This article is from the Australian Property Journal archive
Australia’s burgeoning retail property group Centro is close to paying a massive $6.34 billion ($US5 billion) for New York Stock Exchange listed New Plan Excel Realty Trust.
New Plan directors have voted unanimously for shareholders in the US retail trust to accept the mostly cash Centro offer.
If the deal succeeds, Centro will buy New Plan for $42.05 per share ($US33.15).
The New Plan – Centro involves some 467 neighbourhood and community shopping centres across 38 US states with 68.3 million square feet of gross leaseable area. The US centres return income based rental income in excess of $A462 million ($US363 million).
The New Plan portfolio will be divided between CER and Centro, which intends retaining the bulk of the portfolio in Centro managed wholesale funds and Centro MCS syndicates.
According New Plan, the share offer price represents a 12.9% premium to New Plan’s closing share price on February 27, 2007 and a 12.3% premium to the average closing price over the past 30 days.
CER will retain $US1.8 billion of properties at a weighted average capitalisation rate of 6.6%. The acquired properties complement CER’s existing international property portfolio with the strong grocery retailers providing solid income growth. CER will fund its acquisition through a combination of debt and equity, to be raised through a $826 million accelerated non-renouncable entitlement offer for all CER investors as well as a $174 million institutional placement.
Centro will undertake a $250 million placement of ordinary stapled securities to sophisticated investors. Centro’s lenders look through gearing is forecast to be 49.4% at June 2007 and this will then fall to within our 35% to 45% target range through the strong inflows of equity into our managed funds.
Once the deal is concluded it will have around $23 billion worth of properties under management.
New Plan Excel Realty Trust’s chief executive Glenn J. Rufrano said the group have significantly repositioned New Plan over the past several years, recycling over $5 billion of capital and increasing the intrinsic value of our portfolio.
“We have built a best-in-class national platform and regional operating system, extensively grown our assets under management, created a leading redevelopment program and enhanced our retailer relationships. Today’s transaction recognizes the underlying value of our portfolio, in particular our operating platform, and accomplishes our ultimate objective of maximizing shareholder value,” he said.
Centro chairman Brian Healey added that the New Plan acquisition is another landmark transaction for Centro.
“The increasing appetite of Australian investors for quality retail property investments for their growing superannuation savings has led Centro to continue to seek quality and appropriate retail assets.
“These assets will grow Centro’s funds under management and significantly enhance the geographic and asset spread of Centro’s managed retail property portfolio.”
Healey commented that Centro’s experienced US and Australian management teams have inspected the New Plan properties and completed comprehensive due diligence for this investment.
“The ability to acquire another large US listed retail property REIT demonstrates the strength of Centro Watt’s fully integrated national team in enabling Centro and its managed funds to gain access to quality, retail property assets.”
Centro chief executive Andrew Scott is confident that the joint bid for New Plan will be successful and it is being made as a cash tender bid that is expected to close in four to five weeks.
“Investor support has meant that Centro has been the highest performing Australian listed property trust over the past 10 years, with investors having received an average total return of 27.0% p.a. for each of these 10 years, although the 66% return over the 12 months to 31 December 2006 is also significant.
“We are excited with the opportunity this acquisition represents to continue to add value to Centro investors,” Scott concluded.
Centro was on a trading halt yesterday closing the previous day at 9.83. CER was also on a trading halt and last traded at $1.79.5.
Australian Property Journal
