6k bought on Friday and 8k bought today. I'm in full blown....

6k bought on Friday and 8k bought today. I'm in full blown.
Tomorrow Japan is officially cutting its rate. This Thursday Indonesia will talk about cutting its rate.
Rate cuts are good for property investments. I won't be wrong.

PROPERTY

Mirvac warns of housing slowdown, plans $600m asset sales

• THE AUSTRALIAN
• FEBRUARY 12, 2016 12:00AM
• Samantha Hutchinson

 


Mirvac has scaled back its hunt for new residential sites in response to slowing house price growth and is increasing the pace of asset sales as commercial values approach their peak.



The diversified developer delivered a 69 per cent jump in statutory profit after tax during its first half, driven by strong uplifts in values across its investment portfolio and gains in retail and office performance.

Chief executive Susan Lloyd-Hurwitz told investors that an expectation of slower house price growth has prompted a renewed focus on discipline in acquisitions and a faster-paced disposals drive, with up to $600 million in assets earmarked for sale before June 30.

“As prices and volumes were accelerating, we deliberately and strategically accelerated production,” Ms Lloyd-Hurwitz told investors.

“So how are we reading the markets now? The residential market has clearly passed the inflection point and is now set for a lower volume, lower price growth phase.”

Highlights for the half included record residential pre-sales of $2.6 billion, underpinning more than 88 per cent of development earnings for fiscal 2016 and 73 per cent for 2017.

However, earnings from the residential business came in substantially lower than market estimates owing to a skew in settlements toward the second half, the size of which caught the market by surprise.

Development earnings contributed just $2m during the half compared with more than $100m in the prior period.

Despite the skew, the group remains on track to meet original targets for the full year to settle more than 2900 lots, representing a 27 per cent lift on the previous year and development earnings of more than $200m from $877m in pre-sales.

The group also reiterated guidance for a full-year operating profit of between $470m and $482m and a distribution of between 9.7c and 9.9c.

Investors welcomed the results, with the share price ending the day 3 per cent higher at $1.84, while analysts favourably noted the high visibility of earnings guaranteed by the pre-sales.

“The contracts on hand gives us a high degree of comfort,” Macquarie analysts said.

JPMorgan analysts agreed, calling high expectations for the second half a “leap of faith” that was justified by the strength of pre-sales on hand.

Analysts were also keen for updates on the company’s review into ways to “unlock value” in the business during a period in which the share price consistently traded at a discount to NTA.

Ms Lloyd-Hurwitz declined to divulge any details on whether the group would consider selling parts of the business, but confirmed an update would be provided in due course.

“We are looking at a whole range of options and won’t speculate in public about what our options could be,” she said, adding that those comments “were made at a time when we were trading lower than we were today ... we’re always looking for ways to unlock value”. Outside of residential, positive revaluations throughout the portfolio delivered a 5 per cent boost to net tangible assets per security to $1.83, from $1.74 in June.

The office sector was dominated by deals including securing the development rights to Australian Technology Park, where Mirvac will develop 93,000sq m of office space in an integrated precinct.

The group also secured management rights to CIC’s $2.45bn office portfolio bought from Investa Office Fund.

Asset disposals, including the sale of 1 Woolworths Way at Bella Vista which generated $336m, also boosted the result.

Retail portfolio highlights included a drop in occupancy costs to 15.2 per cent from 16 per cent, at a time when the group is working to upgrade and reposition its shopping centre portfolio.

Acquisitions included East Village in Zetland, for $154.7m, due to settle in fiscal 2017.

“While the residential market is now set for a lower volume and price growth phase, the markets

Mirvac operates in continue to be supported by positive fundamentals, particularly Sydney.”


Mirvac chief executive Susan Lloyd-Hurwitz.