centro to sell southport mall for 75m dollars

Source: The Australian Financial Review newspaper [Page 56 - Property]
Wednesday 14 May 2008

Centro to sell Southport mall for $75m
Mathew Dunckley and Paddy Manning

Key Points

The sale price is in line with the most recent book valuation.

Developer Norm Rix says his bid was knocked back last week.

Other properties on Centro's books are seen as more desirable.

Analysts said the price paid was encouraging for the sector.

The break-up of Centro Property Group's Australian shopping centre portfolio has begun in earnest with the disposal of Centro Southport on the Gold Coast for about $75 million.

The sale of the Southport, owned 50-50 by the Centro Retail Trust and the Centro Australian Wholesale Fund (CAWF), was mentioned in a lengthy disclosure document posted with the US Securities and Exchange Commission overnight about the group's recent debt-extension arrangements.

"Management of Centro has received an offer for the purchase of Southport Centre for approximately $75 million," the document said.

"Centro now desires to enter into an agreement of sale with a potential buyer ... and to apply the proceeds of such sale to repay certain credit facilities of Centro Retail Trust and CAWF."

Yesterday, a Centro spokesman declined to comment on the details of the potential transaction, saying it had not been finalised. Its lead real estate advisor JLL's Simon Rooney, was not available for comment.

The 19,279 square metre Southport centre is about 80 kilometres south of Brisbane and is anchored by a discount department store and two supermarkets..

The 24-year-old centre was extended in 2005 to add an Aldi supermarket.

At $75 million, the sale of Southport was exactly in line with the most recent book valuation provided by the company last year, equating to a yield of about 6.25 per cent.

Private Gold Coast-based-developer Norm Rix said yesterday he had expressed interest in buying Southport last week but was not given the opportunity to bid and was told yesterday the centre had been sold by Centro.

Mr Rix's company, Rix Developments, owns substantial land and property assets in and around the Gold Coast region and was believed to have been a cash buyer for Southport.

"Whether I'd pay that price or not I don't know. However, I was never given the opportunity to even investigate the matter further. Perhaps I would've paid more.

"Apparently, there's a bit of cherry-picking going on to those in the know. I believe my money is as good as anybody's and I was never given the opportunity.

The property industry is awash with rumours about Centro's sell-down and there was speculation yesterday that the Nerang River Plaza, worth more than $50 million, might also be close to changing hands.

While 100 per cent interests in some smaller centres are being offered, Centro is believed to be offering a scaled-down version of the CAWF portfolio to institutional and offsore investors.

The scaled-down portfolio comprises half a dozen assets worth more than $1 billion, being offered as half-interests subject to continuing Centro management rights.

One industry source said Centro faced a difficult choice: selling off the best assets made a portfolio sale less likely, while market conditions made a sale of lesser assets almost impossible.

The source said Centro Galleria in Perth, The Glen in Melbourne and Centro Mandurah in Western Australia were "the ones everyone wants", and had the best growth profiles.

But recent reports indicated those centres had been withdrawn from sale.

The rest of the CAWF portfolio represented second, third or fourth-tier assets, the source said.

"We're in a tough market. We're not going to do ourselves or any investors any favours by paying book value.

"It's a different story on the quality properties, but if you go and look at some of the real estate, it hasn't been that well managed," he said.

Property analysts said the price for Southport was encouraging for the sector and provided further evidence of the resilience in the global market.


Shopping Spree
Centro Australia Wholesale Fund Portfolio

Centro Galleria - Valued at $585m
[GLA: 72,484m2; Owned 50% with CER]

Centro Bankstown - Valued at $580m
[GLA: 80,999m2; Owned 50% with CMCS 28]

Centro The Glen - Valued at $413.80m
[GLA: 58,395m2; Owned 50% with CER]

Centro Colonnades - Valued at $370m
[GLA: 64,557m2; Owned 50% with CER]

Centro Roselands - Valued at $350m
[GLA: 61,679m2; Owned 50% with CMCS 21]

Centro Toombul - Valued at $270m
[GLA: 48,468m2; Owned 50% with CER]

Centro Mandurah - Valued at $233.60m
[GLA: 39,564m2; Owned 50% with CER]

Centro Karingal - Valued at $214m
[GLA: 41,335m2; Owned 50% with CER]

Centro Warriewood - Valued at $150m
[GLA: 22,155m2; Owned 50% with CER]

Centro Arndale - Valued at $151,60m
[GLA: 40,186m2; Owned 50% with CMCS 33]

Centro Cranbourne - Valued at $136.20m
[GLA: 33,872m2; Owned 50% with CER]

Centro Warwick - Valued at $136m
[GLA: 30,202m2; Owned 50% with CER]

Centro Mildura - Valued at $110.70m
[GLA: 19,695m2; Owned 50% with CER]

Centro Tweed - Valued at $110.80m
[GLA: 18,653m2; Owned 50% with CER]

Centro Box Hill South - Valued at $107.40m
[GLA: 23,753m2; Owned 50% with CER]

Centro Taigum - Valued at $90.80m
[GLA: 22,122m2; Owned 50% with CER]

Centro Box Hill North (Whitehorse) - Valued at $78.80m
[GLA: 14,202m2; Owned 50% with CER]

Centro Lavington - Valued at $76.60m
[GLA: 19,155m2; Owned 50% with CER]

Centro Southport - Valued at $75m
[GLA: 19,299m2; Owned 50% with CER]

Centro Karratha - Valued at $72.20m
[GLA: 23,601m2; Owned 50% with CMCS 25]

Centro Goulburn - Valued at $70m
[GLA: 13,917m2; Owned 50% with CER]

Centro Springwood - Valued at $63m
[GLA: 15,490m2; Owned 50% with CER]

Centro Mornington - Valued at $62.58m
[GLA: 11,669m2; Owned 50% with CER]

Centro Whitsunday - Valued at $60.60m
[GLA: 21,723m2; Owned 50% with CER]

Centro Halls Head - Valued at $29.20m
[GLA: 6,037m2; Owned 50% with CER]

Note: The above does not include Centro Tuggeranong, Victoria Gardens or Hervey Bay which are held in joint ventures.

[Source: Centro]


Ends. (Phew; just as well it's first thing in the morning crew, otherwise this might have taken me hours to type out - lol)

Cheers, Pie :-)