Diversified developer Mirvac is reaping the rewards of its early movement in the build-to-rent sector and continued focus on masterplanned communities, recording strong residential results across its third quarter.
The developer is looking to increase its current pipeline size of 2200 units to 5000 units in the medium term.
Mirvac, which currently has $24 billion in assets under management and a $16-billion residential pipeline, on Tuesday upgraded its earnings expectations for the year to June, with securities now closer to 13.7¢, up from its previous forecast of 13.1¢ to 13.5¢.
Operating profit in the first half of 2021 fell 22 per cent to $276 million as development earnings dropped, while statutory profit fell 35 per cent to $396 million from $613 million for the previous corresponding period.
Mirvac chief executive Susan Lloyd-Hurwitz said the group had experienced strong performance across its residential portfolio with enquiry levels up 68 per cent and sales up 98 per sent on the same period last year.
“With a pipeline of approximately 27,800 lots and pre-sales increasing to $1 billion, we are well positioned for future growth and remain focused on creating exceptional living environments,” Lloyd-Hurwitz said.
In recent years, the ASX-listed developer has been pivoting towards its master-planned communities and away from its well-known apartment offerings.
The switch to housing estates also coincided with the federal government stimulus for the new home sector through HomeBuilder.
During the financial year to date, Mirvac has booked 1791 lot settlements, predominantly from domestic owner occupiers, and is on track to record more than 2220 settlements in financial year 2021—the most since 2017.
Two-thirds of those total settlements were on its housing estates, up from the roughly 50:50 split it has had during the past four years.
Mirvac’s apartment product has continued to perform well with the release of the second stage of Green Square in Sydney and Quay at Waterfront in Brisbane, each achieving 50 per cent in pre-sales respectively—equating to $195 million.
Mirvac's commercial arm, with approximately $15 billion of assets under management, has also rebounded, with occupancy at 95.3 per cent and the developer executing 34,000sq m in leasing deals for office space for the financial year to date.
Along with its busy residential business, Mirvac’s diversified platform includes malls, logistics assets and the emerging category of build-to-rent apartment blocks.
Build-to-rent apartment blocks are built specifically to be rented, and held in single ownership to generate long-term income.
Lloyd-Hurwitz said the company was gaining valuable insights from its LIV Indigo project in Sydney Olympic Park, a pioneering build-to-rent development five years in the making.
Mirvac said the project, which is now 63 per cent leased, would inform the rollout of its expanding pipeline of build-to-rent projects, currently comprising 2200 units across five sites with an estimated total end value of $1.6 billion.
“The Australian build-to-rent sector continues to benefit from reforms in planning processes and land tax regimes, providing further support for the establishment of the sector,” Lloyd-Hurwitz said.
“We continue to focus on assessing new site opportunities to meet our target of extending our portfolio from its current pipeline size of 2200 units to 5000 units in the medium term.”
During the period, Mirvac also received development approval for its LIV Newstead development in Brisbane, comprising 395 build-to-rent apartments, 25 per cent of which will be subsidised by the Queensland government for key workers.
The sector is gaining momentum in Australia, with more than 30 major build-to-rent projects with an average size of 365 apartments totalling 12,000, confirmed.
According to CBRE, an additional pipeline estimated at more than 10,000 units is in due diligence with further announcements expected across 2021 and beyond.