Is the Mirvac share price the best real estate buy right now?

The Mirvac share price has been hit hard in 2020 but I think there’s still some upside to be had over the next 12-18 months. Here’s why.

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Mirvac Group (ASX: MGR) has been hit hard in 2020. Investors have sold out and pushed the Aussie real estate investment trust (REIT) share price 34.5% lower. But despite its struggles this year, I think there’s a lot to like about the Mirvac share price. Here’s why Mirvac could be a good pick if you’re after real estate exposure in 2020.

Why the Mirvac share price could be in the buy zone

Let’s start with the full-year result which was tough for investors to swallow.

Mirvac reported a 17% slump in revenue to $2,312 million and a 45% drop in net profit after tax. 

The Aussie REIT has four main business units across Office, Industrial, Retail and Residential. I think that diversification could be a good thing in 2020.

Office real estate is quite uncertain right now as the coronavirus pandemic forces a rethink of commuting arrangements. Aussie retailers are under pressure while residential and industrial markets are holding up for now.

That could make Mirvac a better buy than some concentrated REITs. For instance, Scentre Group (ASX: SCG) and Vicinity Centres (ASX: VCX) are exclusively retail REITs.

That means Mirvac’s Industrial and Residential portfolios could outperform. There’s a strong pipeline in the residential business which could yield some strong results given the record low interest rate environment.

Occupancy rates in its Office and Retail portfolios were sitting at 98.3% with Residential operating earnings climbing 12% to $225 million. 

The Mirvac share price has been under pressure in 2020 but I think the various business levers could help stabilise earnings in FY21.

It’s far from a safe buy in my opinion but I think the strong yields on offer from the REIT could be worth it.

The Mirvac share price is currently yielding 4.35% per annum which is pretty handy in the current environment. 

What about other ASX REITs?

The Aussie retail REITs have been hit hard in 2020 with both Scentre and Vicinity slumping lower.

If today’s Mirvac share price isn’t in your buy zone, I think National Storage REIT (ASX: NSR) could be worth a look.

The National Storage share price is up 2.4% this year and could offer good diversification benefits.

National Storage generates strong earnings from its self-storage units which could benefit from strong housing activity. That means National Storage is worth keeping an eye on for strong yield and capital stability.

These 3 stocks could be the next big movers in 2021

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Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Scentre Group. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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