Mirvac: Office Conditions make up for Resi Weakness

30 April 2019


Mirvac Group provided an operational update for the third quarter of the 2019 Financial Year (FY19). The Group continues to benefit from favourable office market conditions, putting it on track to deliver on its full-year earnings and distribution targets.


The deteriorating housing market with price declines, tighter credit conditions a increasing defaults has impacted their business however Mirvac believe that their well located, high-quality residential products, are protecting the business against the full effect of the slowdown. Mirvac will take advantage of an expected fall in completions in the near term and the resulting undersupply, by restocking the development pipeline in Sydney and Melbourne.


Mirvac's growth will come from its' high exposure to Sydney and Melbourne where the lowest vacancy rates for three decades now provide conditions for rising rents and reduced incentives. Mirvac's first two office buildings at South Eveleigh have achieved practical completion allowing for a staged move‑in by CBA's 10,000-strong workforce. Elsewhere, construction is progressing at 477 Collins Street in Melbourne and 80 Ann Street in Brisbane.


Mirvacs' retail portfolio is weighted to urban and metropolitan areas that are experiencing robust population growth and low levels of unemployment. Their Centres MAT sales growth of 2.3% and comparable specialty sales growth of 2.6% are supporting positive leasing spreads.


Mirvac reaffirms operating EPS guidance of between 16.9 to 17.1 cpss for FY19, which represents an increase in earnings of between 3 to 4 per cent, and distribution guidance of 11.6 cpss, which represents DPS growth of 5 per cent.