The Mirvac Group (ASX: MGR) share price will be one to watch this morning following the release of the property company’s half year update.
How did Mirvac perform in the first half?
Mirvac had a strong first half and reported an operating profit after tax of $352 million. This was a 21% increase on the prior corresponding period.
Management believes that this reflects the resilience of the company’s diversified business.
The company’s earnings before interest and tax (EBIT) increased by 18% to $460 million and its statutory profit fell 5% to $613 million. The latter was the result of higher net valuation gains on investment properties in the prior corresponding period.
The strong performance in the first half allowed the Mirvac board to increase its interim distribution significantly. The company has lifted its distribution by 24% to 6.1 cents per stapled security.
Though, it is worth noting that this distribution was declared at the end of last year and is due to be paid to eligible shareholders at the end of the month.
One of the highlights of the half was Mirvac’s occupancy rate.
At the end of the period the company’s strong portfolio metrics were maintained, with a high occupancy of 99.1%. It also reported a weighted average lease expiry (WALE) of 5.9 years.
Office occupancy stood at 98.5% with a long WALE of 6.9 years, Industrial occupancy was 100% with a long WALE of 7.4 years, and Retail occupancy was maintained at 99%.
Things were equally positive in the Residential segment, with 1,232 residential lots settled during the period. As a result, the company is on track to meet its target of more than 2,500 residential lot settlements in FY 2020.
Mirvac has reaffirmed its operating earnings per share guidance for FY 2020 of between 17.6 cents and 17.8 cents per stapled security. This represents growth of between 3% and 4% on FY 2019’s results.
It also reaffirmed its distribution guidance of 12.2 cents per stapled security, which will be a 5% increase year on year. This equates to a 3.5% distribution yield based on its last close price.
Mirvac’s CEO & Managing Director, Susan Lloyd-Hurwitz, was pleased with the half.
She said: “We continue to successfully execute our focused urban asset creation strategy, generating sustainable, long-term returns for our securityholders and delivering on our promises. We are pleased to report a strong half year performance with earnings before interest and tax up 18 per cent to $460 million and operating profit after tax up 21 per cent to $352 million.”
“This has been driven by an increase in residential settlements during the period, the result of a more balanced first half/second half settlement profile. At the same time, we have made a number of investments that will provide significant future earnings opportunities for the Group,” she explained.
Lloyd-Hurwitz appears positive on the future. Noting that: “Our high-quality investment portfolio and our urban asset creation capability continue to drive growth in passive earnings and generate value. The increase in capital allocated to passive assets and the recurring earnings that this will generate, will support growth in future distributions.”
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