Mirvac Group · ASX:MGR
Mirvac — Debt Investor Presentation (July 2003)
69 slides from Mirvac's debt investor presentation, July 2003
Slide 1: Mirvac Group Multi Option Presale Securitisation (MOPS)
Mirvac Group Multi Option Presale Securitisation (MOPS) July 2003 Arrangers and Lead Managers: Australia and New Zealand Banking Group Limited Merrill Lynch International (Australia) Limited Dealers: Australia and New Zealand Banking Group Limited Merrill Lynch International (Australia) Limited Deut
Slide 2: Agenda
MIRVAC GROUP Agenda 1. Transaction Overview 2. Overview of Mirvac Limited 3. The Property Development Business 4. Overview of the Project Development Lifecycle 5. The Initial Portfolio 6. MOPS Program Features 7. Risks and Mitigants 8. The Initial Portfolio 9. Summary 2
Slide 3: 1. Transaction Overview
MIRVAC GROUP 1. Transaction Overview 3
Slide 4: Transaction Overview
MIRVAC GROUP Transaction Overview • A$500,000,000 Multi Option Presale Securitisation Program • Permits issuance of MTNs rated AA/AA and CP rated A-1+/F-1+ by Standard & Poor’s and Fitch respectively • Backed by a revolving, cross-collateralised portfolio of substantially presold residential develop
Slide 5: Transaction Overview
MIRVAC GROUP Transaction Overview • Mirvac will undertake to complete each project at a fixed cost and by a predetermined completion date • Support Facility will underpin Mirvac’s obligation to complete the projects • Sufficient funding will be provided to cover project completion costs through a co
Slide 6: 2. Overview of the Mirvac Group
MIRVAC GROUP 2. Overview of the Mirvac Group Dennis Broit - Finance Director, Mirvac Group 6
Slide 7: History
MIRVAC GROUP History • 1972 - Mirvac established by Henry Pollack, Robert Hamilton and AGC Corporation (a subsidiary of Westpac). It’s major activities included residential and commercial development, hotel management and property funds management (primarily through unlisted trusts) • 1987 - Mirvac
Slide 8: Market Capitalisation
MIRVAC GROUP Market Capitalisation $2,800 $2,600 $2,400 MGR begins trading $2,200 Market Capitalisation (A$m) Mirvac Ltd Strong 18 Jun 1999 acquires the philosophical $2,000 Manager of belief in Since merger, Mirvac benefits of market cap Commercial internalised increased by $1,800 Trust (formerly s
Slide 9: Relative Comparison
MIRVAC GROUP Relative Comparison Total Return - Last 4 Years(1) Forecast CY03 DPS Yield(2) = grossed 8.0% 7.7% 7.6% up yield 100.0% 84.6% 80.5% 7.5% 80.0% 1.0% 6.9% 6.9% 61.5% 7.0% 51.0% 6.6% 60.0% 48.6% 0.5% 6.5% 7.7% 40.0% 31.4% 21.4% 6.0% 6.9% 6.6% 6.6% 20.0% 6.4% 5.5% 0.0% 5.0% SGP MGR ADP ASX G
Slide 10: Mirvac Group - Financial Results
MIRVAC GROUP Mirvac Group - Financial Results Net Operating Profit After Tax 200 $196.0 $100.4 $170.7 $157.3 150 $millions $137.2 $118.9 $103.3 100 Distributions Paid / Payable 200 $185.9 $161.7 50 $150.7 1998 1999 2000 2001 2002 2003* 150 $129.7 * Pre-UIG excludes $106.2 $millions unrealised profit
Slide 11: Mirvac Group - Financial Results
MIRVAC GROUP Mirvac Group - Financial Results June 02 June 01 $862 $751 (32%) (32%) Assets (A$m) $1,724 $150 $1,452 $140 (63%) (5%) (62%) (6%) Development Hotels Investments June 02 June 01 $62 $50 (35%) (30%) Net Profit (A$m) $107 $10 $102 $12 (60%) (5%) (63%) (7%) 11
Slide 12: Corporate Structure
MIRVAC GROUP Corporate Structure Mirvac Group Board Of Directors Managing Director Robert J. Hamilton Mirvac Executive Committee Hotels Robert Lynch Mick O’Brien Chris Freeman Adrian Fini Ian Costley Andrew Turner Barry Neil Roger Fortune Dennis Broit C.E.O. C.E.O. C.E.O. C.E.O. C.E.O. C.E.O. C.E.O.
