MELBOURNE'S retail dynasty, the Myer family, is understood to have joined forces with Melbourne lawyer and investor Julius Colman and Hastings Funds Management founder Mike Fitzpatrick to bid for debt-laden Centro Properties' fee generating "services business".
All three were cornerstone investors in Mr Colman's property syndication business, MCS, which was sold to Centro five years ago for $193.5 million.
A spokesman for the Myer Family Company declined to comment yesterday.
The Myer Family Co is chaired by Rupert Myer, grandson of the department store founder Sidney Myer, who in 1902 took a lease on a small store in Bendigo selling curtains and manchester.
In 2006, the Myer family bought back into its former department store chain, taking an 8 per cent interest when private equity group Newbridge Capital bought the chain from Coles for $1.4 billion.
The family also has a stake in the redevelopment of the flagship Myer Melbourne store in the CBD, which is expected to have a $1.2 billion value when completed in 2009.
Yesterday The Australian reported that Mr Colman and Mr Fitzpatick had made a series of offers over the past four months for the services business, which carried a boom-time valuation a year ago of $5.5 billion.
Mr Colman, who flew to Las Vegas on Friday to play in the World Series Poker championships, declined to comment last week.
Melbourne sources said the group, which includes other investors, had put in offers over the past four months, though none looked like generating a deal at present.
The services business generates funds and property management fees from Centro's rash of property acquisitions in Australia and the US.
Credit Suisse listed property analyst Andrew Rosivach said on Friday the services business could be worth "roughly in the range of $500 million to $1 billion, but nowhere near what KPMG valued it at". In May last year, accountant KPMG put a $5.5 billion valuation on the services business, up from $2.5 billion in June 2006.
In its June 2007 results presentation, Centro said the services business would deliver cash flow (EBITDA) of $266 million in fiscal 2008.
Centro, which controlled $26.6 billion of shopping centres (at last year's valuations) had been aggressively acquiring assets culminating in its a top-of-the-market $US3.7 billion ($3.9 billion) acquisition of US shopping centre owner New Plan Excel in February last year.
The spending spree rapidly boosted the management fees earned from both the properties and entities that managed them, such as the syndicate business Mr Colman and MCS's other 158 shareholders sold to Centro for $193.5 million in 2003.
Mr Colman, who started MCS with a single property syndicate in the early 1990s, is a director of aged care and property trust group Japara, which, according to its website, owns and operates 32 facilities in Victoria, South Australia, NSW and Tasmania.
One of Mr Colman's partners in the bid, Mike Fitzpatrick, initially sold a stake in his infrastructure and property funds group, Hastings Funds Management, to Westpac in 2003 with Westpac buying full control in 2006.
Hastings had held an 18 per cent interest in MCS when it was bought by Centro.
Centro has faced collapse since December, when it was unable to refinance $3.9 billion worth of maturing debt in the risk-averse credit markets, sending its share price into freefall.
From a high of $10 last July, its shares closed yesterday at 30.5c, down a further 0.015c.
It is surviving on the goodwill of its bankers, who earlier this month granted a debt extension until December 15.
The MCS deal delivered Centro 19 retail property syndicate assets valued at $1.5 billion, and 100 MCS employees forming a launching pad for what would grow into Australia's second biggest shopping centre owner and a dominant US property owner.
CNP Price at posting:
0.0¢ Sentiment: LT Buy Disclosure: Held
