VULTURE funds could make $83 million on their Centro investment...

VULTURE funds could make $83 million on their Centro investment if the shopping centre owner gets taken over by a Lend Lease consortium.
The Australian revealed last week that property giant Lend Lease had teamed up with Singapore sovereign wealth fund GIC and a US firm -- now understood to be New York-based NRDC Equity Partners -- and made an informal approach for the Centro Properties Group and its satellite trust Centro Retail Group.

Simon Marais, managing director of opportunistic investor Orbis Australia, yesterday said his company had purchased a 13 per cent stake in Centro Retail for an average of 12c per unit after the company nearly collapsed.

Mr Marais said the net tangible asset backing of Centro Retail shares was about 40c a share.

Should the company sell all of its buildings, Mr Marais expected shareholders would get a minimum of about 40c per security because the book value of the assets had already been written down.

Start of sidebar. Skip to end of sidebar.
Related CoverageLend Lease, NRDC team for Centro bid Perth Now, 19 hours ago
Centro trust shares drop The Australian, 3 days ago
Takeover move sparks Centro asset sale Perth Now, 3 days ago
Centro chasing billions in sell-off Herald Sun, 4 days ago
Shutters come down on debt-ridden Centro The Australian, 4 days ago
.End of sidebar. Return to start of sidebar.
"I think it is a good thing," Mr Marais said about a potential takeover offer.

However, if the Centro companies are liquidated, shareholders who bought in at the peak of the market will lose billions.

Any takeover of Centro companies could also lead to class actions to recoup shareholders' losses.

Centro Properties Group shares once touched highs of more than $9, while shares in Centro Retail were more than $2 at one stage, but both are now worth less than 20c.

Shares in Centro Properties Group collapsed by 76 per cent in December 2007 after the company admitted it had been unable to refinance $3.9 billion worth of maturing debt in the risk-averse credit markets amid the global financial crisis.

In the days after the announcement, investors carved $5bn off the value of Centro's two stockmarket-listed company arms.

There were fears the group could guarantee its solvency only until February, but a refinancing by its bankers a year later gave them control of Centro's operations.

Investment banks JPMorgan, Moelis & Co and UBS are now advising on a restructure.

It is understood the Lend Lease consortium's approach for Centro prompted the company last Thursday to announce that it would "test the market" for all and any bids for the companies or their assets, including $13bn worth of Australian and US shopping centres.

Centro owns 597 shopping centres in the US -- mostly grocery-anchored strip centres -- and 129 in Australia and New Zealand. Together, they are worth $18.6bn.

Centro chief executive Robert Tsenin said last week that parties had approached Centro about its businesses and a combination of its assets in Australia and the US, but he denied that any offers had been made.

Neither Centro or NRDC would comment on the takeover speculation.

NRDC is an entrepreneurial private equity firm that invests in retail, real estate and consumer-branded businesses.

The business was founded in 2006 by Robert and Richard Baker, owners of National Realty and Development Corporation and William Mack and Lee Neibart, who are part of AREA Property Partners.

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