This was published 8 years ago
Mirvac and Goodman on track for earnings growth
Mirvac and Goodman Group are on track to reach their end-of-financial-year earnings forecasts as they benefit from strong demand for residential and industrial assets.
Reporting for the March quarter the two real estate investment trusts said conditions were positive with consumer spending up for online goods, which creates demand for warehouses and distribution centres.
Rising high: Mirvac and AMP development 200 George Street.
Mirvac, the largest developer of apartments in NSW, said residential contracts on hand remain at $2.6 billion.
Mirvac chief executive Susan Lloyd-Hurwitz said the stronger office sector and development had led the group to revise its distribution guidance by 5 per cent to 9.9¢ for the full year, compared with the previous 9.7¢ per security.
"We have Improved gross residential margins to 25.3 per cent, up from 14.3 per cent in 2012, and accelerated residential releases into supportive markets, more than doubling pre-sales to $2.6 billion since 2012," she said.
"The residential business has continued to see solid sales activity (up 7 per cent on the previous corresponding period), with about $320 million of new sales in the third quarter."
The default rate was maintained at less than 1 per cent and the overall 2016 lot settlements are expected to be up 25 per cent on the 2015 year.
Brokers said the results were in line and were solid. They were released as an unexpected jump in building approval figures is more likely a pause in the housing slowdown rather than a turnaround.
Ms Lloyd-Hurwitz did not express any concern with tighter lending standards by the banks over residential lending. At the fundamental market level, while pricing growth is generally moderating, she indicated that overall demand had not moderated.
Mirvac has pushed out the timing of 49 apartment settlements at Precinct 4A, Harold Park, Glebe, into July 2017 due to construction timing.
Mirvac's $2.1 billion active office development projects are progressing well. 200 George Street, Sydney, is 94 per cent pre-leased, 2 Riverside Quay, Melbourne, is 100 per cent pre-leased and 664 Collins Street, Melbourne, is 33 per cent pre-leased.
Goodman Group has also revised its full-year operating earnings per security by 7.5 per cent to 40 ¢, based on sales from its urban renewal sales and growth in the US operations.
Goodman chief executive Greg Goodman said the company was capitalising on the demand for modern, high-quality logistics space through its focus on "quality assets in prime global gateway cities".
"When we see the likes of Amazon report strong sales, we know demand for warehouses will remain very high," Mr Goodman said.
"This will ensure we are well positioned to drive earnings growth and deliver sustainable growth over the long term."
Goodman's development work in progress is $3.2 billion across 72 projects, with a forecast yield on cost of 8.1 per cent, with a weighted average lease term of 10.3 years.
Goodman recently completed stage one of a site in Japan and bought out its Brazil partner.