Centro Properties Group
Encyclopedia
Centro Properties Group, commonly known as 'Centro', is an Australian company which provides retail property ownership and management services. It is a listed company with securities traded on the Australian Securities Exchange
. The multinational company owns and operates shopping centres in Australia, United States and New Zealand. Centro shopping centres are typically branded with the name Centro in their name. Centro is the fifth-largest retail property owner/manager in the United States, the second largest in Australia, and the largest provider of retail space to Wesfarmers
and Woolworths
. With over 682 properties in the United States and 128 properties in Australia and New Zealand. Centro’s Retail Property Management Services division undertakes property management, leasing, development management and funds management activities for its managed portfolio. Centro manages both listed and unlisted funds.
In a landmark Australian legal decision, in June 2011 the Federal Court of Australia
found that eight executives and directors of Centro breached the Corporations Act by signing off on financial reports that failed to disclose
billions of dollars of short-term debt
. The legal action was commenced by the Australian Securities and Investments Commission
, who sued Andrew Scott (ex-CEO
), Brian Healey (former chairman), Paul Cooper (current chairman), Romano Nenna (ex-CFO
), former non-executive directors Peter Wilkinson, Sam Kavourakis and Peter Goldie, and Jim Hall, who remains on the board. A class action
from investors seeking A$
200 million in damages due to alleged deceptive conduct and breaches of continuous disclosure obligations has commennced in the Federal Court against Centro Properties Group, Centro Retail Group, and their auditors, PriceWaterhouseCoopers
, and relate to conduct from August 2007 to February 2008.
In September 1999, Centro acquired the management rights for Prime Retail Property Trust (PRX), and in October 2004, it merged with Prime Retail Group under a court-approved scheme with a ratio of 5 Prime securities per 1 Centro security.
Throughout the 2000s, Centro acquired numerous assets:
Centro Properties Group is a stapled security listed on the Australian Securities Exchange, specialising in the ownership, management and development of shopping centres in Australasia and the United States, as well as managing unlisted investment funds. Centro has funds under management of approximately $22.6 billion (2007).
Centro Retail Trust
Centro Retail Trust is a pure retail property ownership fund which derives 100% of its earnings from rental income from retail property investments in Australasia and the United States. Centro Retail Trust's portfolio value is approximately $8.3 billion (2007).
Centro MCS Syndicates are fixed-term unlisted funds comprising a direct investment in retail property assets in either Australia or overseas. Centro MCS is the largest property syndication in Australia with approximately $8.3 billion in funds under management.
Centro Direct Property Fund
Centro Direct Property Fund is an unlisted “fund-of-funds”. Centro Direct Property Fund invests in Centro syndicates and funds, as well as Centro and CER and other appropriate property investments. Centro Direct Property Fund has assets of over $2.0 billion.
Centro Direct Property Fund International
Centro Direct Property Fund International is an unlisted “fund-of-funds”. Centro Direct Property Fund International invests in international Centro MCS Syndicates and funds as well as Centro Retail Trust and other property investments. Centro Direct Property Fund International has assets of over $1.4 billion.
Centro Wholesale Funds
Centro Wholesale Funds is an unlisted wholesale funds for institutional and large investors. Centro currently has two wholesale funds with funds under management in excess of $3.8 billion and a close-ended Premium Fund for high net-worth investors.
At 30 June 2005, Centro owned and managed 224 properties, with total managed funds estimated at $9.1 billion. It managed property syndicates in Australia, through which investors were invited to participate in property assets managed by Centro. In 2005 it raised $175 million of equity in three new syndicates. It claimed 17,000 individual investors including the powerful building and construction superannuation fund Cbus
. The company receives fund-management income and success fees for the management of syndicates. It generally invests its own equity (between 25% and 50%) in the property-management funds it administers. Eighteen per cent of its net income was generated by fund-management activities of this kind.
and Woolworths
. Its largest properties in Australia are Centro Galleria
in Perth
, Centro Bankstown
in Sydney and Centro The Glen
in Melbourne
. Most of its other assets are regionally-based convenience shopping centres, most often anchored by major lease deals with Woolworths Limited
with which it has a strong relationship. It has over 900 staff in Australia.
Centro Properties Group in 2005 started developing "Star Zone" shopping-centre entertainment precincts. The first was opened at Centro Karingal, Frankston
in outer Melbourne. Star Zone Karingal houses a state-of-the-art Village Cinema complex (Gold Class, V-Max, Cinema Europa and traditional cinemas), a Genesis Gym, restaurants and other food outlets.
