1.7% IH12 0% 10% 20% 30% 40% 50% 60% 70% Geographic diversification 2 63.5% NSW 62.7% 14.7% VIC 14.5
Slide 31: MPT portfolio snapshot
MPT portfolio snapshot by mirvac For personal use only 1H13 1H12 MPT – lease expiry profile and variance to FY12 5 60% Properties owned 1 61 67 54.3% NLA 1 1,347,863sqm 1,313,194sqm 50 Book value 2 $6,013.7m $5,850.1m WACR 7.45% 7.49% 40 Net property income 3 $220.2m $220.5m 30 Like-for-like NOI gro
Slide 32: Office snapshot
Office snapshot by mirvac For personal use only 1H13 1H12 Office lease expiry profile and variance to FY12 3 70% 65.0% Properties owned 25 29 60 NLA 609,846sqm 638,268sqm 50 Book value 1 $3,471.5m $3,431.3m 40 WACR 7.45% 7.45% Net property income $125.7m $122.9m 30 Like-for-like NOI growth 4.2% 4.2%
Slide 33: Retail snapshot
Retail snapshot by mirvac For personal use only 1H13 1H12 Retail lease expiry profile and variance to FY12 3 40% Properties owned 19 19 NLA 390,646sqm 391,327sqm 30.6% Book value 1 $1,661.5m $1,610.1m 30 WACR 7.25% 7.29% Net property income $60.7m $60.7m 20 Like-for-like NOI growth 2.7% 2.9% 15.9% 1
Slide 34: Industrial snapshot
Industrial snapshot by mirvac For personal use only 1H13 1H12 Industrial lease expiry profile and variance to FY12 3 80% Properties owned 13 15 69.9% NLA 346,972sqm 283,202sqm 60 Book value 1 $445.9m $396.6m WACR 8.00% 8.37% 40 Net property income $19.3m $14.9m Like-for-like NOI growth 5.9% (5.4%) M
Slide 35: Diversification of residential lots/revenue
Diversification of residential lots/revenue by mirvac For personal use only 31,130 lots under control Forecast future revenue by product Lots by structure Mirvac share of forecast revenue by State Masterplanned 100% Mirvac inventory 39.6% NSW 39.4% Communities 53.7% MWRDP 5.5% VIC 34.7% Apartments 4
Slide 36: FY13 calendar
FY13 calendar 1 by mirvac For personal use only Upcoming conference attendance: Event Location Date Private Roadshow Sydney 26 - 27 August 2013 Private Roadshow Melbourne 29 August 2013 Upcoming announcements: Event Location Date Annual General Meeting Melbourne 14 November 2013 MGR Distribution Ann
Slide 37: Glossary
Glossary by mirvac For personal use only Term Meaning Term Meaning A-REIT Australian Real Estate Investment Trust JV Joint Venture Bp Basis Points LPT Listed Property Trust CBD Central Business District MAT Moving Annual Turnover CPSS Cents Per Stapled Security MPC Masterplanned Communities DA Devel
Slide 38: Disclaimer and important notice
Disclaimer and important notice by mirvac For personal use only Mirvac Group comprises Mirvac Limited ABN 92 003 280 699 and Mirvac Property Trust An investment in Mirvac stapled securities is subject to investment and other known and ARSN 086 780 645. This presentation (“Presentation”) has been pre
Slide 39: Thank you
by mirvac For personal use only Thank you by mirvac Follow us on twitter @MirvacIR Mirvac Mirvac Investor 1H13 relations Property website compendium strategic review I 9 May 2013 I page 38