Global investors lining up for Centro's assets

INTERNATIONAL investors are close to finalising a deal to buy the $1.16 billion Australian portfolio of Centro Properties, which includes the Bankstown and Roselands shopping centres.

INTERNATIONAL investors are close to finalising a deal to buy the $1.16 billion Australian portfolio of Centro Properties, which includes the Bankstown and Roselands shopping centres.

This will be good news for long-suffering Centro investors, who watched the stock hit 27.5c on Friday, up 2c for the day, but well below its high of $10.02 reached in May last year.

LaSalle Investment Management, which has $US20 billion of funds under management, is said to have bought Centro's US properties for $US714 million ($728.62 million) - about 10 per cent below their book value - after Centro bought the assets a year ago.

The fund has yet to reveal itself as the buyer, but sources have confirmed the sale to the Herald.

LaSalle is also believed to be a frontrunner to buy Centro's Australian assets. Other potential buyers include Brookfield, which owns Multiplex, based in Canada.

A fund manager from a local real estate investment trust said on the weekend no listed shopping centre landlord based in Australia would be the buyer of Centro's local assets.

That excludes CFS Retail Trust, GPT, which has its own concerns, Lend Lease, Stockland and Mirvac.

Possible local buyers could include private players such as Lang Walker, but in previously he has shied away from such purchases.

"There has been very strong institutional interest in the portfolio and the options are currently being assessed by Centro," Simon Rooney, head of retail investments for Australia at the property firm Jones Lang LaSalle, told Reuters late last week.

Centro is selling four Australian shopping centres, including Bankstown in western Sydney and the Galleria in Perth. The centres have a total book value of $1.157 billion and are part of the Centro Australia Wholesale Fund, which has 28 properties.

The sales are part of Centro's strategic review aimed at raising cash to pay the first tranche of $2.3 billion of debt by December 15. As part of the deal, Centro has until September 30 to satisfy its Australian financiers and US private placement noteholders that it is making progress.

The company, led by Glenn Rufrano, originally wanted to sell the fund in its entirety, but has decided to sell some assets separately. Centro is also looking to sell assets in a number of its MCS syndicates, which include some properties half-owned by Centro Properties, or its associate, Centro Retail Trust.

But the complicated ownership structure is deterring buyers. Centro is also facing two class actions.

Under the most recent US deal, Centro will sell 29 of the 31 properties in the Centro America Fund, including assets in 15 US states. The agreement excludes Centro America Fund's partial share of a mall in North Carolina and another in Minnesota, which are still for sale. Centro's direct interest in Centro America Fund is 46.65 per cent, excluding a stake held through Centro Direct Property Funds.

But Centro has retained management control of the US centres for at least a year - a move that will continue to bring in much-needed fee revenue.


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