We’re finally in the thick of ASX reporting season and companies are handing down their financial results left, right and centre.
Yesterday, we heard from real estate investment trusts (REITs) Vicinity Centres (ASX: VCX) and Dexus Property Ltd (ASX: DXS), who both announced their full-year results.
Today, two more ASX property shares delivered their results: Mirvac Group (ASX: MGR) and Charter Hall Group (ASX: CHC).
Mirvac shares finished more than 2% higher, while Charter Hall enjoyed a near 7% share price jump. Let’s take a look at what they reported.
Mirvac
The headline results from Mirvac’s report include:
- Revenue down 3% to $2.12 billion
- Operating EBIT down 6% to $796 million
- Adjusted funds from operations up 0.4% to $572 million
- Statutory profit after tax down 45% to $558 million
- Final distribution of 3 cents per stapled security, down from 6.3 cents in FY19.
While FY19 enjoyed the benefits of a $516 million revaluation gain, this was only $14 million in FY20.
During the year, Mirvac completed approximately 134,300 square metres of leasing across its investment portfolio, with high occupancy maintained at 98.6% and a weighted average lease expiry (WALE) of 5.6 years.
Segment performance
In the office sector, Mirvac achieved net operating income of $348 million and like-for-like net operating income growth of 3.8%. Total office asset revaluations provided an uplift of $282 million to book value and 83% of rent was collected in the June quarter.
Rent collections aren’t faring so well in the retail sector, with 58% of rent collected in the June quarter and 54% collected in July. However, 92% of stores were open at the end of June.
The group maintained residential sales momentum in FY20, achieving 1,800 sales and settling 2,563 residential lots, which includes a record 1,130 apartments.
Impact of COVID-19
Mirvac said that COVID-19 had a $86 million net impact impact on its earnings, including a $48 million provision of rental receivables and waivers. The group also reported a further $32 million net impact to earnings due to project delays and the timing of residential development payments.
“As the pandemic broke, Mirvac moved quickly to work with tenants to provide a range of assistance measures. The Group has provided various types of assistance to tenants, primarily in the retail sector, whose businesses have been significantly impacted by the pandemic, particularly small and medium enterprises.”
Given the evolving nature of the pandemic, Mirvac declined to provide FY21 earnings guidance. However, it will be targeting a distribution payout ratio of 65-75% of operating earnings.
Charter Hall
Turning our attention now to Charter Hall and its extensive range of funds, here are some of the headline results:
- Revenue up 46.3% to $553.8 million
- Operating earnings up 46.3% to $322.8 million
- Statutory profit after tax up 47% to $345.9 million
- Full-year distributions of 35.7 cents per share, up 6% over FY19
Commenting on what was Charter Hall’s 15th year as a listed company, CEO and managing director David Harrison was pleased with the company’s growth, highlighting 33% growth in funds under management to reach $40.5 billion.
During FY20, Charter Hall launched several new partnerships with investors and new tenant partnership funds with Telstra and BP. As announced this week, it also created a partnership with Singapore’s sovereign wealth fund to acquire a 49% stake in the Ampol Property Trust, which will own 203 convenience properties across the country.
“This success in partnering with our tenant and investor customers has been rewarded with strong equity flows across all equity sources,” said Mr Harrison.
Impact of COVID-19
Charter Hall noted that while it hasn’t been immune to the pandemic, the impacts have been limited through the company’s strategy of investing in long WALE assets. The group said it focuses on assets with long leases to high quality tenants in predominantly defensive industries. What’s more, small to medium-sized enterprises (SMEs) represent just 10.2% of tenants across the funds platform.
Further commenting on COVID-19, Charter Hall said: “More broadly, COVID-19 has seen accelerating demand for access to industrial and logistics assets, something we have actively pivoted towards. Flows into Charter Hall Direct funds have averaged $95 million a month during FY20, while wholesale pooled and partnership funds have also continued to see inflow.”
Outlook
Charter Hall provided FY21 guidance for post-tax operating earnings per security of approximately 51 cents per share. This is based on the FUM growth already achieved in FY21 and assumes the COVID-19 operating environment doesn’t significantly deteriorate.
The group is also guiding for 6% growth in the FY21 distribution compared to FY20.
In other news today, Afterpay Ltd (ASX: APT) upgraded FY20 forecasts, pushing shares nearly 7% higher, while Domain Holdings Australia Ltd (ASX: DHG) reported a 40% fall in profits.
