Archive | Mirvac

Updated 24 January 2006

Mirvac Group put a price tag on the rights Quadrant acquired yesterday (story below): $A5.7 million.

Original story: Mirvac adds $A3.1 billion to funds under management with new US business

Published 23 January 2006

Mirvac Group of Australia has almost doubled its funds under management to $A6.5 billion by putting together a 50:50 US-based institutional real estate funds management business, Quadrant Real Estate Advisors LLC, with a group of former GMAC executives.

Quadrant has acquired the rights to manage $A3.1 billion in US real estate debt funds from GMAC Institutional Advisors LP. These investments are managed in both separate accounts and commingled (wholesale) funds for a range of institutional & pension fund clients, including CalPers (the California Public Employees’ Retirement System).

The GMAC group joining Quadrant were senior executives of GMAC Institutional Advisors LP’s real estate fixed income group.

Atlanta-based Quadrant will also manage a construction-to-permanent loan programme between GMACCM & TIAA-CREF, one of the largest retirement systems in the US and one of the largest institutional real estate investors in the US.

Paramor says it’s a funds management platform

Mirvac managing director Greg Paramor said: “Quadrant is consistent with Mirvac’s strategy of growing its funds management business. Quadrant provides a platform for Mirvac to enter the US real estate funds management business by partnering with a team of high-calibre professionals in the real estate business that have built a strong track record and enjoy a very positive reputation amongst US institutional investors & asset consultants.”

Mirvac’s existing funds management business is through James Fielding Funds Management. Its chief executive, Adrian Harrington, said Quadrant was well placed to raise capital from US institutional investors and would allow Australian institutional & retail clients to invest “across the entire $US3 trillion US real estate investment universe.” Quadrant would also enhance the ASX-listed JF US Industrial Trust, which has been investing in Chicago-based industrial property.

Quadrant chief executive Kurt Wright said many of the GMAC group had worked together since the early 90s and there would be no change in the team’s personnel or processes.

He said the new company would launch a commingled fund in the first quarter of 2006. The new Quadrant Fund’s objective would be to allow both US & Australian investors to receive a high stable income return with liquidity by seeking relative value across the 4 quadrants (public & private, debt & equity) of the US real estate investment market

Quadrant will contract with GMAC Commercial Mortgage Corp for certain infrastructure support, and will also continue to access GMAC’s extensive regional mortgage origination network.

Blake Eagle, chief executive of the National Council of Real Estate Investment Fiduciaries and former president of Frank Russell’s real estate consulting business, will be an independent director of Quadrant.

Ex-Lend Lease executive Michael Wood at the centre of new project

Quadrant will be represented in Sydney by Michael Wood, who will be an executive vice-president & management committee member. Mr Wood was a Lend Lease Corp executive, most recently as executive vice-president of both Lend Lease Capital & Real Estate Services LLC & Bovis Lend Lease Americas Inc, until Lend Lease pulled out of the US.

In 2004 he established Wood Capital Advisors to identify & advise on US real estate investment opportunities for institutional investors, and has since provided strategic advice to both Australian & other foreign institutional investors on equity real estate acquisitions exceeding $US400 million.

Mr Paramor said Mr Wood had also been instrumental in developing & marketing US real estate-based hybrid debt & equity investment products in Australia.

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Attribution: Mirvac/Quadrant statement, story written by Bob Dey for this website.

Published 20 December 2005

Mirvac Homes is about to launch itself into the Victorian housing market with a 600-house estate 25km north of Melbourne.

Chief executive Robert Lynch said Mirvac had secured 43ha in Melbourne’s northern growth corridor, within the City of Whittlesea, for $A23 million.

Mirvac Group is one of Australia’s largest property groups, with over $15.0 billion of assets under control across the property spectrum, from investment and development to hotels and funds management.

The Melbourne master-planned estate will be Mirvac Homes’ first housing development outside Sydney, where it occupies a strong position at the quality end of the residential market. Mirvac Group has commercial, highrise apartment & integrated housing business in Victoria.

Mr Lynch said today the housing division’s expansion into Victoria was prompted by a critical shortage of suitable housing sites in Sydney and a desire to expand operations outside New South Wales. He said the company was also looking at South Australia.

If you want to comment on this story, write to the BD Central Discussion forum or send an email to [email protected].

Published: 8 May 2005

The Mirvac Group said on Tuesday it expected profit in the June 2005 year to fall 8.6% from last year’s $A252.7 million, but would use retained earnings to make up the $A266 million payout to securityholders.

