Strategy with a city heart
Mirvac will focus on developments in the inner city, such as Harold Park in Sydney and Yarra's Edge in Melbourne, as it establishes its new strategic model.
The diversified trust will also expand its office portfolio following the acquisition of seven GE Capital assets for $584 million.
Under that deal, Mirvac will have $400 million in capital to fund the acquisition and remain in line with its revised target gearing range of 20 per cent to 30 per cent.
At the investor day on Thursday, chief executive Susan Lloyd-Hurwitz said the group was concentrating on core office assets, boosting its mixed-use developments in and around the cities and apartments. She said the industrial portfolio could also be a source of properties that could be converted to residential.
"In maintaining a core capability across four sectors, we are able to deliver an appropriate balance of passive and active assets and can also unlock complex urban multi-use opportunities," she said.
"Applying our integrated and diversified model in a focused and disciplined manner is a powerful proposition to investors."
Ms Lloyd-Hurwitz reaffirmed the earnings guidance for the full year in the narrow range of 10.7¢ to 10.8¢ to June 30, 2013.
But after the briefing, head of property research at Goldman Sachs, Simon Wheatley, said his team would have expected that, this close to the end of the financial year, Mirvac would have enough clarity to be able to firm this guidance to a specific expectation.
"Overall, the strategic update did not provide the impact we were expecting and we make minimal change to our prior macro views on the group," he said. "We retain our buy rating and see potential for upside surprise to medium-term earnings estimates from project-specific contributions.
"We were, however, expecting to hear an update on the progress of capital-partnering initiatives for the investment properties [specifically for office assets] and further detail on the preferred structuring of residential projects."
Head of property research at Bank of America Merrill Lynch, Simon Garing, said Mirvac had reinstated its 80:20 capital mix between a diversified investment portfolio and development. He said the message to be taken from the briefing was that Mirvac would focus on its strong competitive advantages in asset management/refurbishment and inner-city medium-density/complex urban developments.
"Mirvac will also move out of non-metropolitan locations for both investment and residential, leading to the sale/wind-up of $900 million of non-aligned assets/projects," Mr Garing said.
"The next milestones for Mirvac will be the launch of both residential and office capital partnerships, and further office site acquisitions."
Mr Garing said further rate cuts and a lift in consumer sentiment should also provide a boost to its price-earnings rating.