Coles and Woolies help Mirvac deliver 30% profit increase

Mirvac’s retail portfolio has defied the current retailing gloom by delivering solid growth, with food majors Coles and Woolies accounting for a quarter of rental income.

Net income from retail assets increased by 4.3% to $125.9 million for the year ended June 30, 2011 with occupancy increasing from 97.9% to 99%.

The annual results reveal that more than a third (37%) of retail rent comes from food retailers with its top two tenants by income being Coles (12.4%) and Woolworths (11.6%). A distant third is the Reject Shop, bringing in 1.2% of annual rent.

Fashion stores bring in 19% of retail rent.

Occupancy costs remain “sustainable” at 13.2%.

The developer says its retail portfolio is well positioned with an 84.7% weighting to retail centres driven by “non-discretionary spending”.

Retail assets account for about 30% of Mirvac $5.9 billion property portfolio with the developer saying it will keep its weighting at this level going into 2012.

More than three-quarters (77.6%) of Mirvac’s retail assets are sub-regional shopping centres including the Taree City Centre, Ballina  Central and Kawana Shoppingworld on the Sunshine Coast.

CBD retail makes up just under 10% of the portfolio, with the North Sydney Greenwood Plaza and Melbourne’s Moonee Ponds Central the most notable assets in this class.

Mirvac expects the retail sector to remain subdued going into 2012.

“The outlook for the retail sector remains mixed. The possibility of higher interest rates and a recent softening in employment growth, together with an increase in the saving ratio has constrained consumer spending,” the annual report says.

“The saving ratio will, at some stage, stop increasing, while personal income should continue to grow; all of which should stimulate spending. Against this backdrop, there is expected to be little change in the average vacancy rate in the retail sector over the next six months.”

Overall, Mirvac delivered annual operating net profit after tax up 30.2% to $358.5 million.

Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer

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