Mirvac Group · ASX:MGR
Mirvac — H1 2011 Earnings Presentation
36 slides from Mirvac's earnings presentation, Feb 22, 2011
Slide 1: Results by Mirvac
results by mirvac 22 february 2011 tower 8, yarra’s edge, Docklands, VIC
Slide 2: Agenda
agenda mirvac GROUP AND STRATEGY 2 KEY 1H11 ACHIEVEMENTS 5 financial RESULTS 8 INVESTMENT – MPT 10 DEVELOPMENT 16 CAPITAL MANAGEMENT 25 CORPORATE RESPONSIBILITY AND SUSTAINABILITY 28 Queensland update 30 SUMMARY and Guidance 33 MIRVAC half year results presentation 22 february 2011 page 1
Slide 3: Mirvac Group and Strategy
MIRVAC GROUP AND STRATEGY woolworths distribution centre, hoxton park, Sydney, NSW MIRVAC half year results presentation 22 february 2011 page 2
Slide 4: Mirvac Group
MIRVAC GROUP 80% Office – 57.2% 2 Mirvac Property Trust – MPT retail – 30.6% 2 Invested capital – $5,805m 1 other – 12.2% 3 target Operating NPAT — through 20% cycle Residential apartments – 41.7% $1,463.2m masterplanned communities – 39.8% development 81.0% integrated housing – 18.5% Invested capi
Slide 5: Mirvac strategy
MIRVAC strategy Investment — MPT drivers outcome Optimise asset performance Actively weight sector Market leading Australian Divest non aligned assets positions to maximise diversified property trust total returns Development drivers outcome Redeploying capital from Maximise commercial Market leadin
Slide 6: Key 1H11 achievements
key 1h11 achievements river homes, yarra’s edge, Docklands, VIC MIRVAC half year results presentation 22 february 2011 page 5
Slide 7: Key 1H11 achievements – Group
key 1H11 achievements > progression of strategy > Quality portfolio outperformance > Growth on track Group > Increased weighted average debt maturity to 4.2 from 2.6 years 1 via $1.85bn debt refinance > Maintained conservative balance sheet gearing at 27.3% 2 > Continued diversification of debt sour
Slide 8: Key 1H11 achievements – Investment and Development
key 1H11 achievements Investment Division – MPT > Achieved 4.2% like-for-like net operating income growth > Increased occupancy from 96.7% (1H10) to 98.2% 1 > Increased development pipeline to $1,408.3m > Confirmed asset valuations via disposal of $149.9m of MPT assets at a 1.3% premium to carrying
Slide 9: Financial Results
FINANCIAL RESULTS 8 chifley square, sydney, nsw MIRVAC half year results presentation 22 february 2011 page 8
Slide 10: Financial results
financial RESULTS 1 1H11 ($m) 1H10 ($m) % change Divisional operating EBIT Investment 203.1 136.0 49.3 Development 37.8 13.1 188.5 Other 14.2 10.3 37.9 Unallocated (30.0) (24.4) (23.0) Elimination 2.8 (5.5) Total operating EBIT 227.9 129.5 76.0 Less interest 32.9 2.2 Add tax benefit 5.4 3.9 Operatin
Slide 11: Investment – MPT
investment – MPT artist’s impression, 10-20 bond street, sydney, nsw MIRVAC half year results presentation 22 february 2011 page 10
Slide 12: Investment division
investment division Office – 57.2% 2 Mirvac Property Trust – MPT retail – 30.6% 2 Invested capital – $5,805m 1 other – 12.2% 3 Achievements 1H11 MPT outperformance MPT total return vs IPD benchmark > Achieved 4.2% like-for-like net operating 12 MPT outperformance (Sep 10) IPD (Sep 10) 11.3% income g
Slide 13: Portfolio highlights – office
portfolio highlights – office > Strong 1H11 like-for-like net operating income growth of 4.0% > Increased occupancy from 96.8% (1H10) to 98.0% 1 > Repositioned and upgraded portfolio quality with 88.8% of MPT now Premium or A Grade 2 > Achieved 32.6% 3 occupancy at 10-20 Bond Street, Sydney > Office
Slide 14: Portfolio highlights – retail
portfolio highlights – RETAIL > Strong 1H11 like-for-like net operating income growth of 5.4% > Increased occupancy from 96.9% (1H10) to 98.9% 1 > Sustainable occupancy cost of 13.4% > 83.3% 1 of portfolio weighted to centres driven by non discretionary spend 2 > 56.9% reduction in 2H11 lease expiry
Slide 15: Commercial development
COMMERCIAL DEVELOPMENT $1,408.3m pipeline of Australian investment grade real estate, undertaken in-house by Mirvac Development 1 Active Project (Ownership) Type Status Dec 10 Jun 11 Jun 12 Jun 13 Jun 14 Jun 15 10-20 Bond Street ✔ 2 32.6% $16.1m, 7.5% 3 Sydney, NSW (50% with ING) Office Preleased Fe
Slide 16: Case study – overweight office portfolio strategy
case study – overweight office portfolio strategy Mirvac has made the strategic decision to overweight office > 57.2% of portfolio weighted to office > $993.5m office development pipeline Demand cycle well underway Cyclical low point in valuation cycle Net absorption as a % of Australian CBD stock R
Slide 17: Development
DEVELOPMENT laureate, port melbourne, vic MIRVAC half year results presentation 22 february 2011 page 16
Slide 18: Mirvac's development division
MIRVAC’S DEVELOPMENT DIVISION apartments – 41.7% Residential $1,463.2m masterplanned communities – 39.8% development 1 81.0% integrated housing – 18.5% Invested capital – industrial – 68.8% $1,806m 1 Commercial $342.3m Office – 21.1% 19.0% retail – 10.1% Achievements 1H11 > Recovery commenced — impr
Slide 19: 1H11 activity
