Mirvac said strong residential sales and settlements put the developer on track to meet its full-year earnings target of 15¢ a share even as its retail portfolio took a battering from lockdowns in NSW and Victoria.
The country’s largest listed developer of residential, commercial and industrial property also said exchanged contracts on a record 902 housing lots and settled 551 sales in the three months to September, putting it on track for 2500 settlements this year, in line with last year’s 2526.
Cash collections in its portfolio of commercial properties fell, however, to 88 per cent of rent owed in the first quarter from 98 per cent last year – but still up on the 82 per cent of the same period a year earlier – pulled lower mainly by retail, where cash collection slumped to 71 per cent.
Despite what it called a “challenging” quarter, Mirvac said it expected conditions in retail – which suffered a 4.8 per cent quarter-on-quarter decline in speciality sales – to improve as shoppers emerged from restrictions and unleashed pent-up demand for physical retail.
“Our clear visibility of earnings, with 95 per cent of Residential EBIT already secured, along with accelerated vaccination rates and an easing of restrictions in NSW and Victoria, give us confidence that we will continue to build momentum in the second half of FY22, and we remain on track to meet the guidance we provided in August,” chief executive Susan Lloyd-Hurwitz said.
In its office portfolio, cash collections slipped to 97 per cent from 99 per cent in the year to June, mainly as a result of weaker retail and car park revenues. Restrictions and limited on-site inspections affected occupancy, which slipped to 94.4 per cent from 95.5 per cent last year.
The office weighted average lease expiry shortened to 6.1 years from 6.3 years.
“Leasing activity softened during the quarter, which was not surprising given the operating environment,” said Campbell Hanan, head of Mirvac’s integrated investment portfolio.
“However, anecdotal evidence from our tenants suggests there is a clear motivation to return to our CBDs, and our modern, sustainable and technology-enabled CBD office assets will help us to both retain and attract employees to our workplaces.”
Mirvac’s industrial portfolio remained strong, with 100 per cent occupancy.
“Low vacancy rates in Sydney also point to better rental growth in the near-to-mid term, which we are well placed to benefit from,” Mr Hanan said.