Listed property and aged-care developer Aveo Group is preparing to put about $500 million in residential and office assets on the market this year as it moves to become a pure-play retirement group, according to industry sources.
Aveo Group, which changed its name from FKP Property Group last month, will look to divest the bulk of its residential community assets and sub-divisions this year.
The assets are expected to sell at or above book value, with skyrocketing property prices helping its sales case. As at June 30, Aveo had $767 million in non-retirement assets and has divested about $15 million in properties since.
Aveo, which has a market capitalisation of about $1.1 billion, is pushing to divest non-retirement assets in the hope of becoming a pure play company by 2016. Strong interest was expected to come from the residential REIT sector.
Some of the first assets to be sold could be Aveo Group’s gasworks office complex in Brisbane and the last of its Luxe residential apartments in Sydney's Woolloomooloo.
In the 2013 fiscal year Aveo Group booked a $166.5 million loss, largely on the back of development impairments. Stockland exited Aveo Group in October when it sold its remaining 11.6 per cent stake for $103.5 million.
Aveo Group is trading about 30 per cent below net tangible assets, which one fund manager attributes largely to the fragmented nature of the retirement group sector and the absence of pure-play offerings.
Last year, Aveo Group sold its 38 per cent stake in New Zealand retirement home operator Metlife for NZ$280 million, which it used to pay down the debt on one of the retirement funds it manages. Aveo Group closed at $2.20 today.