Slide 13: Debt Funding Programmes
MIRVAC GROUP Debt Funding Programmes Capital Markets Funding Amount Rating Type Raised Security A$500m AAA CMBS June 01 Pool of Investment Assets A$300m AA Presale Securitisation July 01 Walsh Bay Development A$190m AA, A CMBS May 02 Pool of Investment Assets Bank Funding Amount Facility Description
Slide 14: Mirvac Group - Presale Securitisation Programs
MIRVAC GROUP $millions $0 $100 $200 $300 $400 $500 $600 Jul-96 Oct-96 Jan-97 Apr-97 Jul-97 Oct-97 Jan-98 Apr-98 Jul-98 Oct-98 Jan-99 Apr-99 Mirvac SPA Jul-99 Oct-99 Jan-00 Apr-00 Jul-00 Oct-00 Jan-01 Apr-01 Jul-01 Walsh Bay issuance Oct-01 Jan-02 Apr-02 Jul-02 Oct-02 Jan-03 Apr-03 Walsh Bay repaid J
Slide 15: 3. The Property Development Business
MIRVAC GROUP 3. The Property Development Business Dennis Broit - Finance Director, Mirvac Group 15
Slide 16: Property Development Business
MIRVAC GROUP Property Development Business l One of the largest and best recognised developers of quality residential dwellings in Australia. Currently operating in NSW, VIC, QLD and WA l Developed more than 17,000 dwellings and housed more than 50,000 people over the last 30 years l Diverse pool of
Slide 17: Property Development Business
MIRVAC GROUP Property Development Business l Other key developments include: q Beacon Cove, Melbourne (1,500 dwellings) q Docklands, Melbourne (2,500 dwellings) q Waverley Park, Melbourne (1,400 dwellings) q Newstead, Brisbane (500 dwellings) q Cutters landing, Brisbane (300 dwellings) q Burswood, P
Slide 18: Development EBIT
MIRVAC GROUP Development EBIT WA $120 opens $108.3 $100 $95.0 QLD $82.0 opens Annual EBIT $M $79.0 $80 $74.5 Victoria opens $60 $55.0 $40.3 $40 $32.3 $22.2 $20 $12.8 $0 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 Financial Year End 18
Slide 19: Development Division - Revenue
MIRVAC GROUP Development Division - Revenue WA WA 1% NSW 3% NSW Victoria Developments Developments 20% 34% 21% Victoria 33% Qld 25% NSW Housing NSW QLD 24% Housing 19% 21% Dec. 2002 Dec. 2001 19
Slide 20: Lots Under Control
MIRVAC GROUP Lots Under Control No. of Lots Forecast Revenue $b WA WA 6,127 $1.1b NSW NSW $3.6b 8,539 Vic. $2.6b Vic. 4,247 Qld. Qld. 2,360 $1.3b Total No. of Lots 21,273 Forecast revenue from lots currently controlled - $8.6 billion over 10 years 20
Slide 21: 4. Overview of the Project Development Lifecycle
MIRVAC GROUP 4. Overview of the Project Development Lifecycle Dennis Broit - Finance Director, Mirvac Group 21
Slide 22: Acquisition Process
MIRVAC GROUP Acquisition Process Strategic Objectives Action Plan (Exec/Board) Board Approval To Purchase New Business Team Identifies Opportunities - Due Diligence - Opportunities Tested - Negotiations Commenced - Deal Structuring 22
Slide 23: Project Delivery Process
MIRVAC GROUP Project Delivery Process Establish Project Control Group Settlement Design Development Development Final Occupation Approvals Certificate Marketing Strategy Approval To Commence Construction: Title Registration Exec < A$25m Board > A$25m Construction Construction Commences Continues Mar
Slide 24: Critical Risk Path
MIRVAC GROUP Critical Risk Path Pre MOPS Programme Add to MOPS Programme (if eligible) Profit 100% Construction Development Costs Sales Revenue 50% Other 25% Land 0 3 months 6 months 18 months 3 months Acquisition Concept/Approvals Construction Collections s Purchase s Presales Project Completion s
Slide 25: 5. MOPS Program Features
MIRVAC GROUP 5. MOPS Program Features Stephen Rorie - Group Finance Manager, Mirvac Group 25
Slide 26: Key features of the Program
MIRVAC GROUP Key features of the Program • Initial Issuance – 2 series of MTNs with 12 month soft bullet Series Amount Maturity MOPS 2003-1 A$100m July 04 MOPS 2003-2 A$110m June 05 – Approximately $8m of 30 day CP • Transaction and Security Structure • Key Portfolio Criteria • Program Tests • Progr
Slide 27: Transaction Structure
MIRVAC GROUP Transaction Structure DEBT MTN S / CP • Issuer raises funds via MTNs or will LIQUIDITY FAC draw on Liquidity Facility and/or issue CP as required ISSUER DEBENTURE MIRVAC F INANCE ALL ASSETS FIXED SECURITY TRUST DEED AND FLOATING CHARGE • Funds flow down to the Project Companies through
Slide 28: Security Structure
