US fund to buy local Centro assets

INTERNATIONAL investors are close to finalising a deal to buy the $1.157 billion Australian portfolio of Centro Properties, which include the Bankstown and Roseland shopping centres in Sydney.

INTERNATIONAL investors are close to finalising a deal to buy the $1.157 billion Australian portfolio of Centro Properties, which include the Bankstown and Roseland shopping centres in Sydney.

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

LaSalle Investment Management, which has $US20 billion ($A21 billion) of funds under management, is said to have recently bought Centro's US-based properties for $US714million - 10% below the book value - after Centro bought the assets last year.

The fund has not disclosed itself as the buyer, but sources have confirmed the sale to BusinessDay.

It is believed LaSalle is a front runner in buying the Centro Australian assets. Other potential buyers include Canada-based Brookfield, which owns Multiplex.

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

That excludes parties such as CFS Retail Trust, GPT, which has its own concerns, Lend Lease, Stockland or Mirvac.

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

Centro is selling four Australian shopping centres, including Bankstown in western Sydney and the Galleria in Perth. They have a total book value of $1.157billion 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 a first tranche of the $2.3 billion of debt by December15.

As part of the deal, Centro has until September 30 to satisfy its Australian financiers and US private placement noteholders it is making good 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 unwind and sell assets in several of its MCS syndicates, which include some properties half-owned by the head company, Centro Properties or its associate, Centro Retail Trust.

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

Under the 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 CAF's partial share of a mall in North Carolina and another in Minnesota, which are still for sale.

Centro's direct interest in CAF is 46.65%, excluding a stake held through the Centro Direct Property Funds.

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


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