Finance Institutional Investment
July 15, 2008
By: Dees Stribling, Contributing Correspondent
Centro Properties, in an effort to deal with the heavy burden of debt that tanked the company’s stock price last year and put the company under new management, is selling 29 of the 31 retail properties held by its Centro America Fund (CAF) in the United States for about $714 million.
All together, the properties total about 5.1 million square feet in 15 states. Centro has not identified the buyer, which is reported to be a U.S.-based pension fund. The deal excludes CAF’s partial share of Independence Mall in Wilmington, N.C., and Elk Park Center in Elk River, Minn., which are still for sale. Centro will provide management and leasing services for the 29 assets, collecting fee income, for at least a year after the sale closes, which will probably be later this year.
The sale price represents a 10 percent discount to previous book value of the properties. Centro, which is based in Australia, told investors in a statement to the Australian Securities Exchange that “the sale of the CAF portfolio is a key step in providing liquidity to our balance sheet,” but it isn’t nearly enough to counter all of the company’s debt woes.
As reported by CPN, the company’s problems surfaced last year when the debt it took on to finance massive retail property acquisitions in the United States could not be refinanced in the CMBS market, as the company had planned. Current, Centro is on the hook for about $4.2 billion, about half of which has to be repaid to U.S. and Australian lenders before the end of this year.
Also on the market are four major Australian shopping centers owned by Centro, which could possibly fetch $1.15 billion. Centro says it wants to retain management of the Australian assets as a condition of their sale.
By: Dees Stribling, Contributing Correspondent
Centro Properties, in an effort to deal with the heavy burden of debt that tanked the company’s stock price last year and put the company under new management, is selling 29 of the 31 retail properties held by its Centro America Fund (CAF) in the United States for about $714 million.
All together, the properties total about 5.1 million square feet in 15 states. Centro has not identified the buyer, which is reported to be a U.S.-based pension fund. The deal excludes CAF’s partial share of Independence Mall in Wilmington, N.C., and Elk Park Center in Elk River, Minn., which are still for sale. Centro will provide management and leasing services for the 29 assets, collecting fee income, for at least a year after the sale closes, which will probably be later this year.
The sale price represents a 10 percent discount to previous book value of the properties. Centro, which is based in Australia, told investors in a statement to the Australian Securities Exchange that “the sale of the CAF portfolio is a key step in providing liquidity to our balance sheet,” but it isn’t nearly enough to counter all of the company’s debt woes.
As reported by CPN, the company’s problems surfaced last year when the debt it took on to finance massive retail property acquisitions in the United States could not be refinanced in the CMBS market, as the company had planned. Current, Centro is on the hook for about $4.2 billion, about half of which has to be repaid to U.S. and Australian lenders before the end of this year.
Also on the market are four major Australian shopping centers owned by Centro, which could possibly fetch $1.15 billion. Centro says it wants to retain management of the Australian assets as a condition of their sale.
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