Mirvac Group · ASX:MGR
Mirvac — FY2019 Earnings Presentation
38 slides from Mirvac's earnings presentation, Aug 8, 2019
Slide 1: FY19 Results
Reimagine Urban Life FY19 Results 8 August 2019
Slide 2: Agenda
FY19 RESULTS Agenda Financial Capital Office & Summary & Overview Retail Residential Results Allocation Industrial Guidance Susan Lloyd-Hurwitz Shane Gannon Brett Draffen Campbell Hanan Susan MacDonald Stuart Penklis Susan Lloyd-Hurwitz CEO & MANAGING DIRECTOR CHIEF FINANCIAL OFFICER CHIEF INVESTMEN
Slide 3: Overview
Overview Susan Lloyd-Hurwitz CEO & Managing Director South Eveleigh, (Axle) Sydney 8 AUGUST 19 2
Slide 4: Making a positive contribution to Australia’s urban landscape
FY19 RESULTS Making a positive contribution to Australia’s urban landscape 8 AUGUST 19 3
Slide 5: Another year of delivering on our promises
FY19 RESULTS Another year of delivering on our promises Highly visible and secure cash flows, sustainable Delivered at top end of EPS 11.6 cpss 10.1% distribution growth & DPS guidance FY19 DPS GROUP ROIC and attractive ROIC 5% GROWTH SINCE FY13 $631m 17.1 cpss 5% p.a. DPS OPERATING PROFIT FY19 EPS
Slide 6: Proven track record through the cycle, well placed for FY20
FY19 RESULTS Proven track record through the cycle, well placed for FY20 OVER THE PAST SIX YEARS MIRVAC HAS MANAGED THE PROPERTY CYCLE WELL FOCUSED URBAN STRATEGY DELIVERING >> Delivered eight new modern office buildings and five industrial buildings with an end value of $2.7bn 1, creating $215m of
Slide 7: Transition continues to high-quality passive earnings
FY19 RESULTS Transition continues to high-quality passive earnings GROWING THE PASSIVE PORTFOLIO 5% >> Our high-quality investment portfolio will increasingly drive overall group results with consistent strong distribution growth >> Passive invested capital has increased 14% to $11.5bn p.a. average
Slide 8: Pipeline of additional opportunities secured in FY19
FY19 RESULTS Pipeline of additional opportunities secured in FY19 LEVERAGING THE INTEGRATED MODEL AND ASSET CREATION CAPABILITIES Office Residential Industrial Future > $2 bn > 3,000 $1.2bn pipeline opportunities end value 1 new lots end value 1 Melbourne office Exclusive due diligence; ~40,000 sqm
Slide 9: Building culture as a source of competitive advantage
FY19 RESULTS Building culture as a source of competitive advantage HEALTH AND SAFETY INNOVATION – HATCH & TECHNOLOGY DIVERSITY, INCLUSION & FLEXIBILITY Refined and streamlined HSE Management system Three start-ups created by intrapreneurs – Awarded the Workplace Gender Equality Agency (WGEA) Achieve
Slide 10: Progress on ‘This Changes Everything’
FY19 RESULTS Progress on ‘This Changes Everything’ SOCIAL AND ENVIRONMENTAL SUSTAINABILITY BECOMING INCREASINGLY EMBEDDED Climate change Natural resources Our community Social inclusion Our people Trusted partner Net positive Net positive (water) and Triple community $100m directed to Highly engaged
Slide 11: Financial Results
Financial Results Shane Gannon Chief Financial Officer EY Centre, 200 George Street, Sydney 8 AUGUST 19 10
Slide 12: Continuing to deliver a strong financial trajectory
FY19 RESULTS Continuing to deliver a strong financial trajectory STATUTORY PROFIT OPERATING EPS NTA PER SECURITY DPS $1,400 million 17.5 cents $2.70 12.0 cents 17.1c 11.6c 1,200 $1,164m 16.5 16.4c 2.50 $2.50 11.5 $1,089m 1,000 $1,033m $1,019m 15.5 11.0 11.0c 2.30 $2.31 800 14.5 14.4c 10.5 10.4c $2.1
Slide 13: Strong financial results in line with expectations
FY19 RESULTS Strong financial results in line with expectations OPERATING RESULTS OFFICE AND INDUSTRIAL FY19 FY18 1 Higher EBIT contribution driven by strong NOI growth of 12%, significant $m $m development EBIT from Calibre, 477 Collins Street and South Eveleigh and higher fees from growth in asset
