From the Sydney Morning Herald: Carolyn Cummins again. She notes...

From the Sydney Morning Herald: Carolyn Cummins again. She notes the Citigroup analysts have slashed their forecast earnings for Mirvac by 14 to 23% ( of what ?? ) Well the shares are down more than 40% in 6 months. So maybe fallen enough already ?


Brokers warn of more trouble for investment trusts
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* Carolyn Cummins
* May 19, 2008
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INVESTORS in real-estate investment trusts are bracing for some bumpy weeks before June 30, as more managers look to write-down assets, possibly cut distributions, and fend off takeover talk - with Mirvac firmly in the spotlight.

UBS has warned that trusts are reviewing goodwill levels from acquisitions in the funds management arm of the businesses.

The warning was prompted by Mirvac's decision to take a $57.5 million hit on its 2007-08 profits, after its JF Infrastructure arm wrote off its indirect investment in the Lane Cove Tunnel.

"In addition to the write-downs, Mirvac is reviewing the carrying value of other intangibles on the balance sheet. We expect further write-downs relating to the $175 million in the funds management businesses including the James Fielding group," UBS said.

"We all see other groups, such as Stockland and Valad, reviewing goodwill relating to funds management business acquisitions in the June results."

In a recent note to investors, Citigroup's property trusts analysts slashed its earnings estimates for Mirvac by 14 to 23 per cent over the forecast period, the 2008-09 financial year, and maintained its "sell" recommendation.

"In a declining asset value environment, Mirvac will no longer be able to use asset sales profits from its residential business to 'prop up' distribution," Citigroup's note to clients said.

"Financial year 2004 was clearly the peak year for Mirvac's earnings, and it looks like 2007-08 will be the trough.

"We don't expect earnings to get back to 2003-04 levels."

Pat Trotter of Goldman Sachs JBWere said Mirvac continues to suffer from broker downgrades and negative sentiment following disappointing write-downs on its infrastructure funds as well as a residential market that shows no real signs of recovery.

"Excluding the two Centro's, Mirvac was the sector's worst performer for the week, losing 10.7 per cent of its value, closely followed by Stockland which closed 5.5 per cent lower for the week, with both stocks feeling the weight of residential markets on their shoulders," Mr Trotter said.

"With Nakheel now having lost in excess of one-third of the value on its 12 per cent Mirvac investment in just 4 months, it must be seriously considering what its next move will be. Once the dust settles on the current round of bad news and downgrades for Mirvac, the market will start focusing on its corporate appeal as well as the value that is starting to appear in the stock," he said.