The team at Macquarie has placed an outperform rating on ASX 200 REIT Mirvac Group (ASX: MGR).
The company is a diversified property group with interests across residential and master-planned communities, office and industrial, retail, and build-to-rent sectors.
It has around $35 billion in assets currently under management, mainly in Sydney, Melbourne, Brisbane, and Perth.
Investors may target ASX 200 REITs because they typically have predictable cash flows and dividend distributions and offer some capital growth opportunities.
Mirvac Group shares closed last week at $2.29 each.
It has already provided investors with solid returns this year, rising more than 20% year to date.
However, Macquarie believes there is more upside potential for this ASX 200 REIT.
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Market leading capability
In a recent report from the broker, it said Mirvac's market leading capability across living sectors allows it to take advantage of under-supply across the wider housing market.
It said the full value chain is captured across land subdivision, homes, terraces, mid and high rise apartments, build to rent, and land lease communities.
According to this report, across the investment portfolio, this exposure has risen from ~$400m (~3%) in FY23 to ~$1.2bn (~10%) in FY25.
In 2023, Mirvac group acquired Serenitas. Serenitas is one of Australia's largest land lease community (LLC) operators – a business model that develops, owns, and manages lifestyle or retirement communities for over-50s.
The team at Macquarie sees Serenitas as a capital-light, high-return model combining stable recurring income with solid development-driven growth.
Serenitas generates passive annuity style rental income from the occupation of its sites with leases indexed to CPI and occasionally CPI +2% with a reset upon resale (no downtime on renewal); and attractive development margins of ~30% on the sale of a house (390 settlements in FY25), generating further capital for development (some competitors talk to 50% marginswith the difference accounted for by civil costs and what is capitalised into land vs expensed into the house).
Price target upside for this ASX 200 REIT
Macquarie has an outperform rating on this ASX 200 REIT and a price target of $2.70.
From last week's closing price of $2.29 this indicates an upside of 17.9%.
Elsewhere, TradingView has a 12 month price target of $2.45 and online brokerage platform Selfwealth rates the ASX 200 REIT as undervalued by approximately 8%.
