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Centro offloads US property for $728m
Email Print Normal font Large font Carolyn Cummins
July 16, 2008 - 1:28AM

CENTRO Properties yesterday sold its United States property portfolio to a private American pension fund for $US714 million ($728.62 million) - 10 per cent below the book value - after exchanging on the assets only a year ago.

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

Fund managers said the sale improved Centro's survival chances and was a step in the right direction. But Centro investors will never again see the $8 per security the group was worth last year; yesterday it closed at just 24.5c, up 1.5c or 6.52 per cent on the previous day.

Under the latest deal Centro, now run by chief executive, Glenn Rufrano, will sell 29 of the 31 properties in the Centro America Fund (CAF), which span 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 per cent, excluding a stake held through the Centro Direct Property Funds.

Winston Sammut, the managing director of Maxim Asset Management, said the 10 per cent discount was a good price and showed financiers were willing to wait for the cash instead of forcing the sale.

The funds will go towards paying off Centro's debts, totalling about $4.2 billion - of which half is due to be repaid to its US and Australian bankers by December 15. Centro is also marketing a portfolio of four key Australian centres worth a combined $1.15 billion and is in the process of winding up its MCS 9 unlisted syndicate valued at $309 million - though it is insisting it retains management of the Australian assets as a condition of any sale. That is a sticking point for potential buyers who want to integrate Centro malls with their centres.

Centro bought the New Plan Excel portfolio in a $6 billion deal in May last year. But the borrowings were unrealistic and the move proved fatal for the group's directors - who were forced to resign after the group failed to make its December 2007 repayment.

Mr Rufrano, who ran New Plan and negotiated the original sale to Centro, is in the US, but told investors in a statement to the Australian Securities Exchange that "the sale of the CAF portfolio is a key step in providing liquidity to our balance sheet".

Mr Rufrano said the agreement had been approved by CAF's investors but was subject to closing conditions, including a due diligence period and lender consent. There was no assurance the transaction would be consummated, he said. Settlement is scheduled for late September to October.
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