Mirvac has held its FY27 earnings and distribution guidance after a resilient first quarter, despite a marked moderation in residential activity. Occupancy remained at 97%, development milestones advanced and roughly three-quarters of the $200 million buy-back was complete by 20 October.
- FY27 operating earnings guidance retained at 13.2 to 13.4 cents per stapled security
- Portfolio occupancy steady at 97%, with positive leasing spreads across key sectors
- Residential activity moderated to 429 net deposits and lots exchanged
- Approximately 75% of the $200 million on-market buy-back completed
- Development pipeline expanded by $3 billion through Hunter Street East
Guidance Holds Despite Softer Housing Sales
Mirvac Group (ASX:MGR) has reaffirmed FY27 operating earnings guidance of 13.2 to 13.4 cents per stapled security and a 9.9 cent distribution, even as residential demand weakened across parts of eastern Australia. The group recorded 429 net deposits and lots exchanged in the first quarter, down 17% on the previous quarter, while leads fell 30%.
Management said the slowdown was most pronounced in New South Wales and Victoria, with Queensland also softening, while Western Australia remained resilient. The quarter produced 291 residential settlements, defaults stayed at 1.1% on a rolling 12-month basis and Mirvac retained approximately $1.4 billion of pre-sales, offering some visibility against its FY27 target of 2,800 to 3,100 settlements.
Investment Portfolio Maintains High Occupancy
The recurring portfolio provided the steadier part of the update. Stabilised occupancy held at 97%, including 96% in office, 97% in industrial and 99% in retail. Industrial leasing spreads were particularly strong at about 22%, while retail specialty sales rose 4.7% and specialty sales productivity reached $12,574 per square metre.
Office leasing included the renewal of Google at 1 Darling Island in Sydney, with about 24,460 square metres leased during the quarter and only 2% of income due to expire in FY27. The picture was less settled at 7 Spencer Street in Melbourne, where leasing improved to 32%, although the figure includes agreements for lease and non-binding heads of agreement. Mirvac also settled the sale of 380 St Kilda Road.
Buy-Back Nears Three-Quarter Mark
Capital management has become a visible part of the story: approximately 75% of the $200 million on-market buy-back announced in August had been completed by 20 October. The program was flagged in the group’s $200 million buy-back, which accompanied Mirvac’s FY26 result.
The funds platform also expanded. The Mirvac Wholesale Office Fund deployed about $600 million into two Premium-grade CBD office assets in Sydney and Melbourne, raised a further $50 million and intends to launch another capital raise in the first half of FY27. The LIV Mirvac Fund has also launched a capital raise, while Kit Georgeos has taken over as chief executive of Funds Management.
Major Projects Move Through Construction
Construction progress was strong across the commercial and mixed-use pipeline. Harbourside and 55 Pitt Street in Sydney, alongside Trielle at Yarra’s Edge in Melbourne, reached topping-out milestones in line with or ahead of schedule. Harbourside was about 30% pre-leased and 55 Pitt Street about 43% pre-leased, although both figures include non-binding arrangements.
Mirvac also commenced construction on the first warehouse at SEED in Badgerys Creek, expected to complete in mid-2027, and satisfied a condition precedent at Hunter Street East in Sydney. That step increased the stated development pipeline by $3 billion, although the figure represents 100% of expected end value and remains exposed to planning, market, construction-cost and supply-chain risks. The Harbourside project had previously been linked to a $1 billion joint venture with Mitsubishi Estate through Mirvac’s Harbourside joint venture.
Second-Half Settlements Carry the Guidance
Mirvac’s guidance is still conditional on the operating environment and delivery of key initiatives, with residential settlements weighted towards the second half of FY27. The group expects its weighted average cost of debt to rise from approximately 5.7% to 5.8%, following a 0.25 percentage-point cash-rate increase in September. The immediate tension is therefore clear: recurring property income and project execution remain supportive, while the residential sales pipeline must convert at the required pace.
Bottom Line?
The next test is whether Mirvac’s $1.4 billion pre-sales book and second-half settlement schedule can absorb the continuing slowdown in new residential demand.
Questions in the middle?
- Can the 599 open deposits, concentrated in Western Australia and Queensland, support the planned 2,800 to 3,100 FY27 settlements?
- Will leasing at Harbourside, 55 Pitt Street and 7 Spencer Street convert from early commitments into firmer income visibility?
- How much capital will Mirvac deploy after completing the buy-back and launching further funds-management raises?