Mirvac’s share price dive A75c as a consequence of the announcement, but regained A14c to end the week $A3.62.Managing director Greg Paramor said accounting policy changes meant the group had to recognise some earnings before they were realised, but instead of paying out early Mirvac had moved that money to retained (& deferred) earnings.

Based on expected sales for the June quarter, contract completion rates at pre-sold residential developments & delays to the completion of some projects, Mr Paramor said Mirvac’s 2005 net profit would be in the order of $231 million. Its $A252.7 million profit last year was a 13% increase on the 2003 figure.

Mr Paramor said the decrease would come equally from deferred sales at residential projects, increased development costs & a decision to retain projects previously earmarked for sale. The $A266 million distribution for the full year, maintaining the 95% payout ratio of the past 2 years, will require $A35 million from retained earnings.

Mr Paramor said retained earnings included a large amount of profit that Mirvac was originally forecast to realise in 2006-07. Introduction of international accounting standards from July meant Mirvac would return to its policy of only recognising profit on presale contracts on actual completion.

Strong March-quarter sales have pushed the value of Mirvac’s presales & deposits to more than $A800 million. 3 major Sydney apartment projects – Epica in Chatswood, Latitude in Milsons Point & Towns Place at Walsh Bay – have helped generate more than $A175 million in sales since 31 December.

The value of Mirvac’s exchanged contracts at the end of April, on which profit is yet to be recognised, has grown to $A803 million compared to the $A623 million reported in the half-year results.

Mr Paramor said the sales figures showed Mirvac’s ability to sell quality product in a slowing market, reflecting the strong Mirvac brand & the quality of the group’s residential development. Settlements are due this quarter at developments at Ephraim Island on the Gold Coast Broadwater, Epica and Tower 5 at Yarra’s Edge in Melbourne.

An earlier accounting standards change meant that since June 2003 Mirvac has been forced to recognise profits on some presales contracts before actual settlement, but Mirvac based its distributions to securityholders on actual realised profits, not recognised profits. This led to an increase in the group’s retained earnings.

“As a result our retained earnings, which in part are actually deferred earnings, have grown to $161.9 million and are available for us to support our distribution payments going forward in line with our original projections. We could have boosted the 2005 number but this would have been at the expense of future earnings,” Mr Paramor said.

Mirvac intends to recognise a proportion of the value created by the development of non-residential property delivered by its development divisions for long-term holding, supporting future distributions, but Mr Paramor said no profit from that value creation was included in the 2005 forecast.

He said Mirvac would provide guidance for the 2006 year after completion & review of the group budget cycle in early June.

Website: Mirvac

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Published: 17 February 2005

The Mirvac Group increased its December half-year profit by 5.1% to $A123 million on revenue up 17.4% to $A801 million.

The accounting period was closed on 28 December, the day before Mirvac acquired the James Fielding Group and James Fielding managing director Greg Paramor took over from Bob Hamilton as managing director of the enlarged group.

The ratio of pretax profit:revenue slipped from 19.2% in 2003 to 18.1% and the ratio of after-tax profit:equity slipped from 5.6% to 5.3%. Basic & diluted earnings/security were down from A17.23c to A17.07c. Asset backing increased by 4.6%, from $A3.02 to $A3.16.

Mirvac has increased dividend payment for the quarter from A8c to A8.3c/stapled security (A3.32c franked). Distributions for the half total A16.6c and the group is aiming for a total A33.8c distribution for the year.

Total assets increased from $A4.3 billion to $A4.55 billion. Net equity is up from $A2.24 billion to $A2.32 billion, including reserves of $A103 million & retained profits of $A162 million.

8 new acquisitions boosted the property investment division’s revenue by 5.7% to $A125 million and its after-tax profit rose 8% to $72 million.

Property development revenue from external customers rose 19.7% to $A618 million with recognition of several major projects nearing completion plus a strong contribution from housing developments. After-tax profit rose 9% to $A49.5 million. Mr Paramor said the development division would produce the bulk of its year’s contribution in the 2nd half.

In the hotels division, average room rates fell slightly, to $A171/night, and occupancy to 74%, but total external sales revenue rose 14.8% to $A55.4 million after after-tax profit rose 7.5% to $A6.2 million.

One accounting change 2 years ago, which the group didn’t like, will disappear in 2006 when international accounting standards are adopted.

