Centro Is Optimistic On $3.4 Billion Reprieve Push to Extend Loans Is Aided by Emergence Of Potential Bidders By KRIS HUDSON February 13, 2008
Centro Properties Group, one of the largest landlords in the world, says it is close to securing an extension from its lenders on $3.4 billion of short-term debt due Friday.
The Australia-based retail-property owner, the fifth largest in the U.S. by square footage and the second largest in Australia after Westfield Group, is "optimistic" about gaining the reprieve, though the length of an extension remains undecided, a Centro spokesman said.
Providing momentum for Centro's push for the extension is the emergence of several potential bidders for the entire company, according to people familiar with the situation.
Centro in January announced it would accept bids for part or all of the company to raise capital to be used in paying down its debt. The company has declined to identify the bidders it has attracted. Among the U.S. companies previously identified by people familiar with the matter were Blackstone Group and General Electric Co.'s GE Real Estate. A Blackstone representative declined to comment yesterday, and a GE representative didn't return messages seeking comment.
Among the Australian bidders mentioned were Mirvac Group and Macquarie Group. Neither could be reached to comment.
Centro's liquidity problems came to a head in December, when it announced it couldn't attract financing -- due to the U.S. credit crunch -- to pay off short-term debt it incurred in its $3.7 billion purchase of New Plan Excel Realty Trust, a New York real-estate investment trust. Investors reacted by pushing down Centro's stock by 90% to below $1, a decline from which it hasn't recovered. At the time, Centro's banks granted the company a two-month extension, and Centro embarked on an effort to sell assets.
Last month, Centro's board requested the resignation of Andrew Scott, chief executive for 10 years, and replaced him with former New Plan Excel CEO Glenn Rufrano.
Centro, a company with roughly $500 million in assets in 1997, grew into one of the world's largest retail landlords, with $24.1 billion in assets by last year. Key to its growth was its system of investment funds into which it would recruit outside investors to own the majority share of properties it acquired. Centro's strategy backfired last year when it bought New Plan Excel and failed to draw enough investors to help it pay the short-term debt it took on.
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