Mirvac assets to lure investment in new club funds

Diversified real estate investment trust Mirvac will focus on creating new club funds with its key office assets, higher-density apartments in inner cities and improving returns from its retail assets.

Diversified real estate investment trust Mirvac will focus on creating new club funds with its key office assets, higher-density apartments in inner cities and improving returns from its retail assets.

The office assets to go into a fund include a 50 per cent stake in its flagship Westpac Place building in Kent Street, Sydney, and its two Melbourne properties - 699 Bourke Street and 664 Collins Street. The group is looking for five investors in the proposed unlisted funds.

For the residential division, which saw a write-down in value at the February half-year results, Mirvac will focus on apartments in the inner-ring metropolitan "activity" centres and masterplanned communities as well select projects on urban edges.

The sector remains under pressure, but analysts say it should benefit from lower interest rates over the longer term.

Mirvac has identified about 35 per cent of its residential assets as non-core and will look to develop out current projects and then sell them.

There will also be a focus on the structure of future acquisitions, including the type of product and a reduced exposure to what it sees as higher-end product.

The Australian Residential Partnership club fund is also progressing with a select group of capital partners.

Conversion of industrial assets to mixed-use residential developments, where possible, and a scale-back of the rural housing lots are also part of the group's new strategy.

Speaking at the much-anticipated investor quarterly update and strategic overview, chief executive Susan Lloyd-Hurwitz reaffirmed the full year earnings per share guidance range of between 10.7¢ and 10.8¢ for the year to June 30.

She said the business conditions remain subdued, with white-collar employment conditions challenging.

But Simon Wheatley, head of property research at Goldman Sachs, said he was surprised the full-year guidance was maintained.

"We believe [this] indicates the earnings are more likely to be toward the lower end of this range," he said.

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