Blackstone Pays $9.4B for Centro Portfolio

February 28, 2011
By Barbra Murray, Contributing Editor

Courtesy Flickr Creative Commons user House of Sims

The Blackstone Group is about to beef up its presence in the retail market by 588 properties. The private equity firm has reportedly won its $9.4 billion bid to acquire the approximately 96.1 million square-foot shopping center portfolio of debt-laden Centro Properties Group, according to published reports. Centro is a shopping center owner and developer, and Australia’s largest manager of retail property investment syndicates.

For a few billion reasons, Centro is in the midst of a restructuring and recapitalization program. “Although we have enviable retail assets in Australia and the U.S. that have performed remarkably well through the global financial crisis, Centro also faces its headstock debt maturity of $3.1 billion in December of this year and therefore must effect a restructure prior to that maturity,” Robert Tsenin, CEO of Centro, noted on Feb. 24.

The group of assets that will soon become Blackstone’s consists of 560 community and neighborhood shopping centers totaling 91.7 million square feet, eight malls and lifestyle centers encompassing 3.9 million square feet and miscellaneous properties accounting for 515,000 square feet. As of the close of December 31, the average occupancy for the retail portfolio, which also includes land parcels, was 87.7 percent. The national retail market vacancy rate is 10.9 percent, marking the third consecutive quarter where the vacancy rate held steady, according to a fourth quarter 2010 report by commercial real estate services firm Cassidy & Turley.

Neither Blackstone nor Centro have confirmed their reported multi-billion dollar agreement.