Both Mirvac Retail and the GPT Group delivered results this week with mixed results. Two very different businesses but both with significant weightings in mixed use assets and projects. The retail environment has been challenging with consumer spending flat and increased competition in many trade areas, however overall their retail portfolios have delivered on their strategy with results indicative of the trust in their strategies.
Mirvac Retail delivered its results for the financial year to June 30, 2019 announcing a solid result in a challenging retail environment, testament to its urban strategy and investment in its high performing assets.
“Our Retail division delivered another solid result, which is pleasing given the highly competitive and rapidly evolving retail sector. Our commitment to constantly curating retail mixes and creating unique experiences has created a portfolio of thriving retail centres that offers the right retail in the right urban locations – densely populated with low unemployment, high incomes and strong population growth. We are also seeing the increase in value that our retail expertise is able to deliver to our office and residential portfolio,” Mirvac Group CEO Susan Lloyd-Hurwitz said.
Mirvac Retail owns and manages a portfolio of shopping centres across Australia’s eastern seaboard with total assets under management of over $4.0 billion. Their strategy is focussed on urban centres which are individually branded, with a focus on delivering the right retail mix for each target market.
Despite the environment of a significant amount of retailer change, the portfolio has maintained a high occupancy of 99.2% and achieved solid net revaluation gains of 2.2% underpinned by like for like income growth of 2.6%. Mirvac Retail has achieved comparable MAT sales growth of 2.7% and comparable specialty sales growth of 2.0% which is a good results in the current challenging retail landscape. The portfolio maintained comparable specialty sales productivity of $10,063 MAT/m2.
New dining precinct, Toombul
Mirvac completed the construction of a 6,900m2 expansion of Kawana Shoppingworld, Sunshine Coast, QLD, introducing Event Cinema’s only Gold Class offering on the Sunshine Coast as well as an expanded dining precinct. The project was 100% leased at completion and progressed a $43 million, 4,500m2 re-development of Toombul, Brisbane, introducing a dining and entertainment precinct. The precinct will be anchored by Archie Brothers, Cirque Electriq and an upgraded cinema. The Toombul development is due for completion in mid 2020.
Lloyd-Hurwitz said the company as a whole was committed to making a positive contribution to the urban landscape, including the release during the period of its Planet Positive plan, setting out the steps we will take to become net positive carbon by 2030, including developing buildings powered by 100% renewable energy.
The GPT Group, in its half yearly results delivered Net Profit After Tax of $352.6 million, down 51.6% on the prior corresponding period (pcp), reflecting lower revaluation gains achieved during the period. In this period, the Group divested their half of The MLC Centre for $800 million, a 3% premium to book value.
MLC Centre, Sydney
GPT’s Chief Executive Officer, Bob Johnston, said the Group has made good progress in the first half of 2019, with the portfolio delivering strong comparable income growth led by the performance of the Group’s office assets.
“The Group’s diversified portfolio of high quality assets continues to deliver growth for its investors. The recent acquisitions are consistent with our strategy of increasing our exposure to the office and logistics sectors while we are also investing in our retail assets to ensure that they are well positioned to grow market share and respond to changing market conditions,” said Johnston.
The Group’s retail portfolio continues to deliver a high level of sales productivity, with specialty sales up 1.0% on pcp to $11,512 MAT/m2. Total specialty MAT growth was up 0.7%. Melbourne Central this year in the 2019 Big Guns Report claimed the top spot for MAT/m2 against previous holder Mirvac’s Broadway Shopping Centre with a massive $14,763 MAT/m2 result.
Like-for-like income growth increased 1.4% in the first half, reflecting a weaker operating environment at Casuarina Square in Darwin and increased downtime. The portfolio has maintained a high occupancy level and continues to attract demand from new retailers, with occupancy of 99.5% across the portfolio at 30 June 2019.
The valuation for the Retail portfolio declined by $35.4 million (down 0.6%) during the period, and the WACR of the portfolio was 4.86% as at 30 June.
In March, the Sunshine Plaza development was completed, introducing 40 ‘first to market’brands and a number of international mini-majors. The sales performance in the first three months of trading has been encouraging and in line with expectations.
Sunshine Plaza opening: COO The GPT Group, Mark Fookes, Sunshine Coast Mayor Cr Mark Jamieson, Lendlease CEO for Property, Kylie Rampa
The Group has progressed the development proposals for both Melbourne Central and Rouse Hill Town Centre, and subject to receiving the required approvals, is targeting to commence both projects in the first half of 2020.
The GPT Wholesale Shopping Centre Fund (GWSCF) continued to execute its strategy of improving the overall quality of its portfolio with the launch of a campaign to sell Norton Plaza. Since the end of the period, GWSCF has exchanged unconditional contracts for the sale of this asset at a small premium to book value. As at 30 June, the GWSCF portfolio was valued at $4.8 billion.
