Mirvac Group (ASX: MGR) released its full year FY 2018 results today and income investors will be pleased to note that the real estate group increased its distributions for the year to the top end of its guidance.
Here are the highlights from the announcement:
Raw numbers
- Total revenue was up 7% to $2,802 million
- Profit for the year was down 6% to $1,089 million
- Total distributions for the year increased by 6% to 11 cents per share a 4.8% yield to the current share price of $2.29
- Occupancy remained high at 98.7% with a weighted average lease expiry (WALE) of 5.6 years
- Prime assets in Sydney and Melbourne led to strong net property revaluation uplifts across the investment portfolio of $490 million (a 5.3 per cent increase)
Mirvac shares were down 2% following the announcement.
What did management have to say?
Management emphasized how the Group's strategy to focus on prime assets in urban areas was paying dividends.
Mirvac's CEO & Managing Director, Susan Lloyd-Hurwitz, said, "Our urban asset creation strategy underpinned another excellent year in FY 18, delivering strong earnings growth for our security holders and ensuring we have a resilient and sustainable business that is well-placed for the future. This is reflected by a robust capital position with good visibility of future earnings and each business unit performing at the top of its class."
Outlook
Looking ahead, management are forecasting EPS growth in FY 19 to be within the 2% – 4% range and the distributions to grow by 5% in FY 19.
While that sounds promising, the company's exposure to the residential real estate market should cause investors to exercise caution.
Ms Lloyd-Hurwitz said, "As we have expected, market conditions in the residential sector have normalised. Our gross margins of over 25 per cent reflect our strategy to focus on the strong Sydney and Melbourne markets, as well as our ability to buy and sell at the right time in the property cycle."
Many investors will hope that those are not famous last words.
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