Property developer and investor Mirvac hasn’t escaped the recent sell off of all things property and geared. Its shares have fallen from a high of $6.30 last November, reached on speculation of a merger with rival property developer and builder, Lend Lease, to $4.84 yesterday (13c up on Tuesday’s low).
Even though it has a reputation for being soundly and conservatively run, investors are taking no chances in this market after the failures of Centro and MFS to fully disclose their financial structures and borrowings.
So it comes as no surprise that Mirvac has found a “friend” to provide it with some cash and the perception of more to come if needed.
A big Middle Eastern property group, backed by the Abu Dhabi Government called Nakheel has paid $300 million for around 5.8% of Mirvac at $5.20 a stapled security, a generous premium to yesterday’s close.
Mirvac made sure the message was easy for for the market: this was cash, and lots of it, with little in the way of debt to be repaid this year:
The capital raised will further strengthen Mirvac’s solid balance sheet with debt to total assets declining from approximately 35% as at 31 December 2007, to approximately 30% post the placement. Following this placement available liquidity via cash and committed bank facilities increases to over $1.1 billion with only $138 million of debt maturing over the next 12 months.
The key numbers in this statement are: $300 million cash from the placement and only $139 million in debt “maturing” over the next year.
The statement described Nakheel as “an international property company with shareholders funds of US$22.7 billion as at 30 June 2007 and over US$60 billion of development activity under its portfolio. Nakheel’s business includes property development, asset management, retail malls and funds management. Nakheel is ultimately 100% owned by Dubai World, a decree company of the Government of Dubai, United Arab Emirates.”
What the statement didn’t say is that well-known Sydney property player, Chris O’Donnell, runs Nakheel. He ran Investa (since swallowed by Morgan Stanley Real Estate for an expensive $4.7 billion) from 2000 to 2006 and before that was an executive at Westpac Investment Property and Lend Lease Property Investment Services.
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