Mirvac first major to withdraw its earnings guidance

Mirvac has become the first property major to withdraw its earnings guidance as a result of the coronavirus.

Mirvac CEO Susan Lloyd-Hurwitz Picture: Britta Campion

Developer Mirvac has become the first property major to withdraw its earnings guidance as a result of the coronavirus, as the listed real estate sector heads into uncharted territory.

Property stocks have been heavily sold off as a result of the impact of the virus, with concerns that developers will find it hard to sell housing and worries about their ability to complete projects.

Mirvac blamed the uncertainty in relation to the duration and impact of the COVID-19 pandemic and said it was appropriate to withdraw its fiscal 2020 earnings and distribution guidance.

“As the effects of the COVID-19 outbreak impact Australia and our business, we are taking swift and prudent measures across the business, to not only protect our employees and stakeholders, but also provide transparency in what is an ever-changing environment,” Mirvac chief executive Susan Lloyd-Hurwitz said.

The company also withdrew “any forward-looking statements, including comments about active and passive earnings”, covering off concerns about projects it was undertaking and more passive assets, including its city-focused malls.

Mirvac said its balance sheet and debt position continued to remain robust and the group was well-positioned with $944m of cash and committed undrawn bank facilities available and gearing levels of 20.8 per cent at the end of December.

In a nod to rising concerns about the state of credit markets, Mirvac said it had only $200m of debt maturing in the next 12 months, which could be repaid from available facilities.

The company has a A3/A- credit ratings with stable outlook from rating agencies Moody’s and Fitch.

Macquarie analysts noted Mirvac was the first REIT to withdraw its guidance. “We believe this will trigger a number of withdrawals of guidance within the REITs. Unibail-Rodamco-Westfield provided an update on its portfolio on Monday but no mention of guidance in its release,” Macquarie said.

Macquarie said there was a short-term impact in Mirvac’s residential business but settlements should come back in the next financial year depending on the outcome of the virus. The broker said it was increasingly cautious on the sales outlook for residential into the medium term; lower rates and undersupply offset by likely higher unemployment.

Rival companies including mall owners Scentre Group and Vicinity Centres have had their stock prices smashed but have yet to provide further guidance, although the latter company warned it would have some impact last month.

Jefferies analysts Sholto Maconochie and Andrew Dodds said they expected more companies to withdraw fiscal 2020 guidance this week.