SYDNEY--Mirvac forecast improved earnings in the new fiscal year, despite the challenges posed by higher interest rates and tax changes designed to cool growth in residential property prices.
Mirvac said it is targeting operating earnings per security of between 13.2 Australian cents (9.35 U.S. cents) and 13.4 cents in the 12 months through June, 2027, and it expects a distribution of 9.9 cents per security.
If achieved, Mirvac's operating EPS for fiscal 2027 would be 3.1% higher at the midpoint of the range than the 12.9 cents reported for the 12-month period just ended.
"This assumes achieving between 2,800 to 3,100 residential lot settlements and an expected weighted average cost of debt of 5.7% for the year," Mirvac said.
On Wednesday, Mirvac also said it intends to buy back shares worth up to A$200 million, citing progress in repositioning its property portfolio and improving visibility on earnings.
"This reflects our confidence in the value embedded in the business, while providing us with flexibility to deploy capital to opportunities where we see the most value for securityholders," Hanan said.
Mirvac provided the guidance alongside a net profit of A$677 million for fiscal 2026, up from A$68 million a year earlier. Revenue rose by 13% to A$3.08 billion. Its annual distribution, which was pre-announced, was 9.5 cents per security.
Homebuilders including Mirvac had been enjoying an upturn in fortunes when the Middle East conflict began in late February. The conflict scrambled expectations for interest rates by stoking inflation, with fuel prices surging at the pump. This quickly weighed on the property market, with Mirvac noting in April that some projects had seen sales moderate in the weeks after hostilities broke out.
To tame inflation, the Reserve Bank of Australia pivoted from a bias toward lowering interest rates to raising them at three consecutive meetings. Rate rises have stretched household budgets at a time when higher prices of food, fuel and packaging are intensifying cost-of-living pressures.
The sector is also adjusting to tax changes introduced by Australian Treasurer Jim Chalmers that the government hopes will improve housing affordability. An overhaul of negative gearing could be a boon for homebuilders as the benefit has been maintained for newly built homes. Still, some analysts warn the shakeup risks souring sentiment toward the property market broadly.
Assessing the current state of the market, Mirvac Chief Executive Campbell Hanan on Wednesday said market conditions remain uncertain. Still, he said the company enters fiscal 2027 with a visible pathway to sustained growth in earnings and net tangible assets.
"We believe the actions we have taken over recent years position us well to continue delivering value to our securityholders," Hanan said.
Mirvac settled 2,130 lots in its residential business in fiscal 2026. That was just above the 2,100 settlements over the previous 12 months and within guidance for 2,000-2,300 lots.
"While there has been some moderation in residential markets, we start FY27 in a strong position, with 63% of our settlement target secured, along with a pre-sales balance of A$1.5 billion," Hanan said.
Across its investment portfolio, Mirvac said earnings before interest and tax was flat at A$602 million. The result was supported by like-for-like growth of 5.3% and new income from development completions across build to rent and industrial. However, earnings in the portfolio were weighed down by A$1.1 billion of asset disposals since the start of fiscal 2025.
Occupancy levels were also unchanged at 98% and Mirvac achieved strong leasing spreads, including 33.7% in industrial property.