Tuesday, December 21, 2010

GIC bids for malls under Aussie group

Straits Times: Tue, Dec 21
THE Government of Singapore Investment Corporation (GIC) has reportedly put in an offer to buy shopping centres owned by Australia's debt-ridden Centro Properties Group.

GIC joined bidders from around the world in vying for the A$13.5 billion (S$17.6 billion) in assets, which are located in Australia and the United States, Australia's Sydney Morning Herald reported yesterday without citing its sources.

A GIC spokesman declined to comment when contacted yesterday.

The newspaper said indicative bids were lodged last Friday. The US assets drew interest primarily from private investors and hedge funds, which would be happy to take on some of Centro's debt, it said.

All the major retail landlords in Australia also threw their hats in the ring for the properties, said the newspaper. These included retail giant Westfield Group, Lend Lease's Australian Prime Property Fund, CFS Retail Property Trust and Queensland Investment Corp.

The Sydney Morning Herald also reported talk that Israel-based Gazit- Globe, a real estate investment company, has shown interest.

Centro's advisers on the deal - JP Morgan, UBS and Moelis & Company - will evaluate the offers and decide whether it will be best to sell the properties as single assets or in groups, the newspaper said.

For the purposes of the deal, the properties had been divided into eight separate portfolios, based on size, location and ownership. Some of the malls are jointly owned with third parties or with the associated Centro Retail Trust.

A Centro spokesman said the company will probably make an announcement on the closing of the bids early this week, but analysts said the shortlisting process could last well into next year, according to a Reuters report.

The report also said the rare opportunity to pick up distressed assets in Australia's relatively healthy economy 'whetted the appetite of investors'.

Domestic players own most of the retail properties in Australia and the values of these assets held steady during the global financial crisis, the report added.

'This is the only owner of retail that is distressed...Even despite the distressed nature of Centro, we are probably unlikely to see much softening in the pricing,' Reuters quoted Mr Adam Learmonth, director for property investment advisory firm Anvil Capital, as saying.

Centro is a real estate investment trust that invests in shopping centres through its managed funds, according to its website. It is the second-largest owner and manager of retail properties in Australia and the third-largest owner and manager of shopping malls in the US.

The group has A$18.6 billion worth of investment properties and A$18.4 billion of debt, according to its latest annual report. It recorded an underlying profit of A$174 million for the year to June 30 and a net loss of A$653 million for the period.

About three years ago, Centro revealed that it did not have enough money to pay A$4 billion in debt that was due in December 2007, causing its share price to plummet by as much as 90 per cent. Centro's shares rose 7 per cent on the Australian Stock Exchange yesterday.


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