UPDATE 2-Liberty Intl unveils demerger, fall in NAV

* Announces plans to split into two businesses

* NAV, underlying earnings fall more than expected

* No plans for fund raising at this point-CEO

* Third biggest FTSE 100 faller at 0936 GMT

(Adds conference call, analyst quote, share reaction)

By Daryl Loo

LONDON, March 9 (Reuters) - Britain's biggest mall owner, Liberty International LII.L, is carving up its 6.2 billion pounds ($9.3 billion) portfolio to drive shareholder value, a likely watershed for the rebounding UK listed property sector.

The real estate investment trust (REIT), which owns regional shopping centres throughout the UK, said it plans to split into two businesses, one focused on UK shopping centres and the other on Central London commercial properties.

"The demerger will enable Capital Shopping Centres and Capital & Counties to achieve greater value for shareholders over time, than the current Liberty would as one combined business," CEO David Fischel said in a conference call.

Major constituents in Britain's young REIT sector have long debated the merits of their mostly diversified portfolios, against the specialisation favoured in the more mature U.S. and Australian markets. [ID:nLEE6E3003]

Post-demerger, Fischel will become CEO of the Capital Shopping Centres Group (CSC) with a portfolio worth 5 billion pounds, while Ian Hawksworth will head London-focused Capital & Counties Properties (C&C) with a 1.24 billion pounds portfolio.

The differing strategies of the two units, with C&C more opportunistic in nature, "will be able to attract the most appropriate shareholder base to provide optimal support", the company said.

Liberty will be the first UK REIT to split its management team along these lines, after sector leader Land Securities (LAND.L) abandoned a similar plan in late 2008 due to turbulent market conditions.

"Now that the property market has settled down a bit after the gyrations of the last couple of years, we think it is a good time to press on," Fischel said, adding the split is expected in May after a shareholder meeting next month.

The Gordon Family, whose combined interest in Liberty is 14.8 percent, has consented to the plan.

NAV, EARNINGS DOWN

While the plan is devised to enhance shareholder value over the longer term, some analysts are sceptical about its near-term benefits to Liberty's share price.

"The demerger is operational and not necessarily a clear positive for the share price," Collins Stewart analyst Aaron Guy told Reuters.

At 0936 GMT, Liberty shares were down 2.5 percent, underperforming a 0.6 percent fall in the broader UK property stocks index .FTELUK as shareholders reacted to its weaker-than-expected results.

Liberty posted a 38 percent fall in full-year 2009 diluted and adjusted net asset value (NAV) per share to 464 pence at end-December 2009, down from 745 pence a year earlier, as the UK economic recession hit retailers, its key tenant base.

Underlying earnings, excluding valuations, was 91 million pounds, against 105 million pounds a year earlier, behind the consensus forecast of 102.96 million pounds from 12 analysts compiled by Thomson Reuters I/B/E/S.

Some analysts were concerned the proposed split was a precursor to Liberty announcing another round of fund raising from shareholders, although the company insisted it had no immediate plans to do so.

"We have no plans for a fund raising at this point ... on the shopping centres side, we have over 300 million pounds of cash, which is more than adequate to deal with those capital commitments," Fischel said.

He said C&C will also have 263 million pounds in cash at the point of demerger, some of which is earmarked for taking the Earls Court business to the planning stage, and to improve sales at the Convent Gardens tourist hub.

Liberty, whose main shareholders also include top U.S. mall owner Simon Property (SPG.N), announced a full-year dividend of 16.5 pence per share, in line with guidance. Post-demerger, CSC will retain its tax-efficient UK REIT status, while C&C will be a non-REIT property company, likely propelling Liberty's shopping centres rival Hammerson (HMSO.L) to the third biggest listed UK property firm by market value. (Additional reporting by Sinead Cruise; Editing by Andrew Macdonald) ($1=.6672 Pound) (See www.reutersrealestate.com for the global service for real estate professionals from Reuters)