Mirvac says full impact of coronavirus yet to come

Property developer Mirvac has kept buying residential sites for an eventual recovery, but admits it has ‘some way to go’.

Mirvac CEO Susan Lloyd-Hurwitz. Picture: Britta Campion

Property developer Mirvac has warned the full impact of the coronavirus on its operations is yet to come as it reported a slowdown in its residential units and across its malls.

The company, which withdraw its guidance in March, has kept buying residential sites for an eventual recovery but chief executive Susan Lloyd-Hurwitz said the pandemic had transformed the world.

“No sector has been untouched by the health and economic crises that have developed,” she said. “We have been impacted across our business, which is why we withdrew guidance in March, and we have still some way to go before we understand the full extent of the impact.”

Ms Lloyd-Hurwitz said Mirvac was working on its development pipeline, exploring a range of additional opportunities, in order to expedite the recovery process.

Mirvac said it entered the COVID-19 pandemic with a strong balance sheet, with gearing at 20.8 per cent, the lower end of its 20-30 per cent target range, and it had a weighted average debt maturity of 7.7 years.

Mirvac has also entered into $440m of new debt facilities and now has cash and undrawn debt facilities of $984m. Only $200m in debt is due for repayment between now and early 2022 but the group has been touted as a potential equity raiser.

The company was hard hit in March when its malls reported a 25.6 per cent plunge in comparable specialty sales and a 5.6 per cent in overall sales.

The company’s residential division was also hit. “In March, the landscape became significantly more challenging, with the COVID-19 outbreak causing our sales offices to close and sales leads to fall off the back of a general decline of consumer confidence,” Mirvac said.

But the company had settled 1,818 residential lots by the end of March, including 537 at St Leonards Square in Sydney, 206 at Woodlea in Melbourne and 28 lots at Verde, the first building at Pavilions, Sydney Olympic Park.

Mirvac said settlement numbers remained healthy across the residential portfolio during January (270) and February (189), and were somewhat impacted by COVID-19 restrictions in March (127).

Defaults remained below 2 per cent and it maintained a high level of residential pre-sales at $1.1bn.

“During January and February, our residential team maintained momentum from the first half, as the recovery in the established residential market flowed through to our inquiries and sales levels,” Mirvac said.

But in March, the company said the landscape became “significantly more challenging”, with the COVID-19 outbreak causing its sales offices to close and sales leads to fall off on the back of a general decline of consumer confidence.