Mirvac : MPT - 1H17 Interim Report (pdf | 721 kB)

MIRVAC PROPERTY TRUST

INTERIM REPORT FOR THE HALF YEAR ENDED

31 DECEMBER 2016

MIRVAC PROPERTY TRUST AND ITS CONTROLLED ENTITIES Interim Report For the half year ended 31 December 2016

The consolidated entity comprises Mirvac Property Trust ARSN 086 780 645 and its controlled entities.

Index Page

Directors' report 2

Auditor's independence declaration 4

Consolidated financial statements 5

Consolidated statement of comprehensive income 6

Consolidated statement of financial position 7

Consolidated statement of changes in equity 8

Consolidated statement of cash flows 9

Notes to the consolidated financial statements 10

Directors' declaration 16

Independent auditor's report to the unitholders of Mirvac Property Trust 17

This Interim Report does not include all the information and disclosures usually included in an annual financial report. Accordingly, this report should be read in conjunction with the Annual Report 2016 and any public announcements made by Mirvac Property Trust during the interim reporting period.

The Directors of Mirvac Funds Limited ABN 70 002 561 640, AFSL 233121, the Responsible Entity of Mirvac Property Trust (MPT or Trust), present their report, together with the consolidated report of MPT and its controlled entities (consolidated entity) for the half year ended 31 December 2016.

MPT and its controlled entities together with Mirvac Limited and its controlled entities form the stapled entity, Mirvac Group (Mirvac or Group).

Responsible Entity

The Responsible Entity of the Trust is Mirvac Funds Limited, an entity incorporated in New South Wales. The immediate parent entity of the Responsible Entity is Mirvac Woolloomooloo Pty Limited ABN 44 001 162 205, incorporated in New South Wales, and its ultimate parent entity is Mirvac Limited ABN 92 003 280 699, incorporated in New South Wales.

Directors

The following persons were Directors of Mirvac Funds Limited during the half year and up to the date of this report, unless otherwise stated:

• John Mulcahy

• Susan Lloyd-Hurwitz

• Christine Bartlett

• Peter Hawkins

• James M. Millar AM

• Samantha Mostyn

• John Peters

• Elana Rubin.

OPERATING AND FINANCIAL REVIEW

FINANCIAL, CAPITAL MANAGEMENT AND OPERATIONAL HIGHLIGHTS

Key financial highlights for the half year ended 31 December 2016:

• profit attributable to the stapled unitholders of $497.9m;

• distributions of $181.6m, representing 4.9 cents per stapled unit; and

• net tangible assets per stapled unit of $2.25 from $2.12 (June 2016).

  Key capital management highlights for the half year ended 31 December 2016:

  The consolidated entity's capital structure is monitored at the Group level. Key capital management highlights relating to the Group for the half year ended 31 December 2016 include:

• substantial available liquidity of $535m in cash and committed undrawn bank facilities held, with $200m of debt due for repayment in December 2017;

• weighted average debt maturity increased significantly from 4.0 years (June 2016) to 6.4 years, following over $1bn of debt issuance over the past six months, including:

  • $536m (US$400m) of US Private Placement notes for terms of 11,12 and 15 years;

  • $200m of medium term notes (MTN) for a term of seven years under the Group's MTN program;

  • $118m (JPY$10bn) of Euro medium term notes (EMTN) for a term of 15 years, the first issuance under the Group's EMTN program;

  • $200m of bank debt was extended from 30 September 2017 to 30 September 2021; and

• average borrowing costs reduced to 4.7 per cent per annum as at 31 December 2016 (December 2015: 4.9 per cent), including margins and line fees, following the new debt issuance and the repayment of maturing debt.

  Mirvac's strong capital management in FY16 means it is well-placed in FY17. This is demonstrated by low gearing, and with debt maturing in 1H17 due to be replaced with long term US debt, the Group's weighted average debt maturity will significantly increase while reducing the amount of debt due in any one year.

  Key operational highlights for the half year ended 31 December 2016:

• investment property revaluations provided an uplift of $256.9m for the 6 months to 31 December 2016;

• furthered our capital partnering strategy by acquiring a 49.9% of East Village Shopping Centre1 Zetland and 50% of South Village Shopping Centre, Kirrawee, which is under construction.

1. Acquisition made by way of acquiring units in the Joynton North Property Trust.

FINANCIAL, CAPITAL MANAGEMENT AND OPERATIONAL HIGHLIGHTS (continued)

Outlook1, Office and Industrial: Tenant demand remains buoyant in the service-orientated markets of Sydney and Melbourne, with both markets experiencing tightening vacancy rates and strong effective rental growth. Rents in Brisbane have shown signs of stabilising with preliminary signs of recovery. In Perth, further rental falls have been recorded, albeit at a more moderate rate, as the state works its way through the contraction in mining investment. Retail: The service-based economies of Sydney and south east Queensland, where 95 per cent of Mirvac's retail portfolio is based, are supported by stronger dwelling prices, more solid population gains and lower unemployment than regional areas. Mirvac's focus on high-quality assets in urban catchments with strong fundamentals is expected to support a continued outperformance in this sector. Risk Office and Industrial: While tenant demand for office space remains challenging in Brisbane and Perth, Mirvac's continued overweight position to Sydney and Melbourne means it is well-placed against this backdrop. The office portfolio metrics, comprising a long weighted average lease expiry and solid occupancy, also demonstrate Mirvac's ability to maintain a strong and robust portfolio through the cycles of demand. Retail: While retail sales have largely continued to grow, certain retailer and category performance has softened and leasing demand remains variable. To mitigate these risks, Mirvac is focused on continually refreshing its retail assets (via refurbishment, redevelopment or tenant remixing) to adapt to changing market dynamics. In addition to its focus on key urban and metropolitan markets, Mirvac continues to ensure it has a diversified tenancy mix, where no single specialty retailer contributes greater than 1.6 per cent of the total portfolio's gross rent.

Net current asset deficiency

As at 31 December 2016, the Trust was in a net current liability position of $313.8m. The Trust minimises its average cash balance using available funds to repay borrowings, however had access to $868.7m of unused borrowing facilities at 31 December 2016. Accordingly, the Directors of the Responsible Entity expect that the Trust will have sufficient cash flows to meet all financial obligations as and when they fall due

Matters subsequent to the end of the half year

No other circumstances have arisen since the end of the half year which have significantly affected or may significantly affect the operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity in future years.

Auditor's independence declaration

A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 4 and forms part of the Directors' report.

Rounding of amounts

The amounts in the financial statements have been rounded off to the nearest tenth of a million (m) dollars in accordance with the ASIC Corporations Instrument 2016/191.

This statement is made in accordance with a resolution of the Directors.

Susan Lloyd-Hurwitz Director

Sydney

16 February 2017

1. These future looking statements should be read in conjunction with future releases to the Australian Securities Exchange.