August 20, 2014 / 11:52 PM / 3 years ago

UPDATE 1-Australia's Mirvac Group annual net profit surges

(Recasts lead, adds earnings details)

SYDNEY, Aug 21 (Reuters) - Property company Mirvac Group tripled its annual net profit, bolstered by asset sales, and said it sees continued strong demand for residential properties in Sydney and Melbourne, Australia’s two biggest cities.

For the year to June 30, operating profit after tax before non-cash and significant items rose 15.9 percent to A$437.8 million ($406.7 million).

Higher investment returns and solid residential demand helped boost net profit to A$447.3, from A$140 million a year ago, and ahead of analysts’ expecatations for A$430.9 million, according to Thomson Reuters I/B/E/S.

Record low interest rates in Australia have led to a pickup in home prices, while approvals to build new homes are trending higher. Sales of new homes rose 1.2 percent in June from May, according to official data.

“We have $1.2 billion in pre-sale residential contracts on hand, and we continue to see high demand in Sydney and Melbourne, where we maintain an overweight position,” Mirvac CEO & Managing Director, Susan Lloyd-Hurwitz, said in a statement.

Mirvac had A$7.5 billion of investments as of June 30 and posted an increase of 3.1 percent in net operating income during the year.

The company said it sold 12 non-core assets across its office, retail and industrial divisions for A$624 million.

Mirvac said it saw challenges in leasing retail assets, but remained “overweight” in non-discretionary retailing.

In the residential segment, it achieved 2,482 lot settlements, ahead of its target for sales of 2,400.

Mirvac has a forward price to earnings ratio of 15.6 times, higher than bigger rival Stockland Corporation Ltd’s 15.3 times and Goodman Group’s 13.8 times, according to Thomson Reuters Starmine.

Shares of Mirvac, valued by the market at $6.5 billion, have risen more than 13 percent so far this year, outperforming a 5.3 percent rise in the benchmark S&P/ASX 200 index. (1 US dollar = 1.0765 Australian dollar) (Reporting by Swati Pandey; Editing by Richard Pullin)

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