Can Centro Keep Selling?

So Centro Properties Group found a buyer for 29 of its US centers at $714 million, according to reports. Supposedly the buyer is DRA Advisors LLC (Centro never named the purchaser), which acquired the centers at a 10% discount.

Centro, reportedly $17 billion in debt, will still have about 650 centers after this sale. But according to a GlobeSt.com article, some insiders are saying that the Melbourne, Australia-based firm will have trouble selling its remaining assets to domestic REITs.

We have heard that the Centro portfolio, the majority of which was acquired from New Plan Excel Realty Trust last year for just over $6 billion, isn’t the most attractive group of centers out there. From what we’ve been told, they aren’t the highest-quality collection of assets, which make them a tough sell in a climate where potential buyers aren’t shopping for value-added deals…or any deals period, for that matter.

Is what we’ve heard wrong? Are there more buyers out there for the Centro portfolio? Or is this thing going to remain on the market for a looooong time?

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6 Responses to “Can Centro Keep Selling?”


  1. 1 Dealmaker July 17, 2008 at 9:06 am

    As the poster child of the commercial property credit crunch…Centro has few choices now and there are enough cash rich private funds out there to cherry pick them to death over the next 12 months or so…certain death in this climate!!

  2. 2 Nancy H July 17, 2008 at 11:43 am

    From everything I see and hear, investors are still out there buying, but they are being very cautious about what they buy. Purchases are being made only when centers have strong, proven track records, are 85% or more leased with long-term lease committments remaining, and the surrounding demographics support continued success. If Centro isn’t in that boat…they’re doomed.

  3. 3 TeenyTiny July 17, 2008 at 3:10 pm

    They will have to keep selling to satisfy the lenders. If discounting further is required, then so be it. It’s sad, because New Plan Excel Realty, Inc. was a well run company with great people, and only 5% of debt. What happened?

  4. 4 B-Rad July 21, 2008 at 2:25 pm

    I recently reviewed a group of Centro’s for sale properties in the Southeast, none of which were of great quality. They were either smaller “strip style” centers, had high vacancies, or were in tertiary markets. I don’t know if they are holding the good stuff until desperation truly kicks in or if this is a taste of what their portfolio consists of. I’m not familar with their holdings.

  5. 5 TeenyTiny July 22, 2008 at 4:26 pm

    The waiting is the hardest part…. and when other Landlords start reducing the asset values of their properties, there will then be many interested buyers in Centro’s properties….the properties aren’t THAT bad, not cream of the crop, but solid income producers, they just need to be priced right. Timing is tough, right now, and they do need to refinance their debt, but the lenders and pension funds want them to unload properties.

  6. 6 MrPotter August 15, 2008 at 12:46 am

    Remember Frank Capra’s “It’s A Wonderful Life”, when George Bailey said:
    Can’t you understand what’s happening here? Don’t you see what’s happening? Potter isn’t selling. Potter’s buying! And why? Because we’re panicky and he’s not. That’s why. He’s picking up some bargains. Now, we can get through this thing all right. We’ve got to stick together, though. We’ve got to have faith in each other.
    Well Mr. Potter is BlackRock, and they’re buying, buying, buying. Any chance that Pete Peterson, and David Rockefeller know what they’re doing? Don’t you know.


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