Mirvac Group (MGR), Australia’s third-biggest diversified property trust by assets, will focus on high-quality offices and housing in inner suburbs of major cities, and new investment partnerships to increase returns.
Mirvac said it will seek partners for each unit of its business and plans to sell as much as half of its Westpac Place building in Sydney, and 699 Bourke Street and 664 Collins Street premises in Melbourne.
The company, which reported a 69 percent slump in first-half profit after writing down residential development projects, joins other real estate trusts, including Westfield Group (WDC) and Goodman Group (GMG), in funding higher-return activities by selling stakes to investors. Chief Executive Officer Susan Lloyd-Hurwitz plans to create an office investment “club” with as many as five investors by June 30.
“It is clear that to deliver returns to security holders, we needed greater focus across the group in certain areas,” Lloyd-Hurwitz said in a regulatory statement today following a review of the business. “Stable income will be derived from our high-quality portfolio of passive assets, whilst growth will be achieved via a range of opportunities including repositioning of existing assets.”
Mirvac, based in Sydney, will move away from lower-quality offices without redevelopment potential, shopping malls in “suboptimal” markets and residential developments in outer suburbs, the company said.
The company reaffirmed operating earnings per share will be between 10.7 Australian cents and 10.8 Australian cents in the year to June 30. It exchanged almost A$972 million ($990 million) of pre-sales contracts in its residential business.
“Mirvac provided a comprehensive strategic review, but with no significant changes,” John Kim, Sydney-based head of real estate research at CLSA Asia-Pacific Markets, said in an e-mail. “The only minor surprise is little new information on capital partnerships.”
Mirvac shares rose 1.5 percent to A$1.745 at the close of trading in Sydney, extending gains this year to 18 percent, compared with a 12 percent gain in the benchmark S&P/ASX 200 Index for 2013 and a 7.4 percent increase in Stockland (SGP), Australia’s biggest diversified property trust by assets. Mirvac closing price today was a 6.4 percent premium to the value of its assets as of Dec. 31.
The company in September agreed to sell half of its Old Treasury Building in Perth to Singapore-based Keppel REIT. (KREIT) That followed the sale of half of its 8 Chifley Square building in Sydney to the same company in July 2011.
Stockland reports the results of its strategic review on May 13.
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