Centro’s US asset sale fails

The troubled Australian mall owner has confirmed a $714m agreement to sell 29 of its 30 assets to a private real estate investor has collapsed. The company says the investor ‘elected to terminate the agreement’ but insisted talks were continuing.

A $714 million (€502 million) deal to acquire a majority of the real estate assets in one of Centro Properties Group’s unlisted retail funds has collapsed after a private investor pulled out of the transaction.

The cash-strapped Australian mall owner today confirmed an agreement to sell 29 of its 31 properties in the open-ended Centro America Fund (CAF), to an unnamed private real estate investment advisor had died. In a statement, the Melbourne-based company said the purchaser had “elected to terminate the agreement.” However, Centro insisted talks were still continuing but that no guarantee of a future sale could be given.

Centro first announced the bulk sale of its CAF portfolio in June. The company said it was planning to sell 29 properties in its CAF fund, totaling 5.1 million square feet and spanning 15 states in the US. The capital from the sale would be used to pay down debt, the company added in a statement at the time, with Centro chief executive officer Glenn Rufrano saying: “As we have previously advised, the sale of the CAF portfolio is a key step in providing liquidity to our balance sheet.”

Centro is a casualty of the US credit crunch after rapidly expanding its operations over the past few years. It is among the world’s largest retail landlords, owning 128 shopping centers in Australia and New Zealand and 682 in the US. At the height of the real estate boom, in April last year, Centro acquired US retail REIT New Plan Excel Realty Trust, which owned 467 properties in the US, in a $6.2 billion deal.

However in the wake of the credit crunch, Centro has struggled to refinance much of its short-term debt incurred to buy New Plan and other REITs.

In January this year, Australian shopping mall owner The Westfield Group, the largest retail property group in the world by equity market capitalization, and Toronto-based Brookfield Asset Management were among the firms billed as potential suitors for the whole of Centro. At the time Centro, said it would only consider selective asset sales.