MIRVAC is offering a 24% discount to investors to grab a stake the company, as part of the group's latest capital raising initiative to raise $1.1 billion.
Managing director Nicholas Collishaw yesterday said this offer will strengthen Mirvac’s balance sheet and improve liquidity.
The capital raising comprises an institutional entitlement offer to raise $710 million and a $155 million institutional placement whilst the retail component will raise $235 million. The price of $1.00 represents a discount of 24.2% to Mirvac’s closing price on June 03 and all new securities will rank equally with existing stapled securities.
Following the offer, Mirvac’s balance sheet gearing to fall from 31.8% to 21.5%, after $582 million of expected devaluations and impairments, and covenant gearing will decrease from 41.3% to 30.1% vs. a covenant of 55%.
Collishaw also said Mir vac will have liquidity to fully fund all debt expiries and capital commitments to June 2011.
“Following the raising, Mirvac will be amongst the lowest geared entities in the A-REIT sector,” he added.
But at the same time, Mirvac has announced bad news. The latest assessments of its property portfolio have resulted in $582 million in impairments.
In its commercial property investment portfolio, the weighted average capitalisation rate is tipped to rise by of 51bps to 7.52% which has resulted in write-downs totalling $240 million.
In the development book, impairments included non-core inventory written down of $203 million, completed and unsold inventory of $40 million, reflecting revised expectations of sale prices and core projects have been written down by $8 million to net realisable values.
Collishaw said the impairments to development inventory allow Mirvac us to exit these projects in the near term.
“We intend to reshape our residential development portfolio to focus on core, large-scale projects – one of our key competitive strengths,” he added.
Meanwhile Mirvac has provided an updated operating guidance range of between $190 million and $200 million for the financial year ending June 2009, the higher end of this range being in line with previous guidance.
Mirvac expects a full year distribution of between 8 cents and 9 cents per stapled security which is unchanged from the guidance provided in March this year.
For the financial year ending June 2010, Mirvac forecasts a distribution of between 8 cents and 9 cents per stapled security.
Australian Property Journal
