Mirvac to head to big city suburbs and CBDs for prime retail investments amid “difficult” conditions

Mirvac will look to sell poorly-performing shopping centres and retail properties in secondary, sub-optimal markets as it focuses on building a prime retail portfolio.

The A-REIT will look to acquire sub-regional, and neighbourhood shopping centres in “strong markets” as well as select CBD retail assets “within strong trade areas either standalone or as part of mixed-use property”.

Mirvac will look to acquire assets in the four big capital city markets - Sydney, Melbourne, Brisbane and Perth - as well as in some select regional markets "with strong fundamentals", said Mirvac chief executive Susan Lloyd-Hurwitz as part of the group’s strategic review.

Secondary and in sub-optimal markets make up 20% of Mirvac's $1.6 billion retail portfolio.

Assets that might come under review given the new strategic focus might include the Orange City Centre, Manning Mall in Taree and Hinkler Central in Bundaberg.

The strategic review highlights that Mirvac’s Broadway Shopping Centre in Glebe, just outside the Sydney CBD, is its most productive shopping centre over 45,000 square metres by annual turnover per square metre.

The 50,000 square metre centre is valued at $250 million and brings in annual turnover of $423 million.

“Whilst there has been some improvement in retail sales this quarter, conditions are expected to remain difficult for retailers during 2013,” says Lloyd-Hurwitz.

“Recent interest rate cuts, whilst boosting consumer incomes, have not translated into broad-based sales growth and category performance is expected to remain mixed.

“Vacancy rates to remain resilient in quality centres (across all sub-sectors); however rental growth continues to moderate,” she says.

Mirvac has an $800 million retail investment pipeline tied to its residential community projects include the Stanhope Shopping Village in north west Sydney, Kawana Shopping World on the Sunshine Coast and the Orion Springfield town centre in Ipswich.

Mirvac revealed a 99.2% occupancy rate in its retail property portfolio with moving average turnover up 3% across its portfolio driven by food-based retailers and mini-majors.