Woolies and K-mart to anchor Centro's new property group

Centro Retail Australia, the new property trust set to rise from the ashes of embattled Centro Property Group will own and manage a portfolio comprising 99 shopping centres, with Woolworths and K-Mart the biggest tenants.

Woolworths will have 29 tenancies among the properties comprising the trust and will take up 8.2% of the gross lettable area, while K-Mart’s 14 stores will take 7.8% of the gross lettable space.

Coles, with 24 leases, will take up 7.2% of the gross lettable area available.

If approved, the new fund will manage and own 43 shopping centres nationally worth $4.4 billion, making it the second-biggest retail landlord behind Westfield. Combined with the Centro syndicate business it will own total assets worth $7 billion.

In his presentation to shareholders in Sydney, Centro chief executive, Robert Tsenin reminded shareholders that the company would be unable to meet its senior debt obligations of $2.9 billion, which is due on December 15, and that “aggregating” the retail property portfolio under a new lender-controlled entity to be called Centro Retail Australia was the only viable solution for the embattled group.

“The alternative is likely to be external administration in which circumstances Centro security holders are expected to receive nothing,” Tsenin said when Centro annual results were released earlier in the year.

Senior lenders to Centro will own nearly three-quarters of the new entity, with shareholders of Centro’s unlisted Direct Property Fund (DPF) and the Centro Retail Group (CER) holding the remaining share of the business.

Direct property income will account for 81% of the revenue earned by Centro.

Tsenin will be interim CEO of Centro Retail Australia until he retires in mid-2012.

Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer


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