On 23 October 2018, Mirvac Group (ASX: MGR) provided an operational update for the first quarter of FY 2019, with solid metrics maintained across the Group’s office, industrial and retail portfolios and sales tracking as expected in its residential business. Following this news, the share price of the company increased by 0.222 percent as on 23 October 2018.
As per the Company’ CEO- Ms. Susan Lloyd-Hurwitz, there has been a continued moderation in some markets, particularly in the retail and residential sectors. The progress that the company has made so far in the first quarter of FY 2019, has put company is a good position to achieve the objectives of FY 2019. The company is well placed to take advantage of the opportunities that will emerge in more challenging operating conditions. She further added that during the next stage of the real estate cycle, the high-quality investment portfolio of the company will be the growth engine of the business as the strong office market conditions continue to drive income growth. This passive, secure and stable income growth ensures that the business has increased resilience and flexibility.
In Mirvac’s Office portfolio, the company maintained high occupancy at 97.2 percent with a long WALE of 6.2 years. Mirvac progressed its $3.1 billion office development pipeline which is 83 percent pre-leased. The company completed approximately 11,000 square meters of leasing activity in this quarter. The company secured a leading financial services provider, Suncorp, at 80 Ann Street in Brisbane QLD, with Suncorp pre-committing to over 39,600 square meters of office and retail space for a 10-year term.
In Mirvac’s Industrial Portfolio, during the quarter, the company witnessed Solid demand from transport and logistics and retail tenants. Further, the tightening availability of space, have all led to lifts in rents in most Sydney industrial markets. The occupancy remained high at 100.0 percent with a WALE of 6.8 years. The company completed approximately 2,400 square meters of leasing activity in this quarter.
In the retail portfolio of the company, the high occupancy of 99.2 percent was maintained. The company executed 112 leasing deals across approximately 16,900 square meters, with leasing spreads remaining positive. Due to several years of very strong price growth, the residential conditions have softened as expected across the major markets. During the quarter, the company settled 560 residential lots, in line with expectations and the defaults remained below 2 percent. The company also maintained a high level of residential pre-sales at $2.1 billion.
It is expected that the company’s balance sheet will remain in good shape and Gearing will remain at the lower end of the target range of between 20 and 30 percent. During the quarter, Fitch (a credit rating Agency) assigned an A- Stable credit rating to Mirvac which shows the resilience of Mirvac’s investment portfolio and development business, as well as the strong financial metrics of the company.
MGR’s share traded at $2.255 with a market capitalization of circa $8.36 billion as on 23 October 2018 (AEST 12:13 PM).
The company has re-affirmed operating EPS guidance of between 16.8 to 17.1 cps for FY 2019, which represents a growth in earnings of between 2 to 4 percent, and distribution guidance of 11.6 cps, which represents DPS growth of 5 percent.
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