Slide 14: Capital management to support growth through cycle
FY19 RESULTS Capital management to support growth through cycle >> Well positioned to fund development pipeline and growing distribution >> Successfully completed a fully underwritten $750m institutional placement and security purchase plan 20.5% 4.8% 8.5 yrs A3/A- >> Executed our longest dated debt
Slide 15: Recurring income supporting distribution growth
FY19 RESULTS Recurring income supporting distribution growth >> Distributions continue to be funded from operating cash flows DISTRIBUTION COMFORTABLY FUNDED BY OPERATING CASH FLOWS >> FY19 operating cash flows lower than FY18 due to construction in progress $700m and residential inventory restockin
Slide 16: Capital Allocation
Capital Allocation Brett Draffen Chief Investment Officer Therry Street, Melbourne (artist impression) 8 AUGUST 19 15
Slide 17: Capital allocation focused on urbanisation of gateway cities
FY19 RESULTS Capital allocation focused on urbanisation of gateway cities 80% OF GROUP CAPITAL ALLOCATED TO SYDNEY AND MELBOURNE Australia’s largest populations Australia’s largest & deepest Australia’s largest and most important Main contributors to Australia’s Australia’s key Largest beneficiaries
Slide 18: Growing value and recurring income through asset creation
FY19 RESULTS Growing value and recurring income through asset creation >> Asset creation capability delivering high-quality STRONG GROWTH IN PASSIVE ASSETS AND EXTERNAL AUM passive assets as development pipeline completes $14.0bn >> $11.5bn passive invested capital provides highly visible and secure
Slide 19: Strong visibility of future pipeline
FY19 RESULTS Strong visibility of future pipeline MAJOR CONTRIBUTORS 1 FY20 90% pre-let FY21 Future Pipeline DEVELOPMENT PROFITS & FAIR VALUE UPLIFTS 2 developments 3 DEVELOPMENT PROFITS & FAIR VALUE UPLIFTS 2 DEVELOPMENT PIPELINE 477 Collins Street, MEL 80 Ann Street, BNE 80 Ann Street, BNE South E
Slide 20: Continuing to progress Build-to-rent strategy
FY19 RESULTS Continuing to progress Build-to-rent strategy >> Delivery of seed asset at Sydney Olympic Park is on program with leasing in FY20 and first customers moving in during September 2020 >> Secured the second BTR asset as part of the City of Melbourne’s $250m renewal of the Queen Victoria Ma
Slide 21: Office & Industrial
Office & Industrial Campbell Hanan Head of Office & Industrial South Eveleigh (Axle), Sydney 8 AUGUST 19 20
Slide 22: Creating modern office buildings that improve the quality of income
FY19 RESULTS Creating modern office buildings that improve the quality of income STRATEGIC OVERWEIGHT SYDNEY AND MELBOURNE DELIVERING EXCEPTIONAL RESULTS >> Strong leasing with 82 deals covering ~96,400 sqm of NLA 98 .2% 5like-for-like .7% .6% $392m 16leasing – 23% effective rental growth through 16
Slide 23: Disciplined industrial strategy focusing on strong Sydney market
FY19 RESULTS Disciplined industrial strategy focusing on strong Sydney market SYDNEY FOCUS AND DEVELOPMENTS UNDERPIN PORTFOLIO PERFORMANCE SYDNEY INDUSTRIAL ASSETS AND DEVELOPMENT PIPELINE Shared heavy / dedicated freight rail >> Strategic positioning of industrial portfolio to Sydney, benefiting fr
Slide 24: Asset creation capability driving future income and returns
FY19 RESULTS Asset creation capability driving future income and returns TRACK RECORD ADDITIONAL HIGH-QUALITY INCOME FROM OFFICE & INDUSTRIAL DEVELOPMENTS 1 EXPECTED FUTURE OF RETURNS RETURNS $3.1bn ACTIVE DEVELOPMENT PIPELINE NOI GROWTH 100 ($m) NOI >$215m >$90m 90 74%5 committed 80 90% New recurri
Slide 25: Retail
Retail Susan MacDonald Head of Retail Tramsheds, Sydney 8 AUGUST 19 24
