Mirvac group from australian property trust

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This report will be analysing Mirvac Group's profile to determent whether it is ideal for an investment opportunity. This will be achieved by tracking the closing Mirvac Group's share price and S&P200 Index over a four week period of 14th April to the 14th May, with commentary on any significant movement in share prices. The organisation's risk profile and appropriate measures will be compared and examined, also an outline of Mirvac Group's investment structure and Board Members.

Commentary of Mirvac Group activity over the period of 14th April to the 14th May

Label Number




Wednesday, 14 Apr 2010 06:35pm EDT

Mirvac Group Announces Security Purchase Plan -

Mirvac Group announced that it would be conducting a Security Purchase Plan (SPP) to provide eligible Security holders with the opportunity to subscribe for up to AUD15,000 worth of Mirvac stapled securities (Securities) without paying any brokerage costs. If the total value of applications for Securities under the SPP is more than AUD150 million, Mirvac reserves the right to scale back applications.


Wednesday, 28 Apr 2010 06:25pm EDT

Mirvac Group Announces Recommended Acquisition Of Westpac Office Trust -

Mirvac Group announced that it has entered into a Scheme Implementation Agreement with Westpac Funds Management Limited (WFML) as responsible entity of the Westpac Office Trust (WOT), in relation to an offer to acquire all WOT units and instalment receipts (IR) (the Offer).


Thursday, 13 May 2010 09:35pm EDT

Mirvac Group Announces Issue Of Fully Paid Securities -

Mirvac Group announced the issue of 18,429,587 fully paid securities at $1.40 per security. The proceeds of the issue will be used to further strengthen Mirvac's balance sheet, provide working capital for further acquisitions and for the fast tracking of the residential and commercial development pipeline without depleting Mirvac's financial capacity.

Commentary Market activity over the period of 14th April to the 14th May

Label Number



S&P200 Daily Change

Wednesday 14th April

Market brought up by the big four banks.


Thursday 15th April

Strong economy growth from China and a good lead from Wall Street brought up the market into the black.


Friday 16th April

Mining and Energy firm companies dragged the market down.


Monday 19th April

Fraud charges against Goldman Sachs and the closure of air space over euro zone took a hit against the airline companies takes the market into the red.


Tuesday 20th April

A good led from Wall Street overnight and strong performance from financial stocks brought the market up slightly.


Wednesday 21st April

Good led from Wall Street.


Thursday 22nd April

A decline in resources stocks and financials takes the market into the red.



Friday 23rd April

Market closed lower because of mining and bank companies are dragging down with worries with Greece with sovereign debt.



Tuesday 27th April

Early gains given up by dragging share price from the big four banks and health care stocks because of some companies, with CSL losing 2.4 billion of market value in the past two days ,stop its distribution of its swine flu vaccination but markets finished up par.



Wednesday 28th April

Mining stocks led the decline on the back of a plunging European market the night before because of credit ratings downgrades for Greece and Portrayal and an expected interest rate increase in the next week.


Thursday 29th April

Miners go down because of Greece debt crisis.


Friday 30th April

Rise in the market because of a banks good profit.



Monday 3rd May

The introduction of the Henry tax review and large profit tax affect Miner's stocks bring the market into the red.



Tuesday 4th May

The Reserve bank raises the interest rate six times in eight months and the impact of the mining tax started be felt.


Wednesday 5th May

Started in the red because of fears that the bailout package for Greece will not be enough, picked up bargains from mining stocks.


Thursday 6th May

Market ended deep in the red with Greece debt concerns and Miner's profit decline continues to spook investors, by noon the banks started the retreat.



Friday 7th May

(Worst week since the peak GFC Nov 2008) Trading error on Wall Street brought on the market's biggest ever sell off but Australian clawed back by the end of the day on news the G7 will be having financial talks for the Greece debt problems.



Monday 10th May

Finished in the black, with the news of an emergency fund of $1 trillion is being established by Euro leaders and the International Monetary Fund as a safety net to protect euro's economy



Tuesday 11th May

Finished up lower after doubts about the details of the $1 Trillion debt crisis fund and showing caution before the federal budget gets handed out that night by Wayne Swan.



