Mirvac upgrades, returns JobKeeper as housing sales jump

The housing developer is back firing as the residential market’s momentum keeps rolling.

Mirvac chief executive Susan Lloyd-Hurwitz said that during the quarter the business had performed well. Picture: Jane Dempster/The Australian.

Developer Mirvac is riding the surging residential property market and has lifted its earnings guidance as home and apartment sales and settlements lift.

In a sign of its strong performance, the company also returned half the JobKeeper payments it had received, giving back $10.5m it received from July to September last year, but keeping amounts relating to when the pandemic struck.

Few major companies have repaid JobKeeper but the likes of Super Retail Toyota and Domino’s Pizza have also handed back varying amounts.

Mirvac CEO Susan Lloyd-Hurwitz said that during the quarter the business had performed well and had strong momentum leading into the final quarter, with rent collection rates improving and residential settlements and sales ahead of expectations.

“The residential business, with 1791 settlements in the financial year to date, positions Mirvac to comfortably exceed guidance of over 2200 lot settlements in fiscal 2021,” she said.

The group has upgraded its 2021 fiscal year forecast earnings per security guidance to at least 13.7c, from 13.1c-13.5c.

The upgraded guidance accounts for the return of JobKeeper payments and the expected delay of the sale of a half stake in the Locomotive Workshops in South Eveleigh, inner Sydney that will now occur early next financial year, with the selldown of this asset in advanced negotiation to a Suncorp mandate.

The distribution per security guidance for the 2021 fiscal year has also been upgraded to 9.9c, from 9.6-9.8c, reflecting the improved outlook for the business.

Guidance is subject to there being no adverse change in market conditions, nor the occurrence of a further or extended COVID-19 impacts.

The company, which manages a $24bn property empire and has pushed into mixed-use and build-to-rent developments, is backing a wave of new city projects.

“We remain committed to investing in dynamic cities and urban areas with scale and deep employment markets,” the company said. “Australian cities will re-energise and remain the centres of our high-value knowledge economy.”

It is also backing new residential projects, including a revamp of the former Channel 9 studios in Sydney, as it says there will be demand for vibrant precincts.

Mirvac’s strong residential results in the third quarter were driven by accelerating demand for masterplanned estates, inner ring attached homes and apartments with 897 sales in the period, a near doubling on last year.

Mirvac had 2282 lot sales this year, up about two-thirds, with a further 550 lots on deposit, putting the residential unit on track to equal the highest level of sales since the 2017 fiscal year.

Residential customer inquiries continue to increase, up 68 per cent, supporting upcoming project launches including Willoughby, Waverley and Menangle, all in the hot Sydney market.

The continued momentum in the residential business, with 1791 settlements in the financial year to date, puts Mirvac on track to beat guidance of more than 2200 lot settlements this financial year.

On the commercial side, rent collection rates improved in the third quarter, with 95 per cent of rent collected in the financial year to date.

Build-to-rent is also working with the first site, LIV Indigo, Sydney Olympic Park, 63 per cent leased and the pipeline of about 1900 build-to-rent units on track.

Mirvac is also capitalising on demand for last mile industrial and logistics hubs, and its estate at Switchyard in Auburn under way.

Mirvac is selling more retail ­assets with, Cherrybrook Village Shopping Centre in Sydney going on the block via McVay Real Estate and the Tramsheds next to the Harold Park residential development up for sale.

JPMorgan analyst Richard Jones said Mirvac was benefiting from a high land exposure to the strongly performing Melbourne market and a pick-up in investor demand. He expects the company to settle up to 2500 lots this year. On a like-for-like basis Mirvac’s guidance implied a rise of at least a 7 per cent to prior guidance.

Mirvac shares jumped 3.9 per cent to $2.66.

Mirvac’s strong residential results in the third quarter were driven by accelerating demand for masterplanned estates, inner ring attached homes and apartments with 897 sales in the period, a near doubling on last year.

Mirvac had 2282 lot sales this year, up about two-thirds, with a further 550 lots on deposit, putting the residential unit on track to equal the highest level of sales since the 2017 fiscal year.

Residential customer inquiries continue to increase, up 68 per cent, supporting upcoming project launches including Willoughby, Waverley and Menangle, all in the hot Sydney market.

The continued momentum in the residential business, with 1791 settlements in the financial year to date, puts Mirvac on track to beat guidance of more than 2200 lot settlements this financial year.

On the commercial side, rent collection rates improved in the third quarter, with 95 per cent of rent collected in the financial year to date.

Build-to-rent is also working with the first site, LIV Indigo, Sydney Olympic Park, 63 per cent leased and the pipeline of about 1900 build-to-rent units on track.

Mirvac is also capitalising on demand for last mile industrial and logistics hubs, and its estate at Switchyard in Auburn under way.

Mirvac is selling more retail ­assets with, Cherrybrook Village Shopping Centre in Sydney going on the block via McVay Real Estate and the Tramsheds next to the Harold Park residential development up for sale.

JPMorgan analyst Richard Jones said Mirvac was benefiting from a high land exposure to the strongly performing Melbourne market and a pick-up in investor demand. He expects the company to settle up to 2500 lots this year. On a like-for-like basis Mirvac’s guidance implied a rise of at least a 7 per cent to prior guidance.

“We would expect the update to be well received,” he said.

Mirvac shares jumped 3.9 per cent to $2.66.