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(This story, in slightly different form, originally appeared in Incisive Media’s Daily Business Review.)

MIAMI-Centro Properties, a troubled Australian owner of retail centers, has pledged its large US portfolio, including dozens of properties in Florida, as security for a $3.4 billion refinancing. Centro, which bills itself as the fifth-largest US retail property owner, arranged the refinanced debt with existing lenders JPMorgan Chase Bank, Bank of America and KeyBank. In Florida, mortgages of $370 million and $332.5 million were recorded last month in Broward County with Centro NP Residual Presidential Plaza LLC of Delaware as the borrower of record. Attorney Fredric Altschuler of Cadwalader Wickersham & Taft in New York, who prepared the mortgages for Centro, declined comment.

Centro is attempting to sell several assets nationwide as part of the “natural culling process,” according to company spokeswoman Stacy Slater in New York. She declined to identify the properties.

The Mall at 163rd Street in North Miami Beach and Presidential Plaza in North Lauderdale are among Centro’s South Florida properties. It owns a total of 44 properties throughout the state. “They are a very significant retail player, and the South and Southeast represent the most concentration for Centro,” says Mark Gilbert, senior director of Cushman & Wakefield’s financial services group in Miami.

The bulk of the company’s properties are grocery-anchored community centers, with Publix a key tenant. “The majority of their portfolio is what I would call best in class,” Gilbert adds.

It was a sign of confidence by Centro’s lenders that they extended the loans, he said. The 705,000-square-foot Mall at 163rd Street, which has undergone significant redevelopment since it opened in 1956, is not the company’s typical holding, he reveals. The mall’s anchors are Marshall’s, Ross Dress for Less and Office Depot.

As of last December Centro owned 633 properties in 40 states totaling almost 104 million square feet. The community and neighborhood shopping centers that comprise the bulk of Centro’s US portfolio are about 11% vacant, the company said. Its entire US portfolio is about 12% vacant.

Centro’s financial troubles stem from huge debt it took on when it paid $6.2 billion for New Plan Excel Realty Trust. The 2006 deal added more than 450 community shopping centers in 38 states to Centro’s portfolio. In the past year, Centro has sold dozens of US properties, and attempted to sell some of its Florida portfolio late last year, explains Gilbert.

Retail consultant Sandie Witmer, a principal in the firm Retail Estate in Coral Gables, says Centro expanded into the operation of lifestyle centers when it acquired New Plan. Witmer worked for New Plan and then Centro from 2003 to 2007, until her contract expired and an in-house Centro executive took over. “Lifestyle centers weren’t their area of expertise, and they acquired New Plan during the height of the market, which then changed. So it’s understandable that they had some trouble,” she says.

Late last month, Centro reported a $2.4 billion loss for the first half of the 2009 fiscal year. That included decreased asset values of $1 billion and losses from the crisis in the financial markets. Centro had invested in commercial mortgage-backed securities, a financial vehicle that has frozen in the wake of the global economic crisis.

For the first half of fiscal year 2008, the company reported a loss of $1.1 billion, primarily due to writedowns of $578 million on New Plan’s goodwill and $278 million on financial investments. “On Dec. 17, 2007, Centro was one of the first real estate companies to suffer financial difficulties,” Centro Properties Group chief executive Glenn Rufrano said in a statement on the company’s Web site about its performance so far this fiscal year. “On Jan. 16, 2009, it was one of the first to be restructured.”

The debt restructuring restores positive cash flow and includes three-year extensions on debt, says the statement. According to a quarterly report filed Feb. 27 with the Securities and Exchange Commission, Centro NP LLC, a subsidiary of Centro Properties, said preliminary financial results for the year ending Dec. 31 indicated a net loss of $520 million to $560 million on assets of $4.2 billion.

The restructuring began more than a year ago, when Centro put itself on the block and solicited letters of interest. As the commercial real estate market deteriorates, no suitors have come forward. The firm has a total of 45 properties in the state of Florida, according to its website.

Terry Sheridan can be reached at [email protected].

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