fkp’s brown succumbs to pressure to leave

FKP’s Brown succumbs to pressure to leave
Gretchen Friemann (source: www.afr.com)

Australia’s listed property sector is set to lose another veteran chief executive less than a month after Stockland’s boss, Matthew Quinn, unexpectedly handed in his resignation.

Peter Brown, the head of ailing retirement and residential trust FKP Property Group, is preparing to step down amid pressure from shareholders unhappy at the precipitous decline in the group’s share price.

According to senior sources, an announcement confirming Mr Brown’s departure will be released next week.

While the managing director declined to comment, the news is unlikely to surprise the market,which has entertained speculation of his resignation for some time.

Mr Brown, who at the age of 46 ranks as one of the property industry’s longest serving chief executives after notching up 10 years at FKP’s helm, switched to an open-ended contract of employment last year.

However, his tenure has grated on investors recently, largely because the trust is trading at a staggering 66 per cent discount to its net tangible asset backing – the largest in the sector by a hefty margin.

Although the market views FKP’s stated NTA with scepticism, revised figures from analysts still put the developer at a 35 per cent plus discount. Mr Brown’s $2.3 million salary package, which included a cash bonus last year of $675,000, has also sparked discontent.

The change of leadership is likely to be cheered by Stockland’s board, which is thought to have frequently locked horns with the trust over its business strategy.

Australia’s largest residential developer holds a 14.5 per cent stake in the retirement vehicle, an investment that has irked those shareholders opposed to an expansion in this sector.

Plans for a possible spin-off of FKP’s $1.2 billion retirement assets would exacerbate these tensions as the demerger may have to be funded by another dilutive capital raise. Stockland has injected cash into the trust twice, and few in the industry believe shareholders have the stomach for a third assault.

FKP is due to report its annual results on August 28. The conclusions of an operational review will be unveiled on the same day and are expected to advocate pursuing the demerger in an effort to make the business more appealing to suitors.

Earlier this year Mr Brown told this newspaper three parties were mulling an acquisition but no firm bid materialised. However, it is understood the trust continues to attract attention from Chinese investors.


The Australian Financial Review
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We might definitely need change by changing its head.
One of very best news in FKP.

Regards,