Centro Properties Expected to Get 3 Bids for U.S. Malls Text By KRIS HUDSON And MIKE SPECTOR Australia's Centro Properties Group Inc. was expected Thursday to have received three bids of at least $9 billion each for its U.S. portfolio of 588 shopping centers, according to people familiar with the matter.
As a deadline for bids on the U.S. centers approached, a consortium of Morgan Stanley Real Estate Fund VII, Starwood Capital Group and Paulson & Co. was expected to make an offer, as was a partnership of NRDC Equity Partners LLC and AREA Property Partners, these people said. Private-equity firm Blackstone Group LP outlined a bid for the properties exceeding $9 billion several weeks ago, some of these people said.
Formal bids were due by the end of Thursday in the U.S., and the possibility remains that aspects of the offers still could be changed. Bids were expected to fall "in the range" of $9 billion to $9.4 billion, the latter being the value that Centro has assigned to the U.S. portfolio on its books, the people said.
The bidders have taken different approaches. Blackstone, which has $100 billion of assets under management, recently has pushed Centro to end its solicitation process and accept Blackstone's bid in light of Blackstone's resources to finalize the deal, they said.
The other two groups of suitors waited until the Thursday deadline, with multiple sources saying Centro and its advisers expected to receive bids from both late in the day. The Morgan Stanley-Starwood Capital group recently added Paulson, which is among several hedge funds that collectively own most of Centro's debt coming due later this year.
The NRDC-AREA group diverged from its earlier strategy, which called for teaming with Australian property investor Lend Lease Group to bid more than $16 billion for the whole of Centro. Instead, NRDC and AREA opted to bid solely for the U.S. properties without Lend Lease, these people said.
Centro Chief Executive Officer Robert Tsenin said Thursday that he couldn't estimate how long it will take Centro to select a bid. Any deal would need approval from Centro's investors and some of its lenders. Centro's directors and lenders "will be in a position to react pretty quickly to any reasonable offers," he said in an interview.
Centro, based in Melbourne, Australia, was among first major commercial landlords to run into debt problems when, in late 2007, it couldn't refinance parts of its $16 billion in debt amassed in a global acquisition spree. Since then, Centro has repeatedly asked its lenders to push back its due dates as it searches for a resolution.
Faced with $5.5 billion of debt coming due this December, Centro late last year began soliciting buyout and recapitalization offers to finally resolve its fate. Centro initially put on the block both its U.S. portfolio and its 112-mall portfolio of malls in Australia and New Zealand. However, Centro's advisers recently suggested to the company that it sell the U.S. assets and attempt to recapitalize its Australian holdings as a stand-alone company, people familiar with the talks say.
Centro's U.S. properties carry roughly $8 billion of debt. Thus, bids of $9 billion or more would provide extra proceeds to pare the debt of the surviving Australian company. Centro amassed its U.S. portfolio?mostly strip centers anchored by grocery stores and big-box stores?in boom-time acquisitions of U.S. real-estate investment trusts such as New Plan Excel Realty Trust.
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