In the United States, Centro has over USD $10 billion worth of property under management. Its US operations are primarily in Philadelphia, Pennsylvania
and Los Angeles, California
. Over 500 staff are employed in acquisition, new development, marketing and leasing activities.
1.3 billion in short-term loans due to expire on 15 February 2008. It was speculated that the American-based subprime mortgage meltdown was the cause of a decline in lending and credit market
problems. While Centro also announced they would be solvent until at least February 2008, shares in the group underwent a dramatic decline. Applications and withdrawals were suspended from Centro's Direct Property Fund (DPF) and the Centro Direct Property Fund International (DPFI).
The company's difficulties were worsened by the 2008 global credit crunch
and by two shareholders' class actions claiming up to $1 billion, while the company was required to refinance loans of $4.5 billion in December 2008. In January 2009, they reached an agreement with their creditors including a three-year extension on their $3.9 billion syndicated debt facility. The terms of the three-year plan may involve some restructure and asset sales.
The largest shopping centres managed by Centro in each state/territory are:
and Wellington and two in Auckland
.
Australian Securities Exchange
The Australian Securities Exchange was created by the merger of the Australian Stock Exchange and the Sydney Futures Exchange in July 2006. It is the primary stock exchange group in Australia....
. The multinational company owns and operates shopping centres in Australia, United States and New Zealand. Centro shopping centres are typically branded with the name Centro in their name. Centro is the fifth-largest retail property owner/manager in the United States, the second largest in Australia, and the largest provider of retail space to Wesfarmers
Wesfarmers
Wesfarmers Limited is one of Australia’s largest public companies and one of Australia's largest retailers. Its headquarters are in Perth, Western Australia....
and Woolworths
Woolworths Limited
Woolworths Limited is a major Australian company with extensive retail interest throughout Australia and New Zealand. It is the:* largest retail company in Australia and New Zealand by market capitalisation and sales...
. With over 682 properties in the United States and 128 properties in Australia and New Zealand. Centro’s Retail Property Management Services division undertakes property management, leasing, development management and funds management activities for its managed portfolio. Centro manages both listed and unlisted funds.
In a landmark Australian legal decision, in June 2011 the Federal Court of Australia
Federal Court of Australia
The Federal Court of Australia is an Australian superior court of record which has jurisdiction to deal with most civil disputes governed by federal law , along with some summary criminal matters. Cases are heard at first instance by single Judges...
found that eight executives and directors of Centro breached the Corporations Act by signing off on financial reports that failed to disclose
Continuous auditing
Continuous auditing is the independent application of automated tools to provide assurance on financial, compliance, strategic and operational data within a company. Continuous auditing uses a set of tools to assure the internal control system is functioning to prevent fraud, errors and waste...
billions of dollars of short-term debt
Money market
The money market is a component of the financial markets for assets involved in short-term borrowing and lending with original maturities of one year or shorter time frames. Trading in the money markets involves Treasury bills, commercial paper, bankers' acceptances, certificates of deposit,...
. The legal action was commenced by the Australian Securities and Investments Commission
Australian Securities and Investments Commission
The Australian Securities & Investments Commission is an independent Australian government body that acts as Australia's corporate regulator...
, who sued Andrew Scott (ex-CEO
Chief executive officer
A chief executive officer , managing director , Executive Director for non-profit organizations, or chief executive is the highest-ranking corporate officer or administrator in charge of total management of an organization...
), Brian Healey (former chairman), Paul Cooper (current chairman), Romano Nenna (ex-CFO
Chief financial officer
The chief financial officer or Chief financial and operating officer is a corporate officer primarily responsible for managing the financial risks of the corporation. This officer is also responsible for financial planning and record-keeping, as well as financial reporting to higher management...
), former non-executive directors Peter Wilkinson, Sam Kavourakis and Peter Goldie, and Jim Hall, who remains on the board. A class action
Class action
In law, a class action, a class suit, or a representative action is a form of lawsuit in which a large group of people collectively bring a claim to court and/or in which a class of defendants is being sued...
from investors seeking A$
Australian dollar
The Australian dollar is the currency of the Commonwealth of Australia, including Christmas Island, Cocos Islands, and Norfolk Island, as well as the independent Pacific Island states of Kiribati, Nauru and Tuvalu...
