Mirvac building to a master plan

Carolyn Cummins February 22, 2012

DIVERSIFIED property developer and funds manager Mirvac is confident its new master-planned communities in the Sydney suburb of Glebe and at Yarra's Edge will deliver higher earnings to help offset any lag in rental income.

Mirvac managing director Nick Collishaw said a focus on the more affluent resource sector of north-western Australia and Queensland would also improve revenue in the residential business. To limit Mirvac's costs, the new projects will be completed with a joint-venture partner.

The redevelopment, also in a joint venture, of an office block at 190-200 George Street, Sydney, will be a key project this year.

Following the sales last year of Mirvac's hotel portfolio to Accor for about $200 million, the group will have two main divisions: development, including residential master-planned communities, and investment, including office assets.

In the half-year, after one-off costs, the group reported a net profit of $176.6 million, in line with expectations.

The group forecast earnings per share of 10.5¢ to 10.6¢ for the full year and a distribution of 8.2¢ to 8.4¢.

This will be boosted by cash from the sale of the hotel assets and nearly 55 per cent in sales at the first stage of the Harold Park project in Glebe.

Goldman Sachs analyst Peter Zuk said the result was well above his estimates, driven by income growth in the Mirvac Property Trust, the stronger first-half development result, and the lower corporate overheads.

Offsetting this were higher than expected net interest and taxation expenses, Mr Zuk said.

The company's investment division, which has about $5.85 billion of invested capital in 67 properties, delivered a profit of $242 million in the half.

Mirvac's development operations posted a $17.7 million loss, as it took a $25 million hit on the premium Beachside Leighton development in Western Australia due to incomplete sale contracts.