SYDNEY, July 25 (Reuters) - Centro Properties Group (CNP.AX), a victim of the subprime crisis, has had strong interest from potential buyers for four Australian shopping centres worth over A$1 billion ($960 million), the firm involved in the sale said on Friday.
Centro, which owns about 700 U.S. malls, has been under pressure to sell assets to help pay down debt, after receiving several extensions on the repayment of A$2.8 billion in debt.
The sale of the Australian properties, together with U.S. mall sales announced earlier this month, will put the firm well on its way towards paying down a debt load due on Dec. 15.
'There has been very strong institutional interest in the portfolio and the options are currently being assessed by Centro,' Simon Rooney, head of retail investments for Australia at property firm Jones Lang LaSalle, told Reuters.
'A decision is expected next week.'
Rooney declined to say whether the interest came from domestic or international institutions. Expressions of interest closed two weeks ago.
The four Australian centres include Bankstown in western Sydney and the Galleria in the western city of Perth. The four have a total book value of A$1.157 billion.
They are part of the Centro Australia Wholesale Fund, which has 28 properties. The company originally wanted to sell the fund as a whole, but has decided to sell some assets separately.
A spokesman for Centro said the asset sale process was continuing and declined to say when any announcement on the Australian portfolio might be made.
Centro borrowed heavily last year to finance a rapid U.S. expansion, but was caught out when it was unable to refinance debt last December due to the global credit crisis triggered by the subprime mortage meltdown in the United States.
Analysts said if the Australian assets sold for about A$1 billion, about half the proceeds would likely be available to pay down group debt, after the payment of debt related to the properties.
Centro plans to still provide management services for the four shopping centres, preserving a valuable revenue stream.
As part of its debt extension agreement, Centro needs to satisfy its bankers by Sept. 30 that it is making progress in implementing its strategic plan, including asset sales and a plan for restructuring.
Centro shares jumped 19 percent on June 26 when Australian newspapers first reported the firm had put the Australian shopping centres up for sale.
Its shares rose 2 percent at A$0.26 at 0421 GMT, in a broader market down 3.6 percent.
Earlier this month, Centro sold 29 U.S. malls for $714 million, a discount of about 10 percent to book value. Analysts said that was a solid result given conditions in the U.S. market. ($1=A$1.04) (Reporting by Victoria Thieberger; Editing by James Thornhill) zr COPYRIGHT Copyright Thomson Financial News Limited 2008. All rights reserved. The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.
Centro, which owns about 700 U.S. malls, has been under pressure to sell assets to help pay down debt, after receiving several extensions on the repayment of A$2.8 billion in debt.
The sale of the Australian properties, together with U.S. mall sales announced earlier this month, will put the firm well on its way towards paying down a debt load due on Dec. 15.
'There has been very strong institutional interest in the portfolio and the options are currently being assessed by Centro,' Simon Rooney, head of retail investments for Australia at property firm Jones Lang LaSalle, told Reuters.
'A decision is expected next week.'
Rooney declined to say whether the interest came from domestic or international institutions. Expressions of interest closed two weeks ago.
The four Australian centres include Bankstown in western Sydney and the Galleria in the western city of Perth. The four have a total book value of A$1.157 billion.
They are part of the Centro Australia Wholesale Fund, which has 28 properties. The company originally wanted to sell the fund as a whole, but has decided to sell some assets separately.
A spokesman for Centro said the asset sale process was continuing and declined to say when any announcement on the Australian portfolio might be made.
Centro borrowed heavily last year to finance a rapid U.S. expansion, but was caught out when it was unable to refinance debt last December due to the global credit crisis triggered by the subprime mortage meltdown in the United States.
Analysts said if the Australian assets sold for about A$1 billion, about half the proceeds would likely be available to pay down group debt, after the payment of debt related to the properties.
Centro plans to still provide management services for the four shopping centres, preserving a valuable revenue stream.
As part of its debt extension agreement, Centro needs to satisfy its bankers by Sept. 30 that it is making progress in implementing its strategic plan, including asset sales and a plan for restructuring.
Centro shares jumped 19 percent on June 26 when Australian newspapers first reported the firm had put the Australian shopping centres up for sale.
Its shares rose 2 percent at A$0.26 at 0421 GMT, in a broader market down 3.6 percent.
Earlier this month, Centro sold 29 U.S. malls for $714 million, a discount of about 10 percent to book value. Analysts said that was a solid result given conditions in the U.S. market. ($1=A$1.04) (Reporting by Victoria Thieberger; Editing by James Thornhill) zr COPYRIGHT Copyright Thomson Financial News Limited 2008. All rights reserved. The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.
© 2008 AFX News
