CENTRO Properties Group, the Australian owner of United States malls, has seen its market worth plunge 85 percent in the past month.
Now Centro has been approached by MFS Ltd with an offer to take over managing A$8.5 billion (US$7.6 billion) of funds, Bloomberg News reported.
The unspecified offer is for rights to manage Centro MCS's unlisted property funds, Southport, Queensland state-based MFS said in a statement on Friday to the Australian Stock Exchange. MFS fell 9.9 percent to A$3.55 at the 4:10pm close in Sydney on Friday.
Centro Chief Executive Officer Andrew Scott is seeking buyers for the Melbourne-based company or its assets to help refinance A$3.9 billion of debt by a February 15 deadline. Centro on Friday halted share trades for itself and unit Centro Retail Group.
US shopping mall vacancy rates rose last quarter to an 11-year high, a research firm said on Friday.
Selling fund management rights "won't solve half Centro's problems because the money they could raise is not enough; they need billions," said Justin Blaess, property portfolio manager at ING Investment Management in Sydney. "People are jockeying for position and MFS's response is natural."
The vacancy rate for US neighborhood and community shopping centers rose to 7.5 percent in the three months ended on December 31, from 7.3 percent in the third quarter, as the housing slump dented consumer spending, New York-based Reis Inc said in a survey.
US malls accounted for almost two-thirds of the value of Centro's A$26.6 billion of malls, the company said in its annual report in September.
MFS isn't seeking to buy property from Centro, it said in the statement.
"We have a long track record of taking over syndicates and then very quickly selling them," Craig White, deputy chief executive officer at MFS, said on Friday in a telephone interview. "How can investors assess any offer with the related-party nature of the Centro syndicate structure? You need to appoint someone like MFS who can actually assess an offer."
Jim Kelly, a spokesman speaking on behalf of Centro in Sydney, wasn't able to confirm or deny MFS's approach.
Centro shares peaked at A$10.02 on May 7, less than a month after the firm completed the acquisition of New Plan Excel Realty Trust, paying US$5.2 billion in cash and assumed debt to become the fifth-largest US mall owner.
The stock dropped 86 percent to 80.5 Australian cents in two days after Centro said on December 17 it is struggling to refinance debt because of the collapse in the US subprime mortgage market. Centro slid 25 Australian cents, or 23 percent, to 86 Australian cents on Thursday.
Centro Retail Group, the property trust managed by Centro, was also halted from trading on Friday. It plunged 24 percent to 58.5 Australian cents on Thursday, capping a 59 percent drop since Centro Properties said it was struggling to refinance debt.
Centro Properties' two most valuable assets are the Australian malls Centro Galleria in Perth and Centro Bankstown in Sydney. The two were worth a combined A$1.17 billion, or about 4.4 percent of Centro's total mall assets, the company said in its annual report.
Fund manager Centro MCS was set up in 2003 when Centro paid A$193.5 million to acquire closely held MCS Property Ltd, which then managed A$1.4 billion of assets.