Fletcher’s potential residential sell-off seen as ‘desperation’, not opportunity

Wednesday, 19 November 2025

Fletcher Building’s residential and development division, which includes Fletcher Living and Vivid Living, is under review.

Any sale of Fletcher Building’s residential division smacks of desperation, not opportunity, and is a sign of the challenges the company faces, Simplicity KiwiSaver managing director Sam Stubbs says.

Speculation about a sale has mounted after The Australian reported the construction giant had sent out sale documents to prospective buyers of its residential development business and that first-round offers were due before Christmas.

In an announcement on the NZX, Fletcher Building acknowledged “media speculation” about a potential sale, and said it was undertaking a review of the residential division as previously announced.

The review process was assessing various outcomes, including sale options, and the company was talking to interested parties, it said.

“Fletcher Building will update the market and stakeholders if and when there are material developments to report.”

The company’s chief executive Andrew Reding first announced the company was moving to undertake a strategic review of its residential and development division, which includes Fletcher Living and Vivid Living, in August.

It followed an earlier announcement that the company was “exploring” sale options for its construction division, which includes Higgins, Brian Perry Civil and Fletcher Construction.

Tough time to sell

Stubbs, who is a sizeable shareholder in Fletcher Building through Simplicity’s funds and also a customer via Simplicity Living, said the residential division was a troubled asset at a very difficult time in the cycle.

“It will be hard to sell as it involves high end apartments in expensive parts of the country at a time when the market is pretty depressed.

“It is another staggering point in the story of Fletcher going from hero to not quite zero, but not good, and speaks to the bad governance of the company over the last 20 years.”

Long critical of Fletcher governance, Stubbs remained “flabbergasted” that the chairperson and one of the directors, who were on previous boards that oversaw the “destruction” of the company, were still there, he said.

“Now, they may be trying to sell a problematic asset in a tough market, and they say they don’t want to sell it as a bargain. But I’m not sure who would necessarily want to buy it.

“It would be fair to say that we’re deafened by the silence around this.”

Overseas buyer “more than likely”

Amova Asset Management head of equities Michael Sherrock said there was nothing new in the latest speculation around the sale of the residential division, but any sale would take a long time.

At its Investor Day in June Fletcher confirmed it would be focusing on its building material and distribution businesses, and simplifying its portfolio by reducing it to five divisions, he said.

“They have already talked about the potential sale of their construction division, and the review of their residential division, so changes have been flagged. Maybe they are following through and notifying potential buyers.”

In his view, there was no urgency for the company to move a sale along due to a need for money, and any sale would be a prolonged process.

The size of the residential business and the land involved meant an overseas buyer was most likely, he said.

“It’s hard to see a local buyer with the capacity for the purchase, so I’d imagine potential buyers would probably be Australian, or maybe another country.

“So the Overseas Investment Office will have to be involved, and there will be all sorts of hurdles to overcome before a transaction can progress. There won’t be a quick sale.”

The New Zealand International Convention Centre in Auckland is now completed, but it came at a great cost.

Sherrock would not speculate on possible prices, but said he would expect the company to execute any sale in the best interests of its shareholders.

Fletcher declared an annual net loss of $419 million after tax over the year to June, and that was a steep decline on its after tax loss of $227m over the previous financial year.

The loss was driven by the difficult trading environment and one-off significant items, including the response to the Western Australian leaky pipe crisis, its Tradelink sale and additional costs for the NZ International Conference Centre build, the company said.

But at its AGM in October Reding said the company was not standing still waiting for market conditions to improve, and had acted decisively to reshape the business over the past 12 months.