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Australia's Centro Sells US Malls for $714 Million

Centro Properties Group, a high-profile Australian victim of the global credit crunch, is selling almost all of the shopping malls in its Centro America Fund for $714 million, using the cash to pay down debt.

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AP

Centro shares jumped as much as 35 percent after it said on Tuesday it was selling 29 of the fund's 31 malls to a private real-estate investment adviser which it did not name.

Centro, which owned about 700 U.S. malls before Tuesday's deal, has received several extensions on about A$2.8 billion (US$2.7 billion) in debt which now falls due in December, and is selling assets to help reduce its debt load.

The sale was at a 10 percent discount to the properties' pervious book value, Centro said. On its website, Centro put the value of the Centro America Fund (CAF) assets at about A$1.2 billion.

Centro will continue to provide management and leasing services for the 29 malls for at least a year, maintaining a valuable source of fees.

"The sale of the CAF portfolio is a key step in providing liquidity to our balance sheet," Chief Executive Glenn Rufrano said in a statement.

A spokesman for Centro told Reuters that talks were continuing with potential buyers of another Centro wholesale fund, the Centro Australia Wholesale Fund, with A$2.6 billion in local shopping centre assets.

The group has had to sell assets in a tough market to meet banks' conditions on the loan extensions.

Centro and its affiliate, Centro Retail Trust, borrowed heavily last year to fund a rapid expansion in the United States, but ran into trouble in December when it was unable to refinance maturing debt after credit markets dried up.

Centro holds a 45.1 percent direct stake in CAF, and its managed funds own another 49.9 percent stake.

Centro and its affiliates have a total of some A$5.3 billion in debt which now falls due Dec. 15. Its shares have fallen about 90 percent since it revealed its debt problems.