More red ink from some of the country’s biggest losers in the property sector since the global; financial crisis erupted.
Mirvac Group yesterday revealed a net loss of $1.08 billion for the year to June and Centro Retail coughed up a massive $2.6 billion flood of losses.
Mirvac said the 2009 result was affected by property revaluations, write-downs and losses on inventory.
Operating profit after tax was $200.8 million, down 43% from the previous corresponding period.
That was the lowest profit since 2002 and means the company has destroyed six years of earnings growth.
Operating profit, which excludes non-cash and significant items, was at the higher end of Mirvac’s issued guidance.
Revenue was down 16% from the previous year to $1.79 billion.
Mirvac declared a final distribution of 0.2 cents, down from 8.23 cents in the prior year.
The full year distribution was 8 cents, down almost 75% from the 32.9 cents in 2007-08.
It is looking for operating profit of $253 million for the current year and is targeting distributions of 8c to 9c per security for 2010, and earnings per security of around 9c.
"After 12 months of hard work, we believe we have a stronger, simplified and more focused business model that is well placed to capture the opportunities that will arise as the market improves," managing director Nick Collishaw said.
He said the group’s residential business will continue to focus on its key competitive advantage being large-scale residential development.
Mirvac completed two capital raisings in 2008-09, raising $1.1 billion in June and $500 million in November.
Gearing was reduced from 34.2% to 18.7% as a result.
"We will maintain our cautious capital management approach in the current environment,” Mr Collishaw said.
"We will finalise our business re-organisation across the group in 2009/10 to realise further cost reductions.
"Our focus is on strengthening our capital and liquidity positions to ensure we have the financial flexibility to take advantage of opportunities that will inevitably arise.”
Mirvac’s investment division, which is made up of Mirvac Property Trust and Mirvac Asset Management, had a total portfolio of $3.7 billion at June 30.
It posted a statutory net loss before tax of $546.4 million.
"The division’s strategy is to increase investment in Australian investment grade commercial and retail property assets focused on the east coast of Australia,” Mr Collishaw said in the statement.
Mirvac securities eased 1 cent to $1.255 yesterday.
It’s once friendly Middle Eastern investor, Nakheel, quit the share register last week after losing the best part of $400 million on its adventure.
Centro Retail Group’s loss was expected after downward revaluations here and in the US were reported earlier, but it’s still an awful lot of money: $2.68 billion.
The company comprises Centro Retail Trust and Centro Retail Ltd and is 51% owned by Centro Properties Group which has yet to report.
The loss is driven by non-cash items including property devaluations of $1.86 billion and derivative mark-to-market adjustments.
Excluding those impacts, Centro Retail said its underlying profit was $185 million.
But there’s a hint of more worries to come with the company’s banks, especially in Australia.
"Recent property devaluations have put LVR (Loan To Valuation Ratio) covenants (primarily related to Australian facilities) under pressure. CER’s look-through loan-to-value ratio (LVR) is 75.9% (73.7% excluding Super LLC), the company said. Super LLC is a US shopping centre group the Centro group controls).
"The underlying health of the portfolio remains sound despite the continuation of difficult conditions for our retailers," chief executive Glenn Rufrano said in yesterday’s statement.
"The downturn in the Australian market has not been as severe as the US as reflected in our results.
"While we are seeing positive signs of recovery in both markets, we remain cautious in our outlook and expect real estate fundamentals to lag the recovery in the broader economy."
Centro Retail reduced its debt by $498.6 million in the year and met all of its debt covenants after using the proceeds of asset sales.
It said negotiations are continuing for the refinancing and renewal of the debt maturing toward the end of 2009 calendar year.
CER’s balance sheet has been significantly impacted during the year by the same items that impacted net profit. Net tangible assets per security (NTA) reduced from $1.27 at 30 June 2008 to $0.30 at 30 June 2009. The primary driver of this reduction was property (88 cents a unit) revaluations.
Centro securities were down half a cent at 12.5 cents yesterday.
