super funds size up centros offerings

http://business.smh.com.au/super-funds-size-up-centros-offerings/20080129-1ovw.html


Super funds size up Centro's offerings

THE troubled Centro Properties Group opened its data room late yesterday, with several of the larger unlisted property investors said to have lodged initial expressions of interest at prices considered high for the market climate.

The data room, which is a confidential website, allows potential buyers to register a price. If accepted, they are then given access to company details by Centro's advisers.

Centro is selling its two unlisted funds, Centro Australia Wholesale Fund, with $2.6 billion of funds under management, and Centro America Fund, which has $1.1 billion.

It was understood that the average bid price reflects a yield of about 6 per cent, implying a high price, given the quality of some of the portfolio.

Fund managers said yesterday that the high asking price would limit the potential buyers to just the unlisted and direct property funds such as the Industry Superannuation Property Trust, Colonial First State, AMP Capital Investors and the Macquarie direct property stable.

These private vehicles have more cash available, thanks to large superannuation inflows, than the listed property trusts, which would need to go to the market to raise funds - a difficult course, analysts say, given the state of equity and debt markets.

Winston Sammut, head of Maxim Asset Management, said more information was still needed by investors.

"The Centro of old has gone and in Centro Mark 2 there is not enough information for investors to make an informed decision. Prudent investors should wait," Mr Sammut said.

A condition of the sales is said to be that Centro remains as manager of shopping centres held by the funds. Analysts said this would not appeal to the listed trusts, such as Westfield, which prefer to manage their own centres.

Centro is the country's second largest owner of shopping centres, owning and managing close to 700 centres in Australia and in 40 states in North America. In December it revealed it had debts of close to $4 billion due for payment by mid-February.

Another potential stumbling block for buyers is the joint ownership of some of the centres within the two Centro funds that are on the block.