Mirvac Group (ASX:MGR) used its half-year results call to highlight stronger operating momentum across its portfolios, improved residential sales, and additional visibility on earnings growth into FY2026 and beyond, while reiterating full-year guidance.
Half-year performance and guidance
Chief Executive Officer and Managing Director Campbell Hanan said Mirvac delivered a “strong half-year performance” with improvements visible across the business, including higher residential sales, like-for-like income growth, positive leasing spreads, and valuation growth in all asset classes.
Mirvac reaffirmed guidance for earnings of AUD 0.128 to AUD 0.13 per stapled security and a distribution of AUD 0.095.
Segment results: investment, funds, and development
Smith said the investment segment contributed AUD 307 million, up 2%, supported by development completions in living and industrial and improved leasing outcomes in retail, partly offset by office asset sales.
The fund segment contributed AUD 19 million, up 38%, driven by two additional completions in the LIV build-to-rent (BTR) fund as well as improved asset valuations and increased leasing activity.
The development segment delivered AUD 111 million, up 37%. Commercial mixed-use contributed AUD 27 million, including contributions from committed projects such as 7 Spencer Street and 55 Pitt Street, plus development management fees from Harbourside. Residential contributed AUD 110 million, up 9%, reflecting higher settlement volumes, improved average sale prices, the sell-down of Harbourside, and development management fees from joint venture projects.
Net financing costs rose to AUD 129 million, up AUD 19 million, primarily due to lower capitalized interest, partly offset by a decrease in gross interest expense. Mirvac also reported statutory profit of AUD 319 million, which included AUD 120 million of positive investment revaluations across all sectors.
Balance sheet, capital management, and partnering
Management pointed to a stronger balance sheet and continued capital partnering. Headline gearing moderated to 25.8%, within target range, and interest cover was reported at more than 3.5 times. Smith said average cost of debt was 5.3%, and noted Mirvac refinanced AUD 1.3 billion of bank debt at average margins of around 115 basis points during the half. The company also reported AUD 1 billion of available liquidity and no maturities in the next 12 months.
Hanan and other executives outlined several transactions and capital initiatives completed during the period, including:
- A “major” 50% joint venture with Mitsubishi Estate at Harbourside
- Recapitalization of the LIV BTR Fund with Australian Retirement Trust
- A AUD 430 million capital raise within MWOF
Smith also referenced Mirvac’s capital management track record over the last five years, including over AUD 9 billion raised, comprised of AUD 6 billion from capital partners and around AUD 3 billion of asset sales.
Portfolio repositioning and operating metrics
Executive General Manager, Investments, Richard Seddon said Mirvac’s portfolio repositioning has upweighted living and logistics while sharpening office exposure through non-core asset sales. He reported the portfolio is at 98% occupancy and delivered 4.4% like-for-like growth, with positive valuation movements in every sector.
In office, Seddon said 60% of the office portfolio is now Premium Grade, up from 34% in 2019, and that leasing has reduced forward expiries to 12% over the next 2.5 years. He also cited improving market conditions, including positive net absorption in major CBDs, “double-digit” effective rental growth in Sydney and Brisbane, and a low supply outlook. In response to a question on 275 Kent Street, management said Mirvac has been leasing the space handed back in the “skyrise” component, with Westpac’s expiry at the asset coming in 2030.
In industrial, Seddon said NOI is up nearly 80% over 7.5 years, supported by development and a Sydney-focused strategy. He referenced under-renting of around 17% and highlighted progress at SEED near Western Sydney Airport, where Stage 1 DA approval has been received and construction is set to begin ahead of the airport opening later this year.
In retail, Seddon emphasized productivity, noting that among 34 new partners introduced over the past 18 months, turnover improved 50%.
In living, he said EBIT increased 15%, while the BTR portfolio of around 2,200 completed apartments delivered 6% like-for-like growth and the strongest valuation uplift in the portfolio at nearly 4%. He said LIV Anura and LIV Albert were leasing strongly, with Anura at 76%.
Development pipeline, residential momentum, and key Q&A themes
Group Chief Executive, Development, Stuart Penklis said the development business produced a “strong first half,” with residential sales up 38% and margins recovering to 22.5%. Management also said residential settlements were up 22% year-on-year and that the company was “90% secured” for the full-year settlement target range, with remaining risk factors including weather and titling.
Penklis outlined “restocking” progress and highlighted three major opportunities:
- Hunter Street Metro (Sydney CBD): expected ~70,000 sq m of premium office space; end value around AUD 3 billion; yield on cost above 6%; expected completion in 2034
- Blackwattle Bay (former Sydney Fish Markets): expected ~800 apartments; first settlements targeted for 2030
- Karnup (Western Australia): expected ~1,500 new homes in partnership with the WA government
On committed commercial projects, Penklis said pre-leasing momentum is encouraging. At 55 Pitt Street in Sydney, he said agreements for lease are in place for 40% of the building (including Baker McKenzie, Aon, and Minter Ellison). At 7 Spencer Street in Melbourne, he said practical completion is expected in the half and that a new heads of agreement increased leasing to almost 25%, with discussions under way that could take pre-leasing toward 60%. At Aspect in Western Sydney, he said Aspect North and South were completed in the half and are now 91% leased.
During Q&A, management said development returns had been affected by elevated costs over the last couple of years but that it expects returns to recover toward “through-cycle returns” as COVID-impacted projects roll off. Asked about residential demand amid changes in interest rate expectations, Hanan said inquiry levels in January and February were similar to December, and Penklis said lead volumes remained at their strongest level in four years (as reported for the December quarter). Executives emphasized undersupply and said recent releases had performed strongly, including a first release at Bullsbrook in Western Australia that was a “100% sell-out.”
On capital partnering timing for industrial projects, management said it is targeting one of Aspect Central and SEED Stage Two for the second half, with the other likely to move into FY2027. On BTR, Scott Mosely said the LIV BTR fund’s recapitalization broadened the mandate to include stabilized assets and fund-throughs; he said yield-on-cost expectations depend on structure, citing a target range of 65–85 basis points of yield-on-cost spread to core cap rate for certain fund-through opportunities.
Hanan also addressed asset sales, saying disposals would remain part of strategy, with continued trimming in office (excluding premium grade) and some rebalancing across other sectors, while emphasizing the company expects AUD 100 million of future NOI currently in production to be realized over the next 3–4 years.
About Mirvac Group (ASX:MGR)
Founded in 1972, Mirvac is an Australian Securities Exchange (ASX) top 50 company with an integrated asset creation and curation capability. For more than 50 years, we’ve dedicated ourselves to creating extraordinary urban places and experiences. We have over $35 billion of assets under management, together with a $12 billion commercial and mixed use development pipeline, and a $17 billion residential development pipeline, enabling us to deliver innovative and high-quality property for our customers, while driving long-term value for our securityholders.
