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Australia's Centro Seeks Bids for 25 Malls

Reuters
Monday, 28 Apr 2008 | 2:00 AM ET

Australia's debt-laden Centro Properties Group said it is seeking bids for 25 of its shopping centres, but hopes to retain at least 50 percent ownership in them to retain management and leasing control.

The group, which borrowed heavily last year to fund a rapid U.S. expansion, must refinance A$5.4 billion ($5 billion) of debt by Wednesday. It is under pressure to sell assets to raise cash after being caught in the global credit crunch.

Centro, owner of 700 U.S. malls, said refinancing talks were continuing and there would be no update to the market prior to Wednesday's deadline. Banks are expected to grant a five-month extension.

"I imagine it would be Wednesday before we say anything. These things tend to go to the last minute," said Centro spokesman Mitchell Brown.

"We're still working towards it. The banks are still supportive, it just takes a while to get the documentation done," he said.

About two-thirds of Centro's shopping centres are in the United States, with the remainder in Australia and New Zealand. It holds the assets through a complex network of managed funds.

The company is selling part of its Centro Australia Wholesale Fund, which contains 28 shopping centres, 25 of which are wholly owned. Brown said buyers had expressed interest in smaller chunks but Centro hoped to avoid selling off individual centres.

"That's possible but it's not what we're pursuing as the primary objective. You may see a few here or there but we'd prefer not to," Brown said.

"Let's say you put four centres together and someone wanted to take a 50 percent interest in those four centres -- that's the kind of thing that would be ideal in our mind because we'd still then be managing, and marketing and leasing the shopping centres," he said.

The group has previously said its adviser, Lazard Carnegie Wylie, reported extensive interest from potential investors and it expected a number of parties to start due diligence soon.

The Sydney Morning Herald on Monday listed potential buyers as GPT Group, Stockland, Westfield Group, Mirvac Group and CFS Retail Property Trust, although they may face competition issues.

Industry Superannuation Property Trust, family groups and individual property investors may also be interested, the newspaper said.

"(Equity) interest in some or all of those assets is very likely to be sold. Twenty-five of them are not in joint ventures with external partners so there are 25 that are able to be sold pretty quickly," Brown said.

Centro plans to review indicative bids and then grant access to detailed due diligence. Formal documents had not yet been signed.

Centro shares were up 2.3 percent at 45 cents in a broader market up 0.5 percent. The shares had traded above A$10 last May.

Centro recently rejected offers to buy stakes in the company reported by newspapers to be up to around A$0.90 a share.

"We have received a number of offers. The board has not taken any of those. We're not going to do anything that takes too big a discount for shareholders," Brown said.