article the australian...'merged centro trust'

Merged Centro trust a new force Florence Chong From: The Australian April 05, 2011 12:00AM

A NEW Centro with only Australian assets could emerge as the third-biggest listed retail property trust, competing for investors with Westfield Retail Trust and Colonial First State Retail Trust, according to investment bank JPMorgan's research team.
If its US shopping centres are sold to private equity group Blackstone, Centro Properties Group (CNP) is expected to merge what is left of its portfolio with listed sister trust Centro Retail Trust (CER).

JPMorgan says such a merger will create a new Centro owning only Australian assets worth $4.6 billion, with $1.6bn of debt and net operating income of $200-$210m a year.

It would have a market value of about $3bn and would be

the ninth-biggest Australian-listed property trust on a gross asset basis but the third-biggest pure retail trust.

JPMorgan says it will offer investors an additional choice to Westfield Retail Trust and Colonial First State Retail Trust.

In an analysts' note, JPMorgan's head of research, Rob Stanton, said Centro's management had stated that discussions were being held with its senior lenders, CER and its other Australian funds with a view to amalgamating their respective portfolios.

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Mr Stanton said rebranding the vehicle would have to be part of an "equity rebirth" in order to break with the past in the minds of investors.

Centro's Australian portfolio was 99.5 per cent occupied, with net operating income growing at 4.4 per cent a year. "While property (fund) managers may still have concerns over CER, it would be difficult for them to totally ignore it, given the size," Mr Stanton said.

Separately, diversified listed property trust Stockland purchased the Centro Hervey Bay shopping centre in Queensland from joint owners Centro Australia Wholesale Fund and Bob Ell's Leda Holdings. On a 12ha site, it was purchased on a 7.5 per cent yield for an undisclosed price.