The change in accounting standards 2 years ago forced Mirvac to start reporting profits from pre-sold apartments & homes from its development division. This was contrary to the group’s previous policy of only reporting development profit on settlement. At the time Mirvac happened to be holding an all-time high in exchanged presale contracts and the development division’s contribution to reported profits increased by 40%.

Reporting of development profits will revert to a cash settlement basis in 2006.

Website: Mirvac

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Mirvac Group managing director Bob Hamilton put a positive spin on losing a 36,000m² tenant today: Having a single tenant in what is “without question the best building in North Sydney” limits rental growth.

Optus will vacate Mirvac’s 101 Miller St property when its lease expires on 31 October 2007, and will keep paying $A485/m² net until then.

Mr Hamilton said the decision by Optus would allow Mirvac its preferred option of reweighting the building’s tenancy profile.

“It is without question the best building in North Sydney and to have a single tenant is not our long-term preference as it limits rental growth.

“Market research from several commentators suggests there will be a significant increase in demand for office space in Sydney leading up to 2007, and we are confident there will be strong interest from potential tenants,” Mr Hamilton said.

Mirvac plans to upgrade certain areas of the building once Optus has completed its make-good requirements.

Mirvac Group – noted in Auckland as developer of the Quay West apartments hotel – said late on Tuesday it would acquire James Fielding Group, but that James Fielding managing director Greg Paramor would take over the helm from Bob Hamilton.

Mr Hamilton will remain as an executive director responsible for Mirvac’s development business.

The deal is a novelty for Mr Paramor. Previously, when he’s built up a business which has been sold, he’s walked away to start a new job. He was co-founder of Growth Equities Mutual, Paladin Australia & James Fielding.

Mirvac is a developer across all sectors and has property trusts, hotel management & funds management businesses. James Fielding has been a fast-growing funds manager after aggressively pursuing property trust management contracts. (Click on thumbnail for new structure).

The enlarged group will have $A15 million of assets under its control.

The proposal has to be voted on by James Fielding securityholders. They’ll get the explanatory memo mid-November and vote on the special resolution late in December. Assuming the scheme is given court approval, the takeover would take effect by the end of this year. Deloitte Corporate Finance Pty Ltd has been appointed as independent expert.

Mirvac is offering James Fielding securityholders 0.73 of a Mirvac security for every one of their securities, valuing James Fielding at $A3.33/security based on Mirvac’s 11 October closing price of $A4.56.

That’s a 6.4% premium on the James Fielding closing price of $A3.13 & 38.2% premium over the $A2.41 net asset backing.

It will make Mirvac the 4th largest ASX-listed property group by index weight. The group will have $A4.9 billion of total assets, a $A2.3 billion investment development pipeline & $A1.8 billion of funds under management.

James Fielding will add a range of businesses to the Mirvac operations. Apart from more funds management, it will add infrastructure, property financing, syndications & financial products businesses.

The important viewpoint is that of Mr Paramor, a former chairman of the Property Council of Australia: “The combination of the businesses provides James Fielding securityholders with access to a significantly larger balance sheet, more attractive funding options & a broader operating platform which will maximise JFG’s ability to capitalise on its existing projects.

“The ASX-listed JF Meridian Trust, which JFG manages, and in which JFG owns 15%, will continue as a separate vehicle at this time. JF Meridian investors will benefit from the larger capital base & resources that Mirvac will offer.”

Making the offer more enticing, Mirvac’s board said it would pay a distribution of A33.8c/Mirvac security for the 2005 financial year, up 5%. James Fielding securityholders will get their own distribution for the December half (A12.56c/security), then participate in the Mirvac quarterly distributions from 1 January 2005, giving them a total A24.81c/security for the year, up 4.2%.

Mr Hamilton said he’d decided to step back from the daily obligation of overseeing the whole group and approached Mr Paramor to take over.

Mr Paramor said: “Bob’s continued association with the group is integral to its future success. My decision to take on the role of managing director of Mirvac was predicated on Bob’s continuing active involvement & guidance. I have signed on for an initial term of 5 years.”

Mr Hamilton will hold 3 million securities and Mr Paramor, who has 4.4% of James Fielding, will initially hold 4.6 million Mirvac securities.

James Fielding’s executive director & head of property, Nicholas Collishaw, will head the group’s investment division, and Mirvac executive director Barry Neil will retire after 20 years with the group.

Leighton Holdings Ltd has 7% of James Fielding and said it supported the deal. It’s in an infrastructure joint venture and said there would be joint opportunities for the enlarged Mirvac & Leighton Properties.

Websites: Mirvac Group

James Fielding Group