Mirvac Announces Slash in Dividends

Submitted by Share Trading on 23 July, 2008 - 11:00

Sydney based property investor group, Mirvac Group (MGR), announced that it expects to slash its dividends to its shareholders by 39 percent. Owing to the ongoing credit crunch in the global market, the company announced that the shareholders shall get a dividend of 20 cents a share in the fiscal year ending June 2009 as compared to last fiscal when they received 32.9 cents a share. It also announced that it expected a drop of nearly 24 percent in its earnings in its current earnings in the current year.

It was also revealed that it has paid off more debt than it has foreshadowed in Mirvac Group's last statement to ASX. It announced that it has paid off nearly $360 million debt leaving $2.6 billion debt in its books. It has currently announced a reduction in its pay outs to reduce its dependence on expensive debt.

Mirvac's Chief Executive announced that the company is pulling out of its non-core businesses like Mirvac Real Estate Investment Trust (MREIT) and Mirvac Industrial Trust (MIX) especially when MIX had been trading at "ridiculously low number." There has been good interest in the US regarding MIX where it holds its maximum assets. He also announced that the company shall pull out of its small investments in infrastructure too. It has already written off its indirect investment of $57.5 million in Connect Motorways which is the main operator of Lane Cove tunnel.

The MGR's share prices have witnessed a steep fall of nearly 60 percent in its share prices. Other real estate groups like Valad and GPT have also reported a downgrade in their earnings in past month attributing it to drop in real estate prices due to global credit squeeze. Mirvac announced that the company shall not pay more distributions to its shareholders than its current earnings. It also announced that it shall pay out 80 percent of its corporate profits and 100 percent of it’s from property trust. It shall keep the remaining amount to pay off the debts and keep some reserve to fund future projects.

Mirvac's share prices fell 14 cents or 5.7 percent to A$2.31 at the close of Sydney trading. Although it was rated at the eighth worst performer at the Sydney exchange, however, the prices remained well above its recent low of A$1.98 on July 15.