Hi swap,I think this is what you are referring to??? So - in...

Hi swap,

I think this is what you are referring to??? So - in other words - the ability to tap the market and manage that Fund, apart from the obvious tangibles & intangibles!

KGB Interview Date: 10th May, 2008

RG: On the management contract business, how difficult would it be to sell off equity in that business and actually therefore pay a tangible value.

GR: Let me just define what we call here the services business because this actually was a new concept for me. Not a new concept, new phraseology coming out of the States. The services business for Centro has basically four income streams. The first one is the funds management business, which is really an income flow and therefore value is based upon the ability to access capital and create products from retail real estate from that capital. So that’s the funds management piece. Then the last three – management, leasing and development – are income streams based upon your ability to manage lease and develop real estate assets, in this case retail in two countries.

So there are very different disciplines, very different functions, very different talents. All very valuable. It’s all called the services business. Four different pieces.

Now to get to the question, could you monetise those? I’d say you could. You could have someone who is interested in the funds management piece – the access to capital and product creation. And then there could be someone interested in the property management piece – the management, leasing and development. And then there could be someone who was interested in the entire spectrum. If you control all the funds management and property management, it’s easier to control the income flows, which is really the basis for Centro. If you have the funds management business and control access to capital and products, you have the better means of controlling the contracts back at the management, leasing and development level.

The probability therefore is that most parties that have an interest would probably have an interest in all four streams. So that there can be a level of control and durability and probability to those streams long-term, and that would allow us to have the highest price. Those considerations have been made at the company level and at some point could be entertained as part of the capitalisation of the company or recapitalisation of the company.

RG: In book value terms, the management business is basically a bonus, isn’t it?

GR: That’s exactly right. It’s over and above. Now, in our balance sheet we have extracted the management business from the $1.30 but we also have an intangible number. The intangible number is goodwill and it’s about $1.7 billion as of December.

Link to full interview: Please Click Here!

Cheers, Pie :)