New York investment firm NRDC Equity Partners LLC has joined with Australian real-estate investor Lend Lease Corp. to make a preliminary bid for Centro Properties Group, the debt-laden owner of hundreds of shopping centers in the U.S. and Australia, people familiar with the matter said.
Centro, based in Melbourne, earlier this week disclosed it had received "expressions of interest" from several potential buyers and, in turn, intends to start a process to solicit and evaluate bids. Centro owns 597 shopping centers in the U.S.?mostly grocery-anchored strip centers?and 129 in Australia and New Zealand.
Spurring Centro's move toward a sale was the recent offer from the NRDC group, these people say. NRDC, based in Purchase, N.Y., has studied Centro's U.S. assets for nearly a year in preparation for a bid. It recruited into its consortium Lend Lease, which covets Centro's Australian properties, and several other backers, they say.
A Centro representative declined to comment on Friday.
Centro, which amassed its $17 billion debt as it rapidly expanded in past years, was among the first big commercial landlords to run into financial difficulty in late 2007 when it couldn't refinance its debts as they came due. Since then the company has been working out deals with lenders to extend debt maturities. But Centro faces a mountain of debt coming due at the end of 2011 and lenders' patience is running thin.
That's why Centro is looking to pull off a sale. Details of the NRDC-Lend Lease offer remain unclear. One source familiar with the talks said it is a formal offer totaling Australian $13 billion (US$13.2 billion). Another said it is simply "preliminary interest." Centro has roughly $17 billion of debt. Its stock and that of its sister company, Centro Retail Trust, trade for pennies a share on the Australian Securities Exchange.
NRDC was founded in 2006 by Robert C. Baker and Richard A. Baker of National Realty & Development Corp., among others. It has since completed five major transactions valued at roughly $5 billion, including investments in retailers Hudson's Bay Co., Lord & Taylor and Linens 'N Things. Hudson's Bay owns and manages about 55 million square feet of retail properties in North America.
Any buyer of Centro still would need to untangle the company's rat's nest of ownership obligations and cross collateralizations that were engineered by ousted CEO Andrew Scott.
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