Mirvac Group (MGR) - Taking a long view

Mirvac Group (MGR) is a diversified property development group with circa $35 billion of assets under management, and a development pipeline that comprises $12 billion in commercial and mixed-use projects and$17 billion in residential projects.

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Mirvac recently hosted an investor day where the company forecast a rebound in gross margins in its residential business, which encompasses apartments, master-planned communities (MPC), build-to-rent (BTR)and land lease developments, to a range of 18–22% by FY26, with its net margin on a similar recovery trajectory.

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The day’s presentations focused largely on its residential and logistics developments, both segments with very positive outlooks, even though retail and office combined are the largest proportion of Mirvac’s suite of assets, highlighting the sectors to which the company is looking for growth.

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We are positive on the outlook for Mirvac earnings over the longer term, particularly as its major Sydney projects – the 70,000 square metre commercial and retail tower at 55 Pitt Street, and its flagship residential project, the Harbourside development, at Pyrmont – are completed in2027 and 2028, respectively.

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That said, our near-term operating EPS estimates have been reduced by 1–8% across the FY25–FY27 horizon as we incorporate into our model increased net debt levels that are not offset by lower interest rates and the latest company’s margin guidance.

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We maintain our Hold recommendation on Mirvac although our target price rises to $2.20 from $2.15.

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