Mirvac Forecasts Weaker Earnings in 2024

Sydney, Australia - Mirvac, a leading Australian property company, has projected a decline in operating earnings for fiscal 2024 due to the impact of higher interest rates and elevated inflation on household behavior.

Revised Earnings Projection

Mirvac aims to achieve operating earnings per security ranging between 14.0 Australian cents (9.1 U.S. cents) and 14.3 cents in the 12-month period ending in June 2024. Additionally, the company expects a distribution of 10.5 cents per security. This update follows Mirvac's statutory net loss of A$165 million in fiscal year 2023, contrasting with a A$906 million profit the previous year. It is worth noting that the annual distribution was already announced to be 10.5 cents per security.

Impact on Earnings

If successful, Mirvac's operating EPS for fiscal 2024 would be 2.7-4.8% lower compared to the reported figures of 14.7 cents during the previous twelve-month period. This adjustment comes after Mirvac downgraded its guidance in April, citing adverse weather conditions that impacted residential settlements. Furthermore, the deferred settlement of the Aspect North property development in Sydney contributed to the revision.

Mirvac acknowledges the challenges posed by increased interest rates and inflation, which are affecting consumer behavior and ultimately shaping the company's financial outlook for the year ahead.

Mirvac Navigating Challenges in Property Development Market

Mirvac, along with other property developers, is facing a turbulent period due to rising interest rates that have increased its debt costs and resulted in reduced consumer spending. Despite widespread price discounts, national retail sales were significantly weaker in June. Additionally, while Australian house prices experienced a fifth consecutive increase in July, many borrowers are now grappling with higher loan-repayment costs following the expiration of fixed-term deals.

However, there are some positive factors supporting the residential property market. The labor market remains tight, and migration has rebounded after extended border closures during the Covid-19 pandemic.

Chief Executive Campbell Hanan, who took over from Susan Lloyd-Hurwitz earlier this year, stated, "Although our operating environment is challenged by high inflation and interest rates, our integrated model ensures that we are well positioned to continue implementing our urban strategy and generating returns for our securityholders."

Mirvac, exceeding the revised guidance provided to investors in April, settled 2,298 residential lots in the past year. Initially, the company aimed to settle more than 2,500 lots, aligning with the levels achieved in fiscal 2022.

At the end of June, pre-sales in the residential business totaled A$1.8 billion, consistent with the balance at the conclusion of the fiscal third quarter.

Mirvac Reports Strong Occupancy Rates and Leasing Performance

Mirvac, one of the leading real estate organizations, has achieved an impressive occupancy rate of 96.9% across its diverse investment portfolio. Additionally, it has successfully leased a substantial 223,400 square meters of space.

The company is particularly pleased with the high level of interest shown by tenants in its innovative build-to-rent developments. This positive response highlights the appeal and desirability of Mirvac's properties within the market.

Overall, Mirvac's strong performance in occupancy and leasing demonstrates its commitment to providing exceptional real estate solutions and attracting quality tenants.