1H11 ACTIVITY 1H11 highlights 721 lot settlements consisting of: 100% Mirvac inventory: 63.1% > 721 lots settled MWRDP: 13.9% > Gross margin 17.1% 1 excluding zero margin PDA: 16.4% JVs: 2.9% settlements (1H10: 16.2%) Development Funds: 3.7% > Gross margin 14.7% 1 including zero margin settlements (
Slide 20: On track for FY11
ON TRACK FOR FY11 77.6% of total forecast 2H11 development revenue secured by exchanged contracts Mirvac’s position as Australia’s pre-eminent residential developer is evidenced by $841.0m 1 ($703.7m as at FY10) of exchanged residential pre-sales contracts FY11 major contributors Mirvac’s % 2H11 EBI
Slide 21: Current and near term projects
current and near term projects Settlement Lots Net revenue 1 Released State Project Stage Status Interest year Lots presold $m 4 VIC Harcrest Stage 1 Under construction 20% FY12 91 92% 10.2 4 NSW Rhodes Water’s Edge Under construction 20% FY12 111 62% 15.8 4 NSW Rhodes Elinya Under construction 20%
Slide 22: Development earnings visibility
DEVELOPMENT earnings VISIBILITY Profit contributing development projects Profit recognition profile 1 Project Stage Ownership Type Status Jun 11 Jun 12 Jun 13 Jun 14 Jun 15 Commercial Projects Currently marketing part share of commercial projects Woolworths Distribution Centre Hoxton Park, NSW — 100
Slide 23: Return to normalised divisional performance
RETURN TO NORMALISED DIVISIONAL PERFORMANCE Forecast provision release 1 Reinvestment of capital in accordance with strategy 350 $m $480m forecast proceeds from provisioned workout and sale projects 300 $170m of proceeds received from 250 provisioned sale projects $650m of forecast cash proceeds 200
Slide 24: Return to normalised divisional performance
RETURN TO NORMALISED DIVISIONAL PERFORMANCE New residential acquisitions: Forecast revenue ($m) Lots Type Hamilton 324.7 582 Apartments Harold Park 1,098.0 1,213 Apartments Hoxton Park 78.2 223 House Middleton Grange 126.7 474 Land New Brighton Golf Course 104.8 257 House Total 1,732.4 2,749 5 year
Slide 25: Case study – Harold Park development acquisition
CASE STUDY – Harold park development acquisition Mirvac’s core competency over almost 40 years is leveraging its internal delivery model and brand recognition to deliver innovative high quality apartments and integrated housing in inner city locations Acquisition rationale > Structured $187m payment
Slide 26: Capital management
capital management justin mitchell, CFO 23 furzer Street, phillip, act MIRVAC half year results presentation 22 february 2011 page 25
Slide 27: Capital management
capital management 1H11 Achievements > Increased weighted average debt maturity to 4.2 from 2.6 years 1 > Refinanced $1.85bn syndicated facility > Issued $200m 6 year MTN at 250 basis point spread > No more than 20.0% of exposure expiring in one year > Maintained diversified sources of funding 1H11
Slide 28: Case study – group overhead costs
case study – group overhead costs > Overhead cost reduction is a continued focus for management > MPT — cost base scaleable as trust developments complete > Development Division — cost base scaleable as inventory expands Overhead calculation 1H11 ($m) 1H10($m) % change Employee benefit expenses 1 36
Slide 29: Corporate Responsibility and Sustainability
Corporate Responsibility and Sustainability broadway shopping centre, sydney, nsw MIRVAC half year results presentation 22 february 2011 page 28
Slide 30: Future proofing group's success
future proofing group’s success Mirvac’s strong commitment to its environmental, social and economic responsibilities delivers tangible results Workplace health and safety: NABERS: > The average cost of employee injury > Current average office and industrial claims has reduced by 46.0% 1 and the por
Slide 31: Queensland update
QUEENSLAND UPDATE mariner’s peninsular, Name townsville, of property qld MIRVAC half year results presentation 22 february 2011 page 30
Slide 32: Queensland update – residential development
QUEENSLAND UPDATE The Group continues to monitor project impacts Residential development: Mirvac experienced limited impact to its residential development projects in Brisbane: Tennyson Reach: Pier, Newstead (MWRDP): > Flooding to basement, 9 ground floor apartments and landscaped areas > Minor wate
Slide 33: Queensland update – MPT portfolio and hotels
QUEENSLAND UPDATE MPT portfolio: Managed hotels: All affected MPT assets are fully covered by insurance Sebel Suites Brisbane: 12 Cribb Street: > Flooding to basement > Flooding to basement 339 Coronation Drive: > Flooding to basement Hinkler Central, Bundaberg: > Flooding to basement City Centre Pl
Slide 34: Summary and guidance
SUMMARY and guidance rhodes residential, sydney, nsw MIRVAC half year results presentation 22 february 2011 page 33
Slide 35: Summary
SUMMARY > progression of Strategy > Quality Portfolio Outperformance > Growth on Track MIRVAC half year results presentation 22 february 2011 page 34
Slide 36: Guidance
GUIDANCE Guidance FY11 Forecast Group operating NPAT $356 – $365m Forecast implied EPS growth 11.8 – 14.0% Forecast operating EPS 10.4 – 10.6cpss Forecast DPS 8.0 – 9.0cpss Forecast weighted average securities 3,423m MIRVAC half year results presentation 22 february 2011 page 35