Blackstone Group, the world’s largest private-equity firm, has agreed to buy Centro Properties Group’s portfolio of U.S. shopping centers — including seven in Colorado — for $9.4 billion, two people familiar with the matter said.
The purchase of 588 malls, at the market price they were valued at on Dec. 31, may allow Centro’s Australian operations to continue as an independent company, said one of the people, who declined to be identified before an official statement is released.
Blackstone’s biggest deal since 2007 signals the firm is betting on a recovery in U.S. commercial property after the subprime crisis that derailed Melbourne-based Centro’s U.S. acquisition spree as debt costs soared.
Blackstone outbid a partnership of Morgan Stanley Real Estate Fund VII and Starwood Capita, and a partnership of NRDC Equity Partners and AREA Property Partners.
“We’re cautiously optimistic about U.S. retail sales, so this is probably a good bet on the part of Blackstone,” said Michael Wood, who helps oversee $5.1 billion at Quadrant Real Estate Advisors in Sydney. “If the price Centro is getting is close to net tangible assets, that’s a good sign.”
Miche Paterson, a spokeswoman for Centro at communications firm Kreab Gavin Anderson, didn’t respond to a voice-mail message.
Peter Rose, a Blackstone spokesman in New York, didn’t respond to an e-mail seeking comment outside business hours.
The sale, reported Monday by The Wall Street Journal, would be Blackstone’s biggest since the acquisition of Hilton Worldwide, completed in October 2007, according to data compiled by Bloomberg.
Centro posted net income of $553.4 million in the fiscal first half last year, as the value of its properties rose and the Australian dollar strengthened. Centro Retail Trust, its listed property unit, reported a $292 million profit for the period.
“This is a step in the right direction,” said Winston Sammut, managing director of Maxim Asset Management. “They were in a position where they had to sell, so to get book value is a bit of a positive. But this is only one step in the process.”
Former chief executive Andrew Scott borrowed to accumulate malls, which he spun off into 34 syndicates, three wholesale funds, two unlisted funds of funds and one listed property fund.
The strategy, aimed at raising management income and accelerating profit growth, backfired when the global financial crisis hit, causing property values to plummet and borrowing costs to soar, leaving Centro unable to refinance its ballooning debt.
Centro’s Colorado properties
Arapahoe Crossings
6400-6700 S. Parker Road, Aurora
Aurora Plaza
603-797 Peoria St., Aurora
Arvada Plaza
9611-9775 W. 58th Ave., Arvada
Superior Marketplace
600 Center Drive, Superior
Villa Monaco
2223 S. Monaco Parkway, Denver
Westland Town Center
10705 W. Colfax Ave., Lakewood
Westminster City Center
9210-9440 Sheridan Blvd., Westminster