Slide 26: Strategic overweight to urban growth markets driving performance
FY19 RESULTS Strategic overweight to urban growth markets driving performance PORTFOLIO PERFORMING WELL IN A COMPETITIVE OPERATING ENVIRONMENT TOTAL RELATIVE RETURN (EASTERN METRO VS NON-METRO) 1.10 Relative return vs Total Retail >> Strong leasing across 396 deals covering ~61,900 sqm of NLA 5% cum
Slide 27: Portfolio well positioned for generational shift in consumer behaviours
FY19 RESULTS Portfolio well positioned for generational shift in consumer behaviours ADAPTING OUR ASSETS TO REMAIN ENGAGING IN THE FUTURE URBAN PORTFOLIO POSITIONED FOR CHANGE Department stores >> Remixing of categories well underway 57% – Increase in non-retail, entertainment and food catering – Si
Slide 28: Investing in connected communities via delivering recreational infrastructure
FY19 RESULTS Investing in connected communities via delivering recreational infrastructure TARGETED DEVELOPMENT SPEND, ENHANCING RETURNS, WITH MINIMAL ADDITIONAL GLA TOOMBUL, BRISBANE MOONEE PONDS CENTRAL, MELBOURNE ORION SPRINGFIELD CENTRAL, BRISBANE (artist impression) New dining Continuing Entert
Slide 29: Residential
Residential Stuart Penklis Tullamore (Folia), Melbourne (artist impression) Head of Residential 8 AUGUST 19 28
Slide 30: FY19 targets delivered in a challenging macro environment
FY19 RESULTS FY19 targets delivered in a challenging macro environment FY19 TARGETS DELIVERED >> Mirvac’s residential brand, track record and high-quality product continues 2,611 27% < 2% to produce strong results >> Exceeded target of >2,500 lot settlements >> Gross margins remain above through-cyc
Slide 31: Creating exceptional places to live
FY19 RESULTS Creating exceptional places to live TRUSTED BRAND & PARTNER N >> 47 years of experience BU IG DES ILD >> Legacy projects and communities RESIDENTIAL >> Integrated business model with in-house BY MIRVAC design and construction >> Quality and care in every little detail >> Early investmen
Slide 32: Delivering the Mirvac difference
FY19 RESULTS Delivering the Mirvac difference 258 Apartments with an Successful Design, planning Premium lobby and East Melbourne, Project Delivery 100% sold Minimum 5 star and end value of ~$460m. relationship with approval, construction, concierge service, Fitzroy Gardens, Agreement with 80% avera
Slide 33: Restocking at the right time and in the right structures
FY19 RESULTS Restocking at the right time and in the right structures STRATEGIC LOCATIONS AND TIMING DRIVING PERFORMANCE RESIDENTIAL RESTOCKING VS RESIDENTIAL PRICE CHANGE 1 >> Around 28,000 pipeline lots with an average vintage of 7 years, 75% NSW/VIC 12,000 Residential lots 12% >> High projected m
Slide 34: High-quality pipeline supports through-cycle earnings
FY19 RESULTS High-quality pipeline supports through-cycle earnings RESIDENTIAL MARKET STABILISING SHIFTING TO A GREATER PROPORTION OF EBIT GENERATED FROM MASTERPLANNED COMMUNITIES >> Price declines in Sydney and Melbourne have stabilised FY14-19 >> Lending conditions have improved for purchasers Apa
Slide 35: Summary & Guidance
Summary & Guidance Susan Lloyd-Hurwitz CEO & Managing Director 8 AUGUST 19 34
Slide 36: FY20 Guidance
FY19 RESULTS FY20 Guidance DPS 13 cents 1 AGR 5% 12 FY20 guidance PS C 12.2c ar D FY20 guidance 3-4% 7 ye 5% 11.6c 11.0 DPS growth 11.0c 10.4c 10.0 EPS growth 9.9c (17.6 – 17.8 cpss) 9.0 9.4c 9.0c 8.7c 8.0 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 Guidance 1. Period of FY13 (DPS 8.7 cpss) to FY20, inc
Slide 37: Important Notice
FY19 RESULTS Important Notice 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”) has been prepared b
Slide 38: Thank you
Reimagine Urban Life Thank you