Wednesday 12th May

Gains in gold stock, a record high in price of the metal brought the market up. IMF (Australia) Ltd Litigation Funding is organising the biggest class action in history against the big banks for unfair charges brought the market down after lunch.



Thursday 13th May

Positive employ figures and News of Portugal joining the fight to tackle the euro debt issues.


Friday 14th May

Fears of euro's debt issues brought the market lower- First week in the black for 4 weeks


Mirvac Group's share price over the 4 week period from the 14th April to the 14th May started off at $1.45 and by the end of the period it decrease in value to $1.38, having reached a highest price of $1.47 to slumping down to $1.34. Over the four week period, the market had experienced significantly impact from world and national events that brought the worst week for the S&P200 since the height of the Global Financial Crisis (Nov 2008). Mirvac Group's share faired quite well over the period having loss 5% of its share price value whereas the S&P200 market lost 9% over the same period. This is an indication that Mirvac's is not volatile to the market over the 4 week period.

Michael Chong, Student Number: 41183410 | REDE2201 - Assignment 2


Risk Profile of Mirvac

Mirvac is a long running company that established itself in 1972. The company owns a diversified property portfolio across Australia comprising of retail, residential, commercial and car park properties. As Mirvac has diverse experience in different industries in different locations, it is reducing its unsystematic risk by eliminating the specific risks.

Calculated Beta Values




2 years




1 year




6 months




3 months




Table 1
Key Statistics Company compared to market




Current Ratio

Quick Ratio

Debt Equity Ratio

P/E Ratio

P/B Ratio

P/E Growth Ratio

P/S Ratio

Yahoo7 Finance









Money Nine MSN


















Table 2

Source: Yahoo7 Finance, Money Nine MSN, Reuters

Three external sources including Yahoo7 Finance, Money Nine MSN, and Reuters have been used to compare the Risk and Value profile of Mirvac compared to the market Table 2. A Beta value over different time periods (3 months, 6 months, 1 year, and 2 years) was calculated to compare these sources.

When comparing the Current Ratio against the three sources (Yahoo7 Finance, Money Nine MSN and Reuters 2010), the value was approximately 1.6. Current Ratio is the current assets divided by current liabilities and generally the ideal ratio would be two. This indicates that it is under par with too much liability.

Quick Ratio of Yahoo7 Finance and Money Nine MSN indicate that the company would be able to pay back any liabilities if there was a sudden liquidation of the company having a value more than one (Yahoo7 Finance and Money Nine MSN 2010). However, Reuters's Quick Ratio of 0.8 indicates that Mirvac would not be able to account for the costs of its liabilities (Reuters 2010).

The Beta measures the rate of systematic risk a stock has in relation to the market portfolio. Beta of the market portfolio is ideally 1 which indicates that the stock is co-moving with the overall stock market. The external sources (Yahoo7 Finance, Money Nine MSN, and Reuters 2010) calculate Beta values of 1.1 and 1.33 over a 48 month period, indicating that the Mirvac shares are 10-33% more volatile as the market it has measures from. A Beta value of 1.40 was calculated to compare to the external sources over 48 months with the S&P200 market. The calculated Beta value differs with the Betas of Yahoo7 Finance and Money Nine MSN by a fair margin indicating that the Mirvac's shares are more volatile to the market. The differing in Beta value might likely be that the external sources would have used a different stock market to compare from (i.e. ALL ORDS, S&P 100, etc.) assuming that the time period of analysis remained constant of 48months.

Other Beta values were calculated over different lengths of time (3 months, 6 months, 1 year, 2 years) to determine if Beta will change over the periods to indicate whether it is a good indicator of systematic risk. As observed in Table 2the Beta value over a 2 year period indicated that Mirvac shares were more volatile than the market whereas from the data collected from one year ago to present show the share has changed to be in line with the market's movements. This change to bring Mirvac's shares volatility back to the market would have been likely caused by the Global Financial Crisis that occurred 36months ago. This possibly “reset” the share's volatile activity and made the Mirvac's share movements more dictated systematic risk

Organisation Summary

Mirvac Group (MGR) is a property development and investment group. The company owns a diversified property portfolio across Australia comprising of retail, residential, commercial and car park properties. MGR splits its operation into two units of Investment and Development.

