Property developers Mirvac and Devine slash profit forecasts

Australia might not be in recession, but the downturn continues to batter property development groups.

This morning Sydney based developer Mirvac announced it would raise $1.1 billion to pay down debt and says it expects to slash valuations in its property portfolio by more than $500 million.

The company has also slightly reduced its profit guidance from $199 million to between $190 million and $200 million.

Managing director Nicholas Collishaw said the new capital was part of the company’s simplify strategy, which is designed to increase investment earnings and concentrate on residential development work on large-scale projects.

“This offer strengthens our balance sheet, enhances our liquidity and further positions the group to accelerate our strategy.”

Over the border in Queensland, another listed developer Devine Group has slashed its profit guidance by a third (from $23-25 million to $15-17 million).

The company has also shelved plans to build a $300 million office tower in Brisbane’s central business district, which it was developing in a joint venture with Leighton Holdings.

Devine’s chief financial officer Viv Grayson said it was hoped the development could commence early in the new financial year.