centro warns of year to thaw frozen funds

Finance
Centro warns of year to thaw frozen funds
MAURICE DUNLEVY
359 words
11 May 2010
The Australian
AUSTLN
1 - All-round Country
23
English
Copyright 2010 News Ltd. All Rights Reserved

CENTRO has warned about 4000 private investors in two of its largest unlisted property funds that it could be more than a year before they can access their frozen funds.

In an investor update yesterday, Centro said its $1.3 billion Direct Property Fund and $358 million Direct Property Fund International were not expected to reopen in the next six to 12 months.

Both funds, each with about 2000 investors, have been suspended since December 2007, when the property group revealed it was unable to rollover almost $4bn in debt.

Direct Property Fund and Director Property Fund International investors have been told liquidity within the funds' investments remains very low.

Centro sees few opportunities in the near future to realise any significant portion of DPF or DPFI's investment portfolio because of the nature of investments in illiquid property securities funds.

While some liquidity could be generated for DPF from proceeds from Australian shopping centre sales, and for DPFI from its 40 per cent investment in the CentroAmerica Fund, the longer-term solution could be Centro's restructuring plans.

In December, Centro Properties Group appointed JPMorgan Australia and Moelis to undertake a restructure assessment.

At the same time, Centro Retail Trust appointed investment bank UBS to undertake an assessment of a restructure.

In yesterday's update, Centro said the restructure plan, expected to be completed midway through this year, could offer DPF and DPFI investors an opportunity to access some or all of their capital.

``Whether the restructure will meet this objective cannot be determined at this stage, but will become more apparent over the coming months,'' investors were told.

DPF announced a March-quarter distribution payable today of 0.8c a unit compared to 0.85c for the December quarter.

Despite the value of DPF assets increasing 1.1 per cent from $1.28bn to $1.3bn in the March quarter, the stronger Australian dollar hurt its $96.7m investment in DPFI. On Friday, DPFI paid a March distribution of 0.26c a unit, compared with 0.30c in the December quarter.

AUS-20100511-1-023-359767

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