Sternlicht Jumps into Billion-Dollar Bidding War for 600 Shopping Centers
Posted by Alex Finkelstein 02/23/11 8:00 AM EST
.ArticleComments (0) Centro Properties Group Shopping Center Nobody ever accused entrepreneur Barry Sternlicht of shying away from a good old-fashioned bidding war. And this time around he hasn't surprised his legion of followers, either.
Sternlicht's Starwood Capital Group has made a late entrance, bidding for the 600 U.S. shopping centers owned by Centro Properties Group Inc. of Melbourne, Australia.
The bidding has narrowed to three large suitors, with formal bids due Feb. 24, reports The Wall Street Journal.
Sternlicht is partnering with a Morgan Stanley-back real estate fund in the bidding.
The other two major bidders are New York City-based Blackstone Group LP, which has bid only for Centro's U.S. assets, and a group led by NRDC Equity Partners and Lend Lease Corp., which has bid for the whole of Centro, according to the WSJ.
Barry Sternlicht The NRDC-Lend Lease bid is reported to top $16 billion. The bid by Sternlicht and his partners hasn't been disclosed.
A fourth bidder, a partnership of U.S. shopping-center owner Equity One Inc. and Apollo Global Management, has dropped out. However, Equity One continues to try to join one of the remaining bids.
The exact value of the U.S. bids couldn't be determined, the WSJ reports. However, they are speculated to be near Centro's $8 billion of debt on its U.S. properties and the $9.5 billion value it most recently assigned to the U.S. portfolio.
Centro's process for collecting bids for its 112 shopping centers in Australia and New Zealand lags behind that in the U.S.
Among the remaining bidders is a partnership of international shopping-center investor Gazit-Globe Ltd. and Colonial First State Global Asset Management, according to the WSJ.
Centro's 600 U.S. centers are mostly neighborhood strip centers anchored by grocers or big-box retailers. Its 112 centers Down Under are mostly larger shopping malls. Sunshine Shopping Center in Medford, NY is among Centro's U.S. properties.
An acquisition spree during the boom made Centro one of the world's largest retail landlords but also left it saddled with $18.4 billion of debt. The company values its global portfolio at about $18.6 billion.
The WSJ reports Centro was among the first big commercial property owners to run aground during the financial crisis when it failed in late 2007 to refinance billions of debt coming due.
The company, on its third chief executive since then, has repeatedly reached new pacts with its lenders to postpone its payment dates for that debt.
Now, that debt has swelled to $5.5 billion coming due in December of this year, Centro is racing to resolve its money problem by the due date, according to the WSJ.
Even so, the complicated saga of Centro has taken yet another twist in recent months.
Most of the dozen banks that held that $5.5 billion of debt separately sold their slices to hedge funds, such as Centerbridge Partners, Davidson Kempner Capital Management, Paulson & Co. and Appaloosa Management.
"It remains unclear what route the hedge funds will take with any bid that Centro decides it favors, leaving some suitors frustrated that their efforts might be for naught if the hedge funds opt to extend the debt yet again, according to people familiar with the talks," the WSJ reports.
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