bid to avert centro fire sale ...

Source: www.heraldsun.com.au

Bid to avert Centro fire sale
Ben Butler
December 23, 2008 12:00am

INVESTORS in a $300 million unlisted Centro shopping centre fund have voted to slash their distributions in order to prevent a forced sale into the slumping US property market.

Centro MCS 36 manages about $300 million worth of shopping centres in the US and has been hit hard by the slump in US retail.

In June the value of its 30 properties was slashed to about $302 million, compared with about $337 million at the same time last year, as anchor tenants quit the centres.

Just one of the centres was revalued upwards, with most having between 10 per cent and 20 per cent cut from their value.

The falling valuations cut the assets that back each unit from $1 to 83c.

The decision by Centro MCS 36 investors to capitalise interest they are owed cures two defaults under a trust agreement with Sandhurst Trustees.

Since June the fund has been in default because it has not been paying interest at the rate previously agreed.

At a meeting of investors on December 12, 99.6 per cent voted to waive the defaults and amend the fund's rules, allowing the interest to be ploughed back under.

If investors had not agreed to the deal Sandhurst could have moved to seize and sell the shopping centres.

In a letter to investors sent ahead of the meeting, Centro chairman Paul Cooper said sales would not be "in your best interests".

"This is because the investment and property markets in the United States are weak, and it is likely that selling assets now will result in a substantial discount to their current value," he said.

Centro holds about 25 per cent of MCS 36 through its Direct Property Fund. The DPF owns about 50 per cent of MCS 36, and Centro in turn owns 50 per cent of the DPF.

Last week Centro's bankers agreed to exchange some of more than $10 billion in debt for 90 per cent of the company, providing some long term respite from Centro's crippling debt crisis.


Ends.

Cheers, Pie :)