Centro Properties Group

From IntFX

See also: CNP for realtime information.

Centro Properties Group is an investment organisation engaged in the ownership, leasing, management and development of retail shopping centres. The Group manages both listed and unlisted retail property and has a broad portfolio of shopping centres across Australia, New Zealand and US. Centro’s properties are valued at $25.5 million as of June 2007. Centro’s listed property investment products include Centro Properties Group and Centro Retail Trust (CER). The Group’s unlisted property portfolio includes 34 direct property syndicates, the Centro Direct Property Fund and Centro Direct Property Fund International.

Centro is listed on the Australian Stock Exchange under the ticker CNP. The Company offers stapled security comprising one unit in Centro Property Trust (CPT) and one share in Centro Properties Limited (CPL). CPT is the ultimate owner of Centro’s interests in the properties and CPL and its subsidiaries provide management services to CPT.

The Group’s managed portfolio consists of retail assets, including regional, sub-regional, neighbourhood and bulky goods shopping centres in metropolitan, suburban as well as non-metropolitan markets. Centro retail centres primarily focus on non-discretionary retail spending such as fresh food and other daily needs.

The Group’s Services Business provides Property Management, Leasing, Development Management and Funds Management activities for its portfolio companies.

[edit] History

Centro was established as Jennings Properties Limited in February 1985, and was subsequently listed in August 1985 on the Australian Stock Exchange. In 1991 the Company’s name was changed to Centro Properties Limited, and in September 1997 the Company was restructured to a stapled security structure named Centro Properties Group.

[edit] Strategy

The Group follows a Cemented Co-Investment Structure wherein Centro prefers to cement ownership of its retail property assets through a two tier ownership structure. In the structure, Centro effectively owns 50% of a diversified fund (e.g. the Centro Direct Property Fund and the Centro Direct Property Fund International) which in turn owns 50% of an ownership fund (e.g. Centro MCS Syndicates, Centro Retail Trust and Wholesale Funds) which in turn own the underlying retail property assets, financed by both equity and debt. Therefore, through the two tier structure, Centro has an effective 25% equity ownership in the underlying retail property assets. Cemented co-investment business model ensures alignment of interests between Centro investors and co-investors.

[edit] Financial performance

As of June 2007, Centro’s has $26.6 billion funds under management up 131.3% from $11.5 billion in 2006. The Centro Direct Property Fund delivered a total return of 18.2% for the year to 30 June 2006 and average total returns of 16.1% p.a. since inception. The Centro Direct Property Fund International has also delivered a strong total return of 11.6% since its launch in August 2005 to 30 June 2006.