MIRVAC GROUP Security Structure • Mirvac Limited and all Project and Construction companies will grant an all assets fixed and floating charge in respect of all Program assets. This includes security over presale contracts, construction contracts, Support Facilities, cash balances in the Program Acc
Slide 29: Key Portfolio Criteria
MIRVAC GROUP Key Portfolio Criteria • Independent Program Manager and Certifier • Open, revolving pool with specific eligibility criteria monitored by Program Manager • Key portfolio criteria includes: – at least 50% of the dwellings are subject to presale contracts – Independent Certifier Report co
Slide 30: Program Tests
MIRVAC GROUP Program Tests • The Tests are calculated by the Program Manager every month • The Positive Cashflow Test: all future inflows of cash exceed all future obligations thus ensuring funding availability – any funding requirements are covered through cash escrowed and/or liquidity facililty –
Slide 31: Program Facilities
MIRVAC GROUP Program Facilities • Liquidity Facility – Committed liquidity facility of A$100m – Ranks pari passu with Notes – Covers short term funding needs and timing mismatches – Supports issuance of CP • Support Facility – must be provided by an appropriate rated entity – may be the form of LC,
Slide 32: 6. Risk and Mitigants
MIRVAC GROUP 6. Risk and Mitigants Stephen Rorie - Group Finance Manager, Mirvac Group 32
Slide 33: Risks and Mitigants - Settlement Risk
MIRVAC GROUP Risks and Mitigants SETTLEMENT • Legally binding unconditional obligation on RISK purchasers to settle under the standard form Contracts of Sale • Large and diverse pool of purchasers • Restrictions on multiple and foreign purchasers • 10% deposit by Purchaser • Historical default rates
Slide 34: Risks and Mitigants - Construction Risk
MIRVAC GROUP Risks and Mitigants CONSTRUCTION • Low complexity of projects RISK • Costs contingencies provided for and completion dates contain conservative time allowances • Fixed price construction contract • Independent Certifier reporting regime monitoring time and CTC • Mirvac Completion Undert
Slide 35: Risks and Mitigants - Developer & Contractor Risk
MIRVAC GROUP Risks and Mitigants DEVELOPER & • Excellent 30 year Mirvac track record CONTRACTOR RISK • Experienced, committed, in house team maintaining a high level of involvement throughout the project • Mirvac has strong vested interest to complete the project, both financial and reputational • E
Slide 36: 7. The Initial Portfolio
MIRVAC GROUP 7. The Initial Portfolio Stephen Rorie - Group Finance Manager, Mirvac Group 36
Slide 37: Assets - Initial Portfolio
MIRVAC GROUP Assets - Initial Portfolio • Security over residential development projects: – Initial Portfolio consists of: 6 Projects – Total value of Portfolio: A$574m – Total number of dwellings: 616 – Remaining Construction Cost to Complete (CTC): A$117m • Presales: – No. of legally binding eligi
Slide 38: Initial MOPS Portfolio
MIRVAC GROUP Initial MOPS Portfolio § Well diversified pool, both in geography and in project size Distribution of Distribution of Pre-sales Pre-sales by Location A$m by Residence of Buyer A$m 21.2 87.1 115.7 299.7 481.2 NSW VIC QLD Foreign Domestic Distribution of Dwellings Distribution of Pre-Sale
Slide 39: 8. Summary
MIRVAC GROUP 8. Summary 39
Slide 40: Standard & Poor's key attributes for construction projects
MIRVAC GROUP Standard & Poor’s Some key attributes S&P* look for in an investment-grade construction project MOPS • Fully permitted project, including owned land • Fixed price, time certain, design and build contract with a quality building contractor who has market experience & financial capacity •
Slide 41: Mirvac Group Multi Option Presale Securitisation (MOPS)
Mirvac Group Multi Option Presale Securitisation (MOPS) July 2003 Arrangers and Lead Managers: Australia and New Zealand Banking Group Limited Merrill Lynch International (Australia) Limited Dealers: Australia and New Zealand Banking Group Limited Merrill Lynch International (Australia) Limited Deut
Slide 42: Appendix 1: Initial Portfolio
MIRVAC GROUP Appendix 1: Initial Portfolio 42
Slide 43: Initial Approved Projects - Avista
MIRVAC GROUP Initial Approved Projects Project Name and Location Avista Cabarita, NSW Type – Houses/Units Residential Units Number of Dwellings 94 No Dwellings Pre-sold 94 Average Sale Price $950,000 Aggregate Value of Pre-Sales (incl GST) $89,301,425 Total Project Value $89,301,425 Scheduled Costs
