CHICAGO-Melbourne, Australia-based Centro Properties Group is “very close” to solving a massive debt crisis, which could involve a split and/or an IPO, CEO Robert Tsenin told a group of insurance executives here during a private conference Wednesday evening. He was the keynote speaker at the annual real estate conference for New York City-based Marsh Inc., held at Chicago’s InterContinental Hotel.
The troubles at Centro, an Australian Real Estate Investment Trust, are well known; it was one of the first global real estate firms to claim overleveraging for its $27 billion in real estate assets, about 712 shopping centers in the United States and Australia. Tsenin, a former Goldman Sachs director, was brought in early this year to untangle a complex, multi-tiered management and debt structure, which had thrived during the heady mid-decade years but crashed when financing dried up in 2007.
The trust has all it needs to succeed, Tsenin said at the conference. The 112 Australian properties are leased at almost 100% with a net income growth of almost 4% in the past 12 months. Even in the United States, where net income growth is flat, the trust’s 600 properties are leased at about 88%, not a bad showing when researchers claim an average national retail vacancy rate of about 11%.
The hold-ups include a complex corporate structure, and the possible need to split the US-owned properties into its own separate entity, Tsenin said. In a private interview after his talk, he tells GlobeSt.com he can’t say yet what the best solution is (which could include a possible initial public offering for a trust for the US-owned centers), but he does admit there is a clear separation. “We don’t see any synergies between the US centers and the Australian properties, they don’t even share any of the same tenants,” Tsenin tells GlobeSt.com. “We will have a decision very soon. I expect we will be implementing the solution through 2011.”
Centro has entered into deals with creditors to hold off billions of dollars in debt payments until the end of 2011. These deals allow the trust to negotiate with various investors and shareholders without having to have a fire-sale of properties, Tsenin tells GlobeSt.com. One main lesson from the experience is that “there’s virtue in simplicity,” he says.
Continue Reading for Free
Register and gain access to:
- 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
© 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.
