The company owns 674 shopping centers in the US and 128 in Australia and New Zealand. Its appetite for US malls began in late 2004 with the acquisition of Philadelphia-based Kramont Realty Trust.
In October 2006, it paid $3.2 billion for Boston-based Heritage Property Investment Trust. With the New Plan Excel buy, it owns about 90 million sf of US retail space, primarily strip malls spread across 40 states.
In acquiring New Plan, the company's financing strategy was to refinance short-term debt with commercial mortgage-backed securities. Since then, however, issues of CMBS have tanked, cutting off a major source of financing.
On Dec. 21, Centro issued a statement saying it had obtained an interim extension of approximately $2.3 billion in funding, which would come due on Feb. 15, allowing time for a "a strategic review of the options available." And, the day before Christmas, it announced that its board had hired three firms as advisors: Lazard Carnegie Wylie, KPMG and Freehills.
In a statement on Jan. 2, Brian Healey, chairman, said, "In recent days, we have received a significant number of unsolicited expressions of interest from a range of strategic and financial investors in potential investments in the group and certain of our assets. Therefore, as part of the strategic review process, Centro is now seeking expressions of interest for key alternatives available to it."
This allows interested parties to "substantiate their interest," Healey says, and "allows the effective evaluation. . . on an equal basis." The options under consideration are acquisition of Centro, recapitalization and acquisition of the company's interests in Australia and the US.
While Centro gave no clue to what companies or entities have expressed interest, speculation abounds. Among those mentioned in published reports are Westfield Group, which is Centro's Australia-based rival; Toronto-based Brookfield Asset Management Inc.; Chicago-based Citadel Investment Group, and New York's Blackstone Group LP.
Centro's malls are considered good performing, well anchored assets. The main anchors in the US are TJ Maxx and Kroger. According to Centro's third quarter report, sales at its centers rose 6% for the quarter ended Sept. 30, 2007. However, the timing for the sale of retail assets is far from ideal, considering the current credit crunch, lackluster holiday retail sales and continuing concerns over a potential recession.
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
