Revals Sweeten Honey Pot for Mirvac, Goodman

Rising property valuations here and offshore helped the annual results of majors Goodman Group and Mirvac in the year to June 30.

Mirvac saw a 9% fall in operating profit to $550 million for the year to June 30.

But statutory profit, which includes the impact of property revaluations or devaluations saw a vastly different outcome – a 61% leap to $901 million off the back of revaluation gains across its portfolio of retail, CBD office blocks and residential holdings.

Revaluations gains of $274 million boosted the statutory result thanks a big jump in industrial assets (logistics) and to a lesser extent its premium office portfolio.

Operating earnings before interest and tax fell 12% to $704 million from the $796 million the year before.

Despite that the company’s first guidance for the current 2021-22 financial year fell short of market expectations.

Mirvac forecast earning per security of “at least 15c,” representing growth of 7.1%, and distribution of 10.2c a security.

The market had been a touch higher –  around 15.5 cents a share.

(2020-21 Earnings per security of 14c was above previous guidance of 13.7c).

CEO Susan Lloyd-Hurwitz said the “buoyant” residential market suited Mirvac’s loyal and predominantly owner-occupier customer base.

Mirvac settled 2,526 residential sales, well above its guidance of 2,200 in the June year as the wider housing boom spilled over.

“Our commitment to being shovel ready, and the depth and diversity of our development pipeline, meant we were able to release product in response to heightened demand,” she said.

“As a result, we saw our highest sales rates since financial year 2016.”

The group made key property disposals at well above book value, particularly after signing a deal to sell Cherrybrook Village in Sydney at a 43% premium.

Mirvac said total distribution was $390m, representing a distribution per security of 9.9c, an increase of 9%.

The securities fell under $3 to close at $2.98, down 0.6%.


Meanwhile, revaluations across the globe saw Goodman Group, Australia’s largest industrial developer, boost statutory profit to $2.31 billion for the year to June as it rode a worldwide logistics boom built on the back of the Covid-driven surge in online retailing and other business activity.

The company’s full-year statutory profit included significant property revaluation gains of $5.8 billion across its portfolio, while its assets under management surged 12% from the previous year to $57.9 billion.

Goodman said strong demand for storage space in the face of disruption from the world-wide pandemic saw occupancy of its storage facilities which stretch from Australia to Europe and Asia, hit a high of 98.1%. That in turn saw like-for-like net property income from businesses leasing them rise 3.2%.

Goodman’s operating profit was $1.219 billion, up 15% on the previous year, allowing it to pay out a distribution of 30c per stapled security.

“Long-term structural trends are well established and are resulting in higher utilisation of space and customer demand,” CEO Greg Goodman said.

“Customer demand in our markets is also translating into high occupancy, rental growth and strong investment returns which should see assets under management grow to in excess of $65 billion.“

“The Group is well positioned to maintain work in progress of around $10 billion throughout FY22, with multi-storey developments remaining a meaningful contributor,” he said.

The group is forecasting operating earnings per security of 72.2c for the 2022 financial year, up 10% on 2020-21.

Despite all the optimism though the company kept its forecast distribution for the 2022 financial year will remain at 30 cents per security.

Goodman said on Thursday that it “remains well-capitalised with available liquidity of $1.9 billion, including $0.9 billion in cash and gearing at 6.8%.”

Investors decided that its big run had ended for the time being and marked the securities down 2.2% to $22.64. That’s still close to the highs for 2021.


About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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