CHICAGO-Melbourne, Australia-based Centro Properties Group is“very close” to solving a massive debt crisis, which could involvea split and/or an IPO, CEO Robert Tsenin told a group of insuranceexecutives here during a private conference Wednesday evening. Hewas the keynote speaker at the annual real estate conference forNew York City-based Marsh Inc., held at Chicago’s InterContinentalHotel.

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The troubles at Centro, an Australian Real Estate InvestmentTrust, are well known; it was one of the first global real estatefirms to claim overleveraging for its $27 billion in real estateassets, about 712 shopping centers in the United States andAustralia. Tsenin, a former Goldman Sachs director, was brought inearly this year to untangle a complex, multi-tiered management anddebt structure, which had thrived during the heady mid-decade yearsbut crashed when financing dried up in 2007.

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The trust has all it needs to succeed, Tsenin said at theconference. The 112 Australian properties are leased at almost 100%with a net income growth of almost 4% in the past 12 months. Evenin the United States, where net income growth is flat, the trust’s600 properties are leased at about 88%, not a bad showing whenresearchers claim an average national retail vacancy rate of about11%.

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The hold-ups include a complex corporate structure, and thepossible need to split the US-owned properties into its ownseparate entity, Tsenin said. In a private interview after histalk, he tells GlobeSt.com he can’t say yet what the best solutionis (which could include a possible initial public offering for atrust for the US-owned centers), but he does admit there is a clearseparation. “We don’t see any synergies between the US centers andthe Australian properties, they don’t even share any of the sametenants,” Tsenin tells GlobeSt.com. “We will have a decision verysoon. I expect we will be implementing the solution through2011.”

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Centro has entered into deals with creditors to hold offbillions of dollars in debt payments until the end of 2011. Thesedeals allow the trust to negotiate with various investors andshareholders without having to have a fire-sale of properties,Tsenin tells GlobeSt.com. One main lesson from the experience isthat “there’s virtue in simplicity,” he says.

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