Slide 44: Initial Approved Projects - ikon
MIRVAC GROUP Initial Approved Projects Project Name and Location ikon Potts Point, NSW Type – Houses/Units Residential Units Number of Dwellings 185 No Dwellings Pre-sold 168 Average Sale Price $1,380,000 Aggregate Value of Pre-Sales (incl GST) $211,020,703 Total Project Value $255,927,000 Scheduled
Slide 45: Initial Approved Projects - Yarra's Edge Tower 4
MIRVAC GROUP Initial Approved Projects Project Name and Location Yarra’s Edge – Tower 4 Melbourne, VIC Type – Houses/Units Residential Units Number of Dwellings 110 No Dwellings Pre-sold 109 Average Sale Price $817,900 Aggregate Value of Pre-Sales (incl GST) $87,478,100 Total Project Value $89,155,0
Slide 46: Initial Approved Projects - SY21 Malcolm
MIRVAC GROUP Initial Approved Projects Project Name and Location SY21 - Malcolm Melbourne, VIC Type – Houses/Units Residential Units Number of Dwellings 96 No Dwellings Pre-sold 83 Average Sale Price $502,000 Aggregate Value of Pre-Sales (incl GST) $40,362,250 Total Project Value $48,170,000 Schedul
Slide 47: Initial Approved Projects - Cutters Landing AP2
MIRVAC GROUP Initial Approved Projects Project Name and Location Cutters Landing – AP2 New Farm, QLD Type – Houses/Units Residential Units Number of Dwellings 77 No Dwellings Pre-sold 76 Average Sale Price $775,000 Aggregate Value of Pre-Sales (incl GST) $56,365,420 Total Project Value $59,691,000 S
Slide 48: Initial Approved Projects - Cutters Landing AP3
MIRVAC GROUP Initial Approved Projects Project Name and Location Cutters Landing – AP3 New Farm, QLD Type – Houses/Units Residential Units Number of Dwellings 46 No Dwellings Pre-sold 46 Average Sale Price $713,000 Aggregate Value of Pre-Sales (incl GST) $32,801,900 Total Project Value $32,801,900 S
Slide 49: Appendix 2: Construction Performance
MIRVAC GROUP Appendix 2: Construction Performance 49
Slide 50: Construction Performance
MIRVAC GROUP Construction Performance Con struction Co sts Con struction Program (mths) No. of Months Project Budget at Actual at Forecast at Actual at from Actual Comm encement Com pletion Comm encement Com pletion of Com pletion to (A$m illion) of Con struction Co nstructions Sunset Date NSW The C
Slide 51: Appendix 3: ANZ Economic Update November 2002
MIRVAC GROUP Appendix 3: ANZ Economic Update 19 November 2002 51
Slide 52: Economic Update: Assessing the fundamental value of Australian house prices
Tuesday 19 November 2002 Economic Update Assessing the fundamental value of Australian house prices Australian house prices have risen sharply in recent times. however that house prices have now overshot these As of the June quarter they are 62% higher than the supportive fundamentals and must there
Slide 53: Owner Occupiers and Residential Investors
next two years, the mid-point of which, 7½%, is broadly Interest payments as a % of disposable income Household debt as a % of disposable income consistent with fair-values based on affordability. 11 % 140 % Clearly, if investors remain stubbornly enthusiastic about 10 120 return prospects or owner-
Slide 54: Property earnings yield
Property earnings yield e 9 % =d−g P 8 Earnings yields should therefore relate to the required rate 7 of return less expectations of growth in rental earnings. To the extent that rental growth tends to closely follow 6 consumer prices rises and should continue to do so for the foreseeable future, th
Slide 55: Property earnings yield and real mortgage rates
rolling moving average) and earnings yields, we would Property earnings yield and real mortgage rates estimate that residential property earnings yields will settle 12 % in a range between 3.8% to 4.3%, as markets adjust to 11 Real mortgage rates 4-year rolling lower long term yields. 10 moving aver
Slide 56: Disclaimer
Disclaimer Represented in: AUSTRALIA by: Australia and New Zealand Banking Group Limited ACN 005 357 522 14th Floor 530 Collins Street, Melbourne 2000, Australia Telephone +61 3 9273 2059 Fax +61 3 9273 1303 UNITED KINGDOM by: Australia and New Zealand Banking Group Limited ACN 005 357 522 Minerva H
Slide 57: Appendix 4: ANZ Property Outlook June 2003
MIRVAC GROUP Appendix 4: ANZ Property Outlook June 2003 52
Slide 58: Property Outlook
