move to oust centro

This isnt looking too good from what I have gathered...

.
Ben Butler

February 26, 2008 12:00am

PROPERTY group Pelorus has made an audacious bid to usurp control of $1 billion in real estate controlled by stricken shopping centre group Centro.

Pelorus, which manages about $500 million of investors' funds, plans to depose Centro as manager of between nine and 11 of its MCS property syndicates at special meetings of unitholders.

Chief executive Stuart Brown would not be drawn on exact figures but said the amount Pelorus would have to pay for control was "not substantial".

He said Pelorus had already signed up the 5 per cent of unitholders required to call a meeting of investors in MCS 16, which owns a $36 million shopping centre at Toormina in NSW, and was checking whether it had the numbers to call meetings of another eight to 10 MCS funds.

The company went into a trading halt yesterday after Centro sent a letter to unitholders warning against the move.

In the letter, Centro cast doubt on Pelorus's effectiveness as a fund manager and questioned the fees it would charge.

"Them sending that letter to unitholders meant we had to move quickly - otherwise we would have announced tomorrow," Mr Brown said.

He said the syndicates would thrive if freed from Centro's control.

"These are stand-alone investments in an individual property," he said.

"It appears they are getting caught up unnecessarily in the corporate problems of Centro."

Mr Brown said Pelorus was acting on behalf of New Zealand financial advisers Money Managers, who had put their clients into the MCS funds.

"Their advisers have been unhappy with Centro for quite a while."

And he defended Pelorus's proposal to pay a trailing commission to Money Managers, saying Pelorus would cut overall management fees by 10 per cent.

"That fee is being paid by us out of the reduced fee we would receive," Mr Brown said.

He said Pelorus would also retroactively remove a fee of 2 per cent of net assets, payable to Centro if it is removed as manager.

Asked if he expected Centro to fight the proposal, he said: "I'm sure they will, but in doing so they need to take into account the interests of unitholders."

Centro spokesman Jim Kelly declined to comment.