Further evidence is emerging that Macquarie Group has regained its appetite for direct real estate investment, with the Australian listed bank preparing a partnership with an Asian party to buy Mirvac Group’s residential arm.
Macquarie is believed to have a Chinese partner in its sights for the acquisition.
However, Mirvac claims it has not yet received an approach from Macquarie.
The latest speculation follows remarks by Mirvac chairman John Mulcahy at the property group’s annual general meeting last year that the company would explore ways to unlock value in light of its lagging share price.
Macquarie’s attempts to actively find a buyer for Mirvac’s residential division comes on the back of a surging housing market last year in Sydney and Melbourne, generating buyer interest for developments from Chinese groups.
The listed company is regarded as one of the best apartment builders in Australia.
This has raised concerns among market analysts that the group could be about to sell the best part of its business, as it increases its focus on commercial property funds management.
Rumours that Mirvac was considering a spin-off of its residential arm were first revealed by this column in April, around the time that the company’s board conducted a so-called ‘‘listening tour’’ through Asia.
Some believe Mirvac is now looking to sell only about 50 per cent.
The speculation is coming thick and fast as the stock remains out of favour on the market, due to the long-term nature of the residential property development cycle.
JPMorgan and Lazard are understood to be Mirvac’s advisers.
Potential parties in discussion with Mirvac include China’s private equity group Fosun.
However, the government-backed China Investment Corporation, for which Mirvac manages its Investa Property Trust office portfolio, is not believed to be one of the parties in contention to buy the operation.
Neither is Ping An out of China, with which Mirvac reached a strategic development agreement for residential projects shortly before Christmas.
The residential development arm could be worth about $2bn, but any sale to a Chinese investor would prove highly sensitive and Foreign Investment Review Board approval would be required.
Macquarie’s move to co-invest could be aimed at appeasing FIRB.
It comes after Macquarie recently waded into the contest to buy the Perth Markets, which is considered a real estate development play. It is also part of a consortium bidding for the real estate information firm Onthehouse.
Last year, Stockland appointed Macquarie Capital for a potential spin-off of its retirement arm, although finding a buyer for the division in a sector where numerous superannuation fund investors were burnt during the global financial crisis appears to have proven too challenging.