Mirvac sees retail profit fall 2 per cent

Mirvac’s Birkenhead Point Outlet Centre

Property group Mirvac has improved operating profit after tax by 26 per cent to $290 million, for the 6 months to 31 December 2018, driven primarily by a high-performing investment portfolio.

However, the group’s retail portfolio, which represents 32 per cent of Mirvac’s investment portfolio, saw operating profit fall 2 per cent to $85 million – largely due to the 50 per cent divestment of Kawana Shoppingworld in December 2017.

Its retail properties enjoyed a high occupancy rate of 99.3 per cent, contributing to a 2.6 per cent like-for-like income growth.

“While conditions in the retail sector remain competitive, our focus on strategic, urban growth corridors has enabled us to benefit from the higher discretionary spend, population increase, strong employment levels and burgeoning tourism typical of areas such as Sydney’s Inner Ring and South East Queensland,” Mirvac chief executive and managing director Susan Lloyd-Hurwitz said.

“By refreshing our retail mix toward more destination offers including dining, entertainment, services and community amenity, and focusing on creating engaging and tailored experiences that meet the lifestyle needs of our customers, we are confident we can continue to maintain the strong metrics for the remainder of the year.”

Mirvac said it is continually refreshing retail assets through refurbishment, redevelopment and tenant remixing, bringing in “more destination” tenants, including dining, services and community amenity.

This focus has led to an increased weighting toward more resilient and experiential categories such as food and beverage, entertainment and other non-retail offers.

This largely echoes the recommendations made by CBRE head of research for Australia Bradley Speers, who noted landlords faced with vacating tenants should seek to re-purpose the space into service-based offerings such as gyms, child-care and entertainment.

Looking forward, Lloyd-Hurwitz said the business’s urban strategy, diversified and integrated business model, and asset creation capability has set it up for continued growth through the remainder of the financial year.

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