SYDNEY — Centro Properties Group, an Australian shopping centre operator struggling through the global credit crunch, said Tuesday it was selling more than two dozen properties in the United States for around 10 per cent less than their former book value.
Centro said it would sell 29 of 31 properties owned by Centro America Fund, a wholesale fund managed by the group, for $714-million (U.S.) to an undisclosed private real estate investment adviser. The sale would be used to pay off debts, it said.
Centro, Australia's second-largest shopping mall owner after Westfield Group, with more than $8.5-billion (Australian) of syndicated funds under management, has been struggling to refinance debt. It has until Dec. 15 to repay $2.3-billion to Australian creditors and $450-million to U.S. private placement noteholders.
Centro shares rose almost 11 per cent on the news of the sale to 25.5 cents.
But some analysts warned the company was not out of trouble yet.
“This is a step in the right direction ... but is a bit too early to say if investors have changed their view or if it is a beginning of a recovery for Centro,” said ABN Amro analyst Bill Bishop. “They are still up to their neck in debt.”
The sale agreement applies to properties in 15 U.S. states. It excludes Centro's partial share of Independence Mall in North Carolina and Elk Park Center in Minnesota.
Centro will provide management and leasing services for the 29 assets for a minimum of one year in exchange for market fees.
The agreement has been approved by Centro's investors and is subject to certain closing conditions, including a due diligence period and lender consent. Settlement of the deal is due in September or October.