200 million in damages due to alleged deceptive conduct and breaches of continuous disclosure obligations has commennced in the Federal Court against Centro Properties Group, Centro Retail Group, and their auditors, PriceWaterhouseCoopers
PricewaterhouseCoopers
PricewaterhouseCoopers is a global professional services firm headquartered in London, United Kingdom. It is the world's largest professional services firm measured by revenues and one of the "Big Four" accountancy firms....
, and relate to conduct from August 2007 to February 2008.
History
Centro was established on 18 February 1985 under the name Jennings Properties Limited, and shares were issued in the same year on the Australian Stock Exchange. In January 1991, Jennings Properties Limited was renamed Centro Properties Limited, with the stock being changed across in May 1991. In September 1997, Centro was restructured to become a stapled security structure named Centro Properties Group. Centro is a stapled security comprising one unit in Centro Property Trust (CPT) stapled to one share in Centro Properties Limited (CPL). CPT is the owner of Centro's interests in the properties and CPL, along with its subsidiaries, provides management services to CPT.In September 1999, Centro acquired the management rights for Prime Retail Property Trust (PRX), and in October 2004, it merged with Prime Retail Group under a court-approved scheme with a ratio of 5 Prime securities per 1 Centro security.
Throughout the 2000s, Centro acquired numerous assets:
- CT Retail Investment Trust (July 2001)
- MCS Syndication Business (July 2003)
- 14 international assets located in California (August 2003)
- Centro launched its first international syndicate, MCS 32 (November 2003)
- Kramont Realty Trust (a listed US REIT) (August 2005) – USD $1.6 billion
- Centro Retail Trust was spun off from the main fund (August 2005)
- Heritage Property Investment Trust (a listed US REIT) (July 2006) – USD $4.3 billion
- New Plan Excel Realty Trust (a listed US REIT) (February 2007) – USD $5.0 billion.
- Galileo Funds Management (May 2007)
- Centro Watt Joint Venture (May 2007)
Investment products
Centro Properties Group has two investment products listed on the Australian Securities Exchange. Centro specialises in the ownership, management and development of shopping centres in Australia, New Zealand and the US, as well as managing unlisted investment funds. It has two main categories of investment products: listed and unlisted investments.Listed investments
Centro Properties GroupCentro Properties Group is a stapled security listed on the Australian Securities Exchange, specialising in the ownership, management and development of shopping centres in Australasia and the United States, as well as managing unlisted investment funds. Centro has funds under management of approximately $22.6 billion (2007).
Centro Retail Trust
Centro Retail Trust is a pure retail property ownership fund which derives 100% of its earnings from rental income from retail property investments in Australasia and the United States. Centro Retail Trust's portfolio value is approximately $8.3 billion (2007).
Unlisted Investments
Centro MCS SyndicatesCentro MCS Syndicates are fixed-term unlisted funds comprising a direct investment in retail property assets in either Australia or overseas. Centro MCS is the largest property syndication in Australia with approximately $8.3 billion in funds under management.
Centro Direct Property Fund
Centro Direct Property Fund is an unlisted “fund-of-funds”. Centro Direct Property Fund invests in Centro syndicates and funds, as well as Centro and CER and other appropriate property investments. Centro Direct Property Fund has assets of over $2.0 billion.
Centro Direct Property Fund International
Centro Direct Property Fund International is an unlisted “fund-of-funds”. Centro Direct Property Fund International invests in international Centro MCS Syndicates and funds as well as Centro Retail Trust and other property investments. Centro Direct Property Fund International has assets of over $1.4 billion.
Centro Wholesale Funds
Centro Wholesale Funds is an unlisted wholesale funds for institutional and large investors. Centro currently has two wholesale funds with funds under management in excess of $3.8 billion and a close-ended Premium Fund for high net-worth investors.
Stock return information
Until the events of December 2007, Centro was considered one of the best-performing property groups listed on the Australian Stock Exchange.At 30 June 2005, Centro owned and managed 224 properties, with total managed funds estimated at $9.1 billion. It managed property syndicates in Australia, through which investors were invited to participate in property assets managed by Centro. In 2005 it raised $175 million of equity in three new syndicates. It claimed 17,000 individual investors including the powerful building and construction superannuation fund Cbus
Cbus
Cbus is one of Australia's largest public offer industry superannuation funds. Established in 1984 for the construction, building and allied industries, Cbus has grown rapidly in its 27 years and now provides membership to 630,000 Australians working in a wide variety of occupations and...
