Property giant Mirvac Group has posted a smaller operating profit amid tough conditions as it sells office blocks to invest in build-to-rent apartments and warehouses.
The developer, investor and fund manager on Thursday reported a five per cent fall in net operating profit to $552 million for the year to June 30.
Some $1.1 billion was slashed from the value of the investment property portfolio, mostly unwanted high-rise offices.
Mirvac also completed the $1 billion sale of assets in the Sydney and Melbourne CBDs to strengthen its balance sheet and improve financial headroom.
This meant the statutory loss for the financial year swelled to $805 million, from a statutory loss of $165 million a year earlier.
"While market conditions are likely to remain challenging in 2024/25, we are setting ourselves up for recovery," group chief executive Campbell Hanan said.
Higher costs for apartment projects in NSW and Queensland, hit by bad weather and contractor insolvencies in the past year, were expected to continue into 2025.
But the "strategic decision to reweight to the attractive living and industrial sectors" was paying off, Mr Hanan said.
"A number of exceptional outcomes were achieved in a tough environment ... where transactional activity was limited, the cost of debt remained high and institutional capital became harder to access," he said.
Developments under way across the industrial, build-to-rent and office divisions were expected to provide more than $90 million in additional income to security holders as they complete over the next two to three years, while growing funds under management by $2.6 billion.
Tenants continued to gravitate towards high-quality, well-located assets with strong sustainability credentials, Mr Hanan said.
Mirvac said it was targeting operating earnings in the 2025 financial year of 12 to 12.3 cents per stapled security, for a distribution of nine cents.
The group confirmed the distribution of 10.5 cents per stapled security for 2023/24, from Mirvac Property Trust only.