Mirvac has residential developments across Victoria, Western Australia, Queensland and New South Wales that comprises of house and land packages, master planned communities and luxury apartments. Most recent data shows that the residential development pipeline comprised 21,342 house and land lots and 4,011 apartment lots. Non-residential developments projects have been put on hold by Mirvac due to the difficult economic conditions created by the Global Financial Crisis. The group's Hotel business unit comprises of 44 resorts and hotels located in the major CBD in Australia, New Zealand and resorts locations, having over 5,000 rooms in total.

The investment division is made up of Mirvac property Trust and Mirvac Asset Management, where it has investments in 58 properties comprising the retail, commercial, industrial and hotel sectors also with a number of investments in other Mirvac's managed funds. Recent data shows that Mirvac's total portfolio is values at approximately $3.7billion.

Board Members

The members on Mirvac Board are a group of diversely skilled and well experienced individuals, all of which have had been appointed to senior directive roles in many other companies throughout their careers. The Board's chairman is James MacKenzie; he has been on the board for 5 years and as chairman for 4 years. Mackenzie also is currently the chairman of Pacific Brands Limited and Gloucester Coal Limited, having also been in senior roles in ANZ Bank Group, Norwich Union, Standard Chartered Bank and TAC (Transport Accident Commission). While working at TAC MacKenzie led the change in the Personal Injury Schemes for the Victorian Government, this would suggest that MacKenzie is a campaigner to improve Work Safety. MacKenzie has been coming under fire from share holders in the past 6 months having allowing a 34.5% pay increase to the Non-Executive Directors during a time when the company endured huge losses in profit (AAP, 2009). During Mackenzie term as chairman, Mirvac's shares were steadily increase but at the turn of the Global Financial Crisis (GFC) where the price of the share skydived 80% to less than a dollar in value. Now post-GFC Mirvac share price has been increasing but has been heavily dictated by stock market.

Mirvac's Managing Director Nicholas Collishaw brings to the board a wealth of experience in commercial, retail and industrial property throughout Australia while being involved in property and property funds management.

The Board's Deputy Chairman Paul Biancardi is an experience accountant, who has extensive knowledge in the areas of finance, taxation and human resources. Biancardi also has many years experience in running companies having been chairman of Coopers and Lybrand Chartered Accountants from 1994 to 1997.

The other members on the Board are the Non-Executive Director comprising of Adrian Fini, Peter Hawkins, Penny Morris, John Mulcahy and James Millar.

All members are will equip with each having many years experience in managing a number of companies throughout their careers. This hopefully translates to good management of Mirvac Group to reduce the unsystematic risk profile.


In summary, Mirvac's share price over the 4 week period had decreased in value but this was a likely result considering the stock market was “bearish” over the period. The graphs of Mirvac's share price shows that its announcements have little effect to vary its share price; most of the significant movement was impacted by issues on the stock market. This indicates that Mirvac's total risk profile is heavily dependent on systematic risk, which inhibits any attempts of controlling variation making it a risky investment. This was further confirmed with the company's Beta value staying consistently at 1 over different periods of time.

The investment structure is forced on in Mirvac with its operation split into two units, Development and Investment. This is supported by a Board of well experienced members who have variations in specialities. But in recent months the Board has made some impractical decisions regarding Members of the Board having pay increases during a period where the company is finding difficulties to make profit.

From an investment outlook, Mirvac Group is a well established organisation with most of its projects and assets in a diversified property portfolio across Australia but due to its risk profile mainly directed by systematic risk and the organisation's Board making impractical decisions in unfavourable times, it is suggested that Mirvac Groups is not a good opportunity for an investment.


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