Mirvac strikes deal with Japan’s Mitsubishi for $2.3bn Harbourside
An artist’s render of Mirvac’s Harbourside Residence at Darling Harbour, NSW. Image: Supplied
Property developer Mirvac has put on display the strength of its ties to Japanese capital, locking in the heavyweight Mitsubishi Estate Co to back its $2.3bn Harbourside project at Sydney’s Darling Harbour.
The company has been at the vanguard of winning backers from Japan to roll out its large-scale projects, with its latest move flagged in The Australian in August. Other supporters include Mitsui Fudosan, which has taken a 66 per cent stake in Mirvac’s $2bn 55 Pitt Street office development at Sydney’s Circular Quay.
Mirvac already has close ties with Mitsubishi in other areas, as it is backing its pioneering build-to-rent business as it rolls out new towers across the country.
Australian real estate developers have turned to Japan to support their projects, partly as they have grown in scale beyond their own balance sheets and also to boost their returns via development fees. Other companies have gone down this path, notably Lendlease, which recently secured Japanese backers for its CBD project overlooking Hyde Park.
Mitsubishi Estate Co has jumped aboard Mirvac’s Darling Harbour project. Picture: Supplied
Both companies are putting their capital attracting skills on display as they vie for control of Lendlease’s Australian Prime Property Fund empire, which spans $10bn of office towers, shopping centres, and industrial parks. Unhappy super funds led by Hostplus have proposed installing Mirvac as the manager of the industrial and retail funds, but Lendlease is fighting to keep control of the wholesale vehicles.
The battle for the funds is coming to a head, with Lendlease cancelling a meeting, where it had hoped to head off investor dissatisfaction, that was scheduled for Tuesday. At the same time, the independent directors of it unlisted retail fund had recommended keeping the manager ahead of a separate vote on its future.
The Harbourside project is an example of major mixed use projects that have proven attractive to Asian capital. The high-rise apartment tower has had strong sales and Mirvac is also putting modern retail and offices into the podium.
Mirvac and Mitsubishi Estate Co said they had a joint venture agreement to deliver Harbourside, which has an expected end value of about $2.3bn.
“As one of Japan’s leading real estate developers, MEC has a great alignment to our own capabilities and shares our vision of delivering iconic assets that have community at their heart, as demonstrated by their partnership with Mirvac across our LIV build-to-rent assets,” Mirvac chief executive Campbell Hanan said.
The project is on track, with building well-progressed and more than $800m in residential pre-sales secured. “We have secured a precommitment for our premium grade waterfront commercial office and have entered into a heads of agreement with a flagship food and beverage operator for a key part of the retail,” he said. “We continue to receive a high level of leasing inquiry for the remaining space for both commercial and retail tenancies.”
Mitsubishi Estate Asia head of Australia Yosuke Matsunaga said the venture “presents us with a unique opportunity to invest in a flagship mixed-use development that will leave a lasting legacy to the urban landscape of Sydney”.
“This project aligns with our strategy of collaboration with established and trusted local partners to deliver world-class developments in key urban locations. We are pleased to be working together again with Mirvac, who has a strong track record of delivering high-quality projects and a shared commitment to excellence, to bring this vision to life,” he said
The venture expands the cumulative project cost of MEC’s portfolio in Australia to more than 1.7 trillion yen ($17.7bn).
