Mirvac on prowl after asset sales

Mirvac remains on the prowl for acquisitions after offloading seven properties to Blackstone and reaffirming guidance at its third quarter update.

The developer and fund manager expects earnings per share to grow by 8 per cent to 10 per cent during the 2014 financial year, which will translate into earnings per security of 11.8c to 12c.

Driving the growth is a pick-up in the company’s residential business despite mixed conditions, chief executive Susan Lloyd-Hurwitz said.

“Sydney and Melbourne continue to be the strongest markets nationally. In Sydney the housing market remains supported by limited stock and a continued sense of urgency for purchases, driving above-average price growth,” Ms Lloyd-Hurwitz said.

She added that Brisbane’s residential market had “turned the corner”, while Perth was also holding steady.

The relative strength of Mirvac’s residential portfolio was offset by some “challenging” leasing conditions in its office and retail portfolio.

This week Mirvac announced it had sold a 50 per cent stake in the Westpac building on Kent Street in Sydney for $435 million to Blackstone. Blackstone has also secured options over seven smaller office towers owned by Mirvac for $391.4m. Mirvac has provided vendor finance of $156m to Blackstone on an 8 per cent coupon to settle the Kent Street deal in July.

Ms Lloyd-Hurwitz said the company would look to acquire more development opportunities and passive assets.

Analyst opinion on the sale of the portfolio of properties to Blackstone was mixed.

Morningstar analyst Tony Sherlock questioned why Mirvac had sold the stake in Kent Street at a lower than expected premium.

Morgan Stanley analyst John Lee said Mirvac’s provision of vendor finance — or “Mirvacbank”, as he dubbed it — would help to lessen the sale’s dilutionary impact on Mirvac’s future earnings.

Mirvac’s shares yesterday closed up 1.5c to $1.765.