I am amazed there has been so little press criticising the...

I am amazed there has been so little press criticising the proposed merger. We have "independent directors" recommending to unit holders that they accept Mirvac's takeover at a discount to NTA of 37%. I am afraid they are not working too hard for their directors' fees.

Let's consider some interesting observations:
1. In MRZ'z Aug 25 announcement to the ASX, Mr Gary Wilcox (MRZ Director) was quoted "During the year, management remained intensely focused on the rationalisation of assets in order to pay down debt and boost the Trust's balance sheet. We are extremely satisfied to have disposed of seven non core properties. All properties were sold at or around book value". Unfortunately, 2 months later the best strategy the directors can come up with is to sell all assets to Mirvac at a massive discount.
2. As it is, directors signed off on a 16% decrease in book values for the full 08/09 year.
3. Gearing was only 44.6% as at 30 Jun 2009 (amazing other distressed REITs with higher gearing can negotiate successfully with their bankers yet MRZ is struggling)
4. Since discussions between MGR and MRZ were announced on 12 Aug, we have seen a sustained rally in A-REITs unit prices for which MRZ unit holders are getting NIL value.
5. Consider the price moves just in the last month alone:
Name Last/Cls % 1m
CNP.AX CENTRO PROP 0.3850 133.3%
CER.AX CENTRO RETAIL GR 0.2050 64.0%
AEZ.AX APN EUROPEAN 0.0930 47.0%
TGP.AX TRAFALGAR CORP 0.6300 40.4%
VPG.AX VALAD PROPERTY 0.1550 30.6%
RNY.AX RNY PROPERTY 0.1500 27.3%
CNR.AX COONAWARRA AUST 0.2000 25.0%
TSO.AX TISHMAN SPEYER 0.3950 19.4%
MOF.AX MACQUARIE OFFICE 0.3500 19.3%
APZ.AX ASPEN GROUP 0.5450 17.8%
GPM.AX GEO PROPERTY 0.2000 17.6%
ABP.AX ABACUS PROP GRP 0.4750 16.9%
CDI.AX CHANLLENGER DIV 0.4950 16.7%
MAP.AX MACQ AIRPORTS 2.8100 16.2%
CPA.AX COMWLTH PROP OFF 1.0100 13.6%
GMG.AX GOODMAN GRP-STPL 0.6850 12.4%
GPT.AX GPT GROUP 0.6800 11.8%
MDT.AX MACQUARIE DDR TR 0.1150 10.0%
RBV.AX RABINOV PROPERTY 0.5600 9.8%
CHC.AX CHARTER HALL GRP 0.6400 9.5%
IIF.AX ING INDUSTRIAL 0.6300 8.8%
DXS.AX DEXUS PROPERTY 0.8350 8.6%
IOF.AX ING OFFICE FUND 0.6450 8.5%
CFX.AX CFS RETAIL PRPTY 2.0900 7.1%
CDP.AX CARINDALE PRP TR 4.3800 5.5%
SGP.AX STOCKLAND 4.0800 3.9%
ALZ.AX AUSTRLND PROP-UN 0.5500 2.9%
LLC.AX LEND LEASE CORP 10.4800 1.9%
MCW.AX MACQ COUNTRYWIDE 0.6600 1.6%
CMW.AX CROMWELL GROUP 0.7100 1.4%
WDC.AX WESTFIELD GROUP 13.3500 0.4%
BEC.AX BECTON PRO GRP 0.1050 0.0%
CJT.AX CVC PROPERTY FND 0.0400 0.0%
MPS.AX MACARTHURCOOK 0.1200 0.0%
MGR.AX MIRVAC GROUP 1.6000 -2.2%
MRZ.AX MIRVAC REAL EST 0.5250 -2.8%

6. Needless to say I am not a fan of the merger which simply transfers value from MRZ unitholders to MGR unit holders.
7. MRZ is not particularly highly geared and if management continued with selling assets in the same vein as what was achieved in the last 12 months, it will deliver significant value to unit holders (MRZ of course rather than Mirvac).
8. Interesting to note that the "recommended merger" with Mirvac is equivalent to MRZ selling its property portfolio on the open market at a discount of approximately 16% to current book value as at new 30 Jun 09 values (which of course the directors just signed off as being fair market value!!).
9. I think the independent directors should start looking after the unit holders and negotiate with the banks on orderly liquidation over 2 years of the property portfolio. I'm sure all unit holders will be happy to capture the discount to NTA over the next 24 months rather than giving it to Mirvac.

Remember to go to the unit holders meeting and vote "no".