This article is from the Australian Property Journal archive
BUOYED by a strong financial performance, Mirvac is looking to maintain momentum and has announced a $750 million equity raising to deliver its next wave of projects including its Melbourne build-to-rent development.
The diversified developer expects FY2019 earnings to come in at 17.1 cents per stapled security, at the top end of its guidance, while distributions per security will be 11.6 cpss, in line with previous guidance and up 5% on FY18.
The $750 million raising will be underwritten by Macquarie Capital, JPMorgan and UBS, and will be concurrent with a $75 million non-underwritten share purchase plan open to eligible holders in Australia and New Zealand.
Mirvac said the equity raising would support the delivery office, industrial, residential and mixed-use projects, repay debt and replenish funding for its existing development pipeline.
“It will provide additional funding flexibility, enabling Mirvac to continue investing through the cycle, with the objective of delivering strong, visible and secure cash flows, sustainable distribution growth and attractive rolling average return on invested capital above the group’s cost of capital.”
The group said it has $2 billion worth of “identified advanced acquisition opportunities”. It is poised to finalise a 70,000 sqm industrial site purchase in Sydney and a Melbourne middle ring residential master planned community in an “attractive infill location”, as well as a Melbourne CBD build-to-rent project that will follow its Sydney Olympic Park development in the burgeoning sector.
It is also in due diligence for a 40,000 sqm Melbourne office development and two Sydney middle-ring master planned communities of 400 and 350 lots respectively, and is shortlisted for an inner Sydney mixed-use development with a gross floor area of 70,000 sqm.
Chief executive officer and managing director, Susan Lloyd-Hurwitz said, “We are pleased to announce that we are expecting to deliver at the top end of our FY19 EPS guidance range and we believe now is the time to undertake an equity raising to position Mirvac for future growth”.
“This new equity will be used to repay debt and provide certainty of funding to activate our future, secured commercial development pipeline that has an estimated end value of over $4 billion.
“It will also provide capacity for a number of identified acquisition opportunities currently under due diligence with an estimated end value of over $2 billion.”
“These identified acquisition opportunities are all aligned with our urban strategy and asset creation capabilities. They are targeted to deliver in excess of Mirvac’s cost of capital, creating value over the medium-term.”
Its new office tower at 55 Pitt Street in Sydney and the $600 million industrial park in Kemps Creek will also be funded by the raising, at $2.97 per new stapled security
Mirvac also announced a preliminary FY20 DPS guidance of 5% growth on FY19, supported by passive earnings that are expected to grow by at least 5% per annum on average over until FY21 inclusive, as well as a preliminary FY20 EPS guidance of greater than 2% growth compared to FY19.
The payout ratio for FY20 is expected to remain around 70% of operating earnings, supported by the increased contribution from passive earnings.
Australian Property Journal