. The company receives fund-management income and success fees for the management of syndicates. It generally invests its own equity (between 25% and 50%) in the property-management funds it administers. Eighteen per cent of its net income was generated by fund-management activities of this kind.
Properties
Centro shopping centres are typically branded with the name Centro in their name. Centro is the fifth-largest retail property owner/manager in the United States and the second largest in Australia, and the largest provider of retail space to WesfarmersWesfarmers
Wesfarmers Limited is one of Australia’s largest public companies and one of Australia's largest retailers. Its headquarters are in Perth, Western Australia....
and Woolworths
Woolworths Limited
Woolworths Limited is a major Australian company with extensive retail interest throughout Australia and New Zealand. It is the:* largest retail company in Australia and New Zealand by market capitalisation and sales...
. Its largest properties in Australia are Centro Galleria
Centro Galleria
Centro Galleria is a super-regional shopping centre located in Morley, Western Australia, about northeast of Perth's central business district. The Galleria is the second largest retail centre in Perth...
in Perth
Perth, Western Australia
Perth is the capital and largest city of the Australian state of Western Australia and the fourth most populous city in Australia. The Perth metropolitan area has an estimated population of almost 1,700,000....
, Centro Bankstown
Centro Bankstown
Centro Bankstown, formerly known as Bankstown Square, is a major regional shopping centre situated in the central business district of the City of Bankstown. It has over 310 specialty stores including a number of major retail stores. Opened in 1966, the shopping centre has undergone several...
in Sydney and Centro The Glen
Centro The Glen
Centro The Glen is a major regional shopping centre located in Glen Waverley, Victoria, Australia. The head offices of Centro Properties Group are located in the centre....
in Melbourne
Melbourne
Melbourne is the capital and most populous city in the state of Victoria, and the second most populous city in Australia. The Melbourne City Centre is the hub of the greater metropolitan area and the Census statistical division—of which "Melbourne" is the common name. As of June 2009, the greater...
. Most of its other assets are regionally-based convenience shopping centres, most often anchored by major lease deals with Woolworths Limited
Woolworths Limited
Woolworths Limited is a major Australian company with extensive retail interest throughout Australia and New Zealand. It is the:* largest retail company in Australia and New Zealand by market capitalisation and sales...
with which it has a strong relationship. It has over 900 staff in Australia.
Centro Properties Group in 2005 started developing "Star Zone" shopping-centre entertainment precincts. The first was opened at Centro Karingal, Frankston
Frankston, Victoria
Frankston is a suburb within the Greater Melbourne metropolitan area in Victoria, Australia. It is located 40 km southeast of the state capital Melbourne at the southernmost edge of Greater Melbourne, near the beginnings of the Mornington Peninsula...
in outer Melbourne. Star Zone Karingal houses a state-of-the-art Village Cinema complex (Gold Class, V-Max, Cinema Europa and traditional cinemas), a Genesis Gym, restaurants and other food outlets.
In the United States, Centro has over USD $10 billion worth of property under management. Its US operations are primarily in Philadelphia, Pennsylvania
Philadelphia, Pennsylvania
Philadelphia is the largest city in the Commonwealth of Pennsylvania and the county seat of Philadelphia County, with which it is coterminous. The city is located in the Northeastern United States along the Delaware and Schuylkill rivers. It is the fifth-most-populous city in the United States,...
and Los Angeles, California
Los Angeles, California
Los Angeles , with a population at the 2010 United States Census of 3,792,621, is the most populous city in California, USA and the second most populous in the United States, after New York City. It has an area of , and is located in Southern California...
. Over 500 staff are employed in acquisition, new development, marketing and leasing activities.
Financial performance
The entity combines Centro Properties Group and Centro Property Trust. 82% of its net income comes from retail property ownership. In 1993, it had a market capitalisation of just over $90 million. Its operating profit in 2005 was $253.4 million. In 2006, it had a $5.5 billion market capitalisation making it one of the top 100 companies listed on the Australian Securities Exchange. However, in the 2008 year, Centro lost more than $2 billion because of a fall in property values and asset write-downs.Financial difficulties
In December 2007, Centro announced that it had not been able to roll over A$Australian dollar
The Australian dollar is the currency of the Commonwealth of Australia, including Christmas Island, Cocos Islands, and Norfolk Island, as well as the independent Pacific Island states of Kiribati, Nauru and Tuvalu...
