Mirvac chief executive Susan Lloyd-Hurwitz says the group will continue to work through its non-core asset sale program. Picture: Sam Mooy Source: TheAustralian
RECORD residential sales of $1.5 billion over the first six months of 2014 has led Mirvac to tighten guidance for the full-year, with the company aiming to achieve earnings growth of up to 10.1 per cent.
The strong result followed an announcement this week that the company had struck a joint investment agreement with giant US pension fund cum financial services firm TIAA-CREF.
Speaking after handing down a near threefold increase in net profit to $246 million, chief executive Susan Lloyd-Hurwitz said the alliance with TIAA-CREF could give Mirvac the capacity to launch a takeover of another listed trust.
It comes after rival property trust Dexus recently took control of $3bn office landlord Commonwealth Property Office Fund with the assistance of the deep-pocketed Canada Pension Plan Investment Board.
“It’s one of the advantages of having very strong relationships with capital partners that when there are opportunities which are too large for us on our own that we have a trusted partner we can talk to,” Ms Lloyd-Hurwitz said. “But I will underscore that there are no specific plans at this stage.”
Mirvac purchased industrial, retail and office properties valued at $698m during the half as well as settling 1032 lots in its residential business. The strong performance in the group’s residential development arm drove operating profit after tax up 3 per cent to $200.2m, representing earnings per share of 5.5c.
Mirvac has narrowed the band of its guidance to earnings per share of between 11.8c and 12c, representing growth of between 8.3 per cent and 10.1 per cent.
The company has already secured 92 per cent of its expected development earnings before tax for the full year, however, some of the earnings from its successful Harold Park apartment project in inner Sydney would be pushed into 2015.
Ms Lloyd-Hurwitz said the group would continue to work through its non-core asset sale program, forecasting between $100m and $200m of sales per annum. It sold more than $200m in non-core property over the half.
Operating profit from its office portfolio was $23.8m for the half underpinned by the completion of 8 Chifley Square in Sydney, while like-for-like net operating income from its office arm grew 3.4 per cent over the half. The company declared an interim distribution of 4.4c, up from $4.2c.
Fund manager Grant Berry at SG Hiscock said the company was “very much” moving in the right direction.
Mirvac’s shares closed yesterday at $1.75, down 0.5c.
Source: The Australian
