FKP considers demerger plan

FKP Property is looking at a demerger of its retirement business, with analysts speculating what that means for Stockland's interest.

FKP Property is looking at a demerger of its retirement business, with analysts speculating what that means for Stockland's interest.

In an update to investors this week, FKP's chief executive Peter Brown said the strategic review of its retirement portfolio has two key streams, being operational and organisational.

While at an early stage in the process, the company stated its conclusion was that "FKP may pursue a demerger to separate its retirement and development-trust businesses."

No final decision has been made and a further update is not expected until the August result.

Head of property research at Bank of America Merrill Lynch, Simon Garing, says at this stage, there is little detail on what this demerged FKP might look like.

"There is a lack of clarity whether demerged entities would remain listed or if a sale process would be run over either or both," Mr Garring said. "There seems to be the difficulty of splitting the development business into separate residential and retirement businesses."

"It is unclear how a demerger can be structured in a 'value accretive fashion'."

Mr Garing said the key obstacle was the "dis-synergies" from shrinking the size of FKP, and from splitting the development business.

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