Mirvac : MPT FY16 Annual Report (pdf | 5.95 MB)

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M I R V A C PR O P E R T Y

T R U S T

Mirvac Property Trust Annual Report For the year ended 30 June 2016
The consolidated entity comprises Mirvac Property Trust (ARSN 086 780 645) and its controlled entities.
Index	Page
Directors' report	3
Auditor's independence declaration	7
Consolidated Financial Statements	8
Consolidated statement of comprehensive income	10
Consolidated statement of financial position	11
Consolidated statement of changes in equity	12
Consolidated statement of cash flows	13
Notes to the consolidated financial statements	14
Directors' declaration	36
Independent auditor's report to the members of Mirvac Property Trust	37

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 year ended 30 June 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 whole of the year and up to the date of this report, unless otherwise stated:

• John Mulcahy

• Susan Lloyd-Hurwitz

• Christine Bartlet

• Peter Hawkins

• Samantha Mostyn

• James M. Millar AM

• John Peters

• Elana Rubin.

Principal activities

The principal continuing activities of the consolidated entity consist of property investment for the purpose of deriving rental income and investments in unlisted funds. There has been no significant change in the principal activities of the consolidated entity during the year.

OPERATING AND FINANCIAL REVIEW

FINANCIAL, CAPITAL MANAGEMENT AND OPERATIONAL HIGHLIGHTS

Key financial highlights for the year ended 30 June 2016:

• profit attributable to the stapled unitholders of MPT $978.3m from $582.9m (June 2015), driven by substantial property revaluation uplifts;

• operating cash inflow of $384.9m;

• distributions of $366.5m, representing 9.9 cpsu; and

• net tangible assets per stapled unit of $1.74 up from $1.57 (June 2015).

  Key capital management highlights for the year ended 30 June 2016:

  The consolidated entity's capital structure is monitored at the Group level. Key capital management highlights relating to the Group for the year ended 30 June 2016 include:

• increased available liquidity to $1.2bn of cash and undrawn committed bank facilities held, as a result of proceeds from non-core asset disposals;

• issued A$536m of US Private Placement Notes (USPP), with maturities across tenors of 11, 12 and 15 years. The issue is expected to settle in September 2016;

• weighted average debt maturity reduced slightly to 4.0 years; however, this is expected to increase to over 5.0 years post USPP issuance;

• average borrowing costs increased slightly to 5.0 per cent per annum at 30 June 2016 due to the repayment of lower cost short-term bank debt (including margins and line fees); and

• gearing of 21.9 per cent, at the lower end of the Group's target range of 20 to 30 per cent;

• continued to comfortably meet all debt covenants.

  FINANCIAL, CAPITAL MANAGEMENT AND OPERATIONAL HIGHLIGHTS (continued)

  Key operational highlights for the year ended 30 June 2016:

  • maintained high occupancy of 98.2 per cent1, with a long WALE of 5.6years2;

  • achieved like-for-like net operating income growth of 0.5 per cent;

  • disposed of over $599.2m of assets with the sale of Como Centre, Melbourne VIC; 16 Furzer Street, Woden ACT; and 3 and 5 Rider Boulevarde, Sydney NSW demonstrating the consolidated entity's ability to flex with the cycle and dispose of non-aligned assets at the top of the cycle; and

  • total asset revaluations provided an uplift of $500.4m for the 12 months to 30 June 2016

  • acquired $337.6m of key strategic assets across office, industrial and retail. Including Toombul Shopping Centre, Nundah QLD, 26-38 Harcourt Road, Altona VIC and CBA site, Australian Technology Park, Redfern NSW (33.3% interest).

Market outlook3

Strong business conditions in Sydney and Melbourne continue to result in solid net absorption levels, with prime vacancy rates tightening over the past six months. Tenant demand in Brisbane is positive, driven by the government and education sectors, while there have been small levels of negative contraction in Perth, as larger mining firms continue to consolidate space options.

Risk

While tenant demand for office space remains challenging in Brisbane and Perth, Mirvac's overweight position to Sydney and Melbourne, where 79 per cent of Mirvac's office portfolio is located, means it is well-placed against this backdrop. The office portfolio metrics, comprising a long WALE of 5.6 years and solid occupancy of 98.2 per cent, also demonstrate Mirvac's ability to maintain a strong and robust portfolio through the cycles of demand.

Interests in the Trust
2016 Units m	2015 Units m
Total ordinary stapled units issued	3,699.0	3,694.3
Stapled units issued under long term incentive plan (LTI) and EIS	2.6	3.3
Total stapled units issued	3,701.6	3,697.6

Refer to note E2 of the financial statements for a reconciliation of the interests in the consolidated entity issued during the financial year.

Environmental regulations

The consolidated entity and its business operations are subject to compliance with both Commonwealth and State environment protection legislation and is satisfied that adequate policies and procedures are in place to ensure the consolidated entities' compliance with the applicable legislation. In addition, the consolidated entity is also subject to the reporting requirements of the National Greenhouse and Energy Reporting Act 2007 and Building Energy Efficiency Disclosure Act 2010. The consolidated entity is not aware of any incidents that have resulted in material non-compliance with environmental regulations during the financial year.

More information on Mirvac's sustainability strategy, actions and performance for the year ended 30 June 2016 can be found in our Sustainability report available in October 2016 on Mirvac's website at: http://www.mirvac.com/Sustainability/Sustainability-Reports/.

1. By area, including equity accounted investments and owner-occupied properties, and excluding assets held for sale and assets held for development.

2. By income, including equity accounted investments and owner-occupied properties, and excluding assets held for sale and assets held for development.

3. These future looking statements should be read in conjunction with future releases to the ASX.