March quarter June 2003 2002 Property Outlook ANZ Property Outlook is produced half yearly by Inside Economics@ANZ Economic Overview Contributors to this issue: After a strong performance in 2002, Australian economic growth has lost some momentum recently and is likely to slow to 3% in 2003, a touch
Slide 59: Economic overview
Economic overview Australian growth to slow below trend easing is not clear cut. Inflation is currently at the top of the RBA’s 2-3% target band and monetary The Australian economy grew by a strong 3.6% in policy settings are already expansionary. Interest 2002, as vigorous domestic demand more than
Slide 60: Residential Property
Residential Property National Trends pipeline of work will support the current downward leg in activity. Forward indicators of residential construction activity suggest that building act ivity peaked in the The residential construction industry should also be December quarter. Current indications ho
Slide 61: homeowner scheme has
homeowner scheme has quite successfully benchmarks we outlined in November 2002, and we transformed a large number of renters into owner- expect prices growth to moderate over 2003 and occupiers at the same time that record numbers of 2004. We are encouraged by the fact that house investors have bee
Slide 62: State Trends
State Trends however that Sydney house prices will overshoot our “fair-value” targets, implying subsequent New South Wales adjustment once momentum wanes. Provided overvaluation remains within reasonable limits, this Subdued residential construction activity has quite adjustment could be gradual and
Slide 63: requirements of around 44,000 new dwellings for and is nearing the levels prevalent in
requirements of around 44,000 new dwellings for and is nearing the levels prevalent in the early-to- 2003. mid 1990s, when Victorians en-masse decamped to warmer climes. This time however it is NSW that is Melbourne’s rental market remains oversupplied. providing the bulk of Queensland’s gains. This
Slide 64: 10,500 dwellings during 2002, well ahead of underlying requirements of 7,100 dwellings. While approvals
10,500 dwellings during 2002, well ahead of Property prices in Perth have failed to keep pace underlying requirements of 7,100 dwellings. While with gains on the eastern seaboard, growing by just approvals have now declined to an annualised 9,000 12.3% over the year to the March quarter. While rate,
Slide 65: Commercial property
Commercial property CBD office markets Industrial markets Vacancy rates for CBD office space have been on a Last year’s solid growth in manufacturing and other rising trend since mid 2001. The total vacancy rate industrial sectors of the economy has continued to across the six capital cities was 8.3
Slide 66: Retail and Tourism accommodation markets
Retail markets Tourism accommodation markets Shop building activity is expected to stay firm in the Building activity in the hotel, motel and holiday months ahead, as reflected by healthy building apartments segment continued to strengthen in approvals numbers. The real value of building 2002 with t
Slide 67: Melbourne vacancy rates. After bottoming at 4.5% in July 2000, the total market vacancy
Melbourne vacancy rates. After bottoming at 4.5% in July 2000, the total market vacancy rate rose to 8.4% in After bottoming at 5.1% in mid 2001, the total January 2003. The increased pressure in the office market vacancy rate rose to 6.7% in mid leasing market over the past 12 months has le d to 20
Slide 68: incentives from landlords. There is little vacant space in the better quality end of
incentives from landlords. There is little vacant The value of work done in the hotels sector in South space in the better quality end of the market. Australia more than doubled in 2002 compared with However, with landlords’ incentives, prime effective the previous year. Building activity is likely
Slide 69: ANZ representation and disclaimer
ANZ is represented in: such are conditional and must not be relied upon without specific advice from your securities advisor as to the AUSTRALIA by: appropriateness to you given your individual investment Australia and New Zealand Banking Group Limited objectives, financial situation and particular
Mirvac Group — Debt Investor Presentation (July 2003) on 6ix