Diversified property investor Stride has pulled the plug on a planned demerger of part of its business and an associated share float because of market uncertainty.
Photo: Supplied / NZX
Stride chief executive Phil Littlewood said the decision followed volatile market conditions amid the possible collapse of the property investor China Evergrande with debts in excess of $300 billion.
Stride intended to spin off commercial office properties into a new company, Fabric, which was to raise up to $290 million in a share float to buy another office property in Auckland.
Littlewood said the company had until March to settle the office building purchase and would wait until the volatility died down.
"The uncertainty is the piece that the markets obviously don't like... and so until that uncertainty is taken off the table and people know where companies like Evergrande stand... we'll sit on the sidelines and watch and wait," Littlewood said, adding that time was on Stride's side.
The company had intended to keep a cornerstone stake in the new company and Stride shareholders were to be given an allocation of Fabric shares as well.
"We will continue to evaluate market conditions and assess the appropriate approach that is in the interests of both existing Stride shareholders and potential investors," chair Tim Storey said.
"Stride considers its office portfolio to be high quality with strong sustainability credentials and it remains attractive within Stride or as a separate entity."
The demerger and NZX listing was due to be completed by early October.
Fabric was set up as a Stride subsidiary in November 2020 to invest in commercial office property, primarily located in Auckland and Wellington, with a current portfolio valuation of $714 million.
Stride has moved in recent years to become a property fund manager acquiring properties in a particular sector and then splitting them off into a separate listed company, which it manages and retains a cornerstone stake in. It did this with big box retail properties, which it put into Investore, and has future plans to look at developing town centres.