http://business.smh.com.au/breather-for-some-centro-syndicates-as...

http://business.smh.com.au/breather-for-some-centro-syndicates-as-investors-wait-20080609-2o16.html

Breather for some Centro syndicates as investors wait


Advertisement

* Carolyn Cummins Commercial Property Editor
* June 10, 2008
*

CENTRO Properties has negotiated another lifeline with the completion of a $331 million refinancing deal for eight of its 36 syndicates, although others, such as its Centro MCS 20, remain under threat of being wound up.

The deal, finalised over the weekend, provides refinancing for two years and will mature in April 2010. Additional funding for forecast operational capital expenditure during the loan term has also been approved.

The eight syndicates involved are Centro MCS 2, 3, 4, 5, 6, 8, 11 and 12. The Centro MCS syndicates 11, 16 and 19 NZ/I were the subject of a threatened takeover by Pelorus Funds that was abandoned at the end of March.

Centro MCS 20 owns two retail centres in New Zealand worth about $NZ65.2 million ($53.4 million). It is under pressure from rising interest costs and the strong Australian dollar. It is expected the assets will be put up for sale. The syndicate was not due to be wound up or rolled over until 2010.

Centro MCS manages 36 syndicates valued at $8.5 billion on behalf of about 16,500 investors.

Centro's investors continue to wait for the security price to recover. Despite the group's executives, led by Glenn Rufrano, extending its debt deadline to December 15, the price hovers at 34c, a far cry from the $8 high of eight months ago. Mr Rufrano is negotiating with three serious bidders for its $1.1 billion Centro America Fund assets as a portfolio.

Over the weekend Mulpha International Bhd's executive chairman, Lee Seng Huang, ruled his group out of the running. Mr Lee said Mulpha International considered bidding for Centro Properties initially but decided not to proceed.

JP Morgan's broking arm said any sale of the CAF assets exceeding $900,000 "would be a good result in our view, given the complete absence of large-scale physical transactions in the market". JP Morgan's corporate division is a creditor to Centro.

"For Centro Australia Wholesale Fund (CAWF) the marketing strategy has been revised," JP Morgan's property team said. "CAWF bids to date appear disappointing. Centro originally asked for full bids for all of CAWF based upon the debt covenants covering the entirety of the vehicle, and a full sale being the most tax-efficient approach. For our 2009 price target we prefer at this point to focus on an net asset value, now revised, of 60c.

"Risks to the price target exist and must be taken into account, including the removal of lenders' support, deterioration in asset values beyond our expectations, and an inability for Centro to access asset ownership positions for sales into the open market."