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Mirvac (ASX: MGR) has topped a ten-figure statutory profit margin for its fourth year in a row, buoyed by a string of leasing deals and high-performing CBD office markets.
While the $1.019 billion statutory profit result is a $70 million drop from last year, Mirvac managed to deliver at the top end of its guidance.
Revaluation uplifts across Mirvac's investment suite accounted for $516 million which was supported largely by the portfolio's 82 per cent weighting to Sydney and Melbourne.
Mirvac completed 82 leasing deals over approximately 96,400sqm and settled more than 2,600 residential lots to secure $1.7 billion in pre-sales during FY19.
The acquisition of 383 La Trobe Street in Melbourne also gave the group potential to reach 40,000sqm in A-grade office tower assets.
CEO and managing director Susan Lloyd-Hurwitz says Mirvac's "disciplined approach to capital raising" has resulted in a healthy balance sheet that is ripe for further investment opportunities.
"The strength and resilience of our business were evident throughout the year, underpinned by our award-winning urban asset creation capability, our high-quality investment portfolio and our diversified model," she says.
"Our robust capital position and the acceleration of passive earnings growth means we are well placed to continue to generate strong returns for our securityholders, while making a positive contribution to our urban landscape."
Lloyd-Hurwitz adds that Mirvac has now secured its place as Australia's second largest office manager with $15 billion of assets under management.
"In FY19, the strategic weighting in our office portfolio of 85 per cent to the Sydney and Melbourne CBDs maximised our exposure to the favourable market conditions in these locations," she says.
"We continue to deploy our unique asset creation capability to improve the quality of our portfolio and generate increasing passive earnings for the group."
Through to FY23, Mirvac's development pipeline including South Eveleigh (Sydney), 477 Collins Street (Melbourne) and 80 Ann Street (Brisbane - pictured top) is expected to add a further $90 million in recurring net operating income as well as more than $130 million in development profit.
In the residential sphere, Mirvac delivered gross development margins of 27 per cent despite a challenging market.
"We have seen sustained sales throughout the financial year, and we achieved our settlement target and maintained our default rate at less than 2 per cent," says Lloyd-Hurwitz.
"We have carefully restocked in the changing market, with a number of new development opportunities in established Mirvac sub-markets including Henley brook (WA) and Wantirna South (VIC), putting us in a strong position to take advantage of the anticipated upswing."
Mirvac has provided an operating earnings per share guidance of between 17.6-17.8cps for FY20.
MGR stock is currently trading up 1.72 per cent at $3.245 as of 10:26am AEST.
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