1.3 billion in short-term loans due to expire on 15 February 2008. It was speculated that the American-based subprime mortgage meltdown was the cause of a decline in lending and credit market
Bond market
The bond market is a financial market where participants can issue new debt, known as the primary market, or buy and sell debt securities, known as the Secondary market, usually in the form of bonds. The primary goal of the bond market is to provide a mechanism for long term funding of public and...
problems. While Centro also announced they would be solvent until at least February 2008, shares in the group underwent a dramatic decline. Applications and withdrawals were suspended from Centro's Direct Property Fund (DPF) and the Centro Direct Property Fund International (DPFI).
The company's difficulties were worsened by the 2008 global credit crunch
Credit crunch
A credit crunch is a reduction in the general availability of loans or a sudden tightening of the conditions required to obtain a loan from the banks. A credit crunch generally involves a reduction in the availability of credit independent of a rise in official interest rates...
and by two shareholders' class actions claiming up to $1 billion, while the company was required to refinance loans of $4.5 billion in December 2008. In January 2009, they reached an agreement with their creditors including a three-year extension on their $3.9 billion syndicated debt facility. The terms of the three-year plan may involve some restructure and asset sales.
Claimed assets
As at June 2008, Centro Properties Group has interests in total assets worth USD $22.6 billion, representing approximately 810 shopping centres in three countries – Australia, New Zealand and the United States. In the United States its portfolio consists of over 104 million square feet (9.6 million sqm) of retail space.Australia
Being established in Australia, Centro Properties Group currently owns and/or manages approximately one hundred and twenty-five properties and is seeking more, despite its credit crisis.The largest shopping centres managed by Centro in each state/territory are:
- Centro Tuggeranong Hyperdome in the Australian Capital Territory,
- Centro BankstownCentro BankstownCentro Bankstown, formerly known as Bankstown Square, is a major regional shopping centre situated in the central business district of the City of Bankstown. It has over 310 specialty stores including a number of major retail stores. Opened in 1966, the shopping centre has undergone several...
in New South Wales, - Centro ToombulCentro ToombulCentro Toombul is a regional shopping centre located in the locality of Toombul which is part of Nundah, a suburb of the city of Brisbane in the state of Queensland, Australia. The centre is currently anchored by a Kmart discount department store, Coles supermarket, BI-LO supermarket and Aldi Food...
in Queensland, - Centro ColonnadesCentro ColonnadesCentro Colonnades is one of the largest shopping centres in Adelaide, South Australia. The shopping centre is located in the City of Onkaparinga, in the suburb of Noarlunga Centre...
in South Australia, - Centro The GlenCentro The GlenCentro The Glen is a major regional shopping centre located in Glen Waverley, Victoria, Australia. The head offices of Centro Properties Group are located in the centre....
in Victoria, and - Centro GalleriaCentro GalleriaCentro Galleria is a super-regional shopping centre located in Morley, Western Australia, about northeast of Perth's central business district. The Galleria is the second largest retail centre in Perth...
in Western Australia.
United States
Since entering the United States market in late 2003, Centro has acquired, redeveloped and renovated a number of mall properties. On 9 May 2006, Westfield announced the sale of eight United States shopping centres which it deemed to fit outside its strategic plan, which Centro subsequently acquired. Centro in the US is now independently known as Brixmor.New Zealand
Centro operates four shopping centres in New Zealand—one each in ChristchurchChristchurch
Christchurch is the largest city in the South Island of New Zealand, and the country's second-largest urban area after Auckland. It lies one third of the way down the South Island's east coast, just north of Banks Peninsula which itself, since 2006, lies within the formal limits of...
and Wellington and two in Auckland
Auckland
The Auckland metropolitan area , in the North Island of New Zealand, is the largest and most populous urban area in the country with residents, percent of the country's population. Auckland also has the largest Polynesian population of any city in the world...
.
See also
- Lend Lease CorporationLend Lease CorporationLend Lease Group is a global property and infrastructure company headquartered in Sydney, Australia...
- Shopping property management firms
- StocklandStockland (company)Stockland is a diversified Australian property development company.Founded in 1952 as a residential developer, it listed on the Australian Stock Exchange in 1957 and diversified into commercial developments in the 1960s.Its current activities include:...
- Westfield Group