Private equity giant Blackstone Group will pay $9.4 billion to acquire a portfolio of 558 U.S. shopping centers owned by Australia’s Centro Properties Group, Reuters said. Blackstone beat out two other groups for the deal.
(Reuters) – Private equity firm Blackstone Group will pay about $9.4 billion for nearly 600 U.S. shopping malls and other properties of Australia’s debt-laden Centro Properties , a source with direct knowledge of the transaction said on Monday.
Blackstone beat rival bidders including Morgan Stanley Real Estate, which had teamed up with Starwood Capital Group, and New York-based NRDC, which also made pitches for the property portfolio, said the source, who was not authorised to talk to the media and did not want to be identified.
The portfolio includes 560 U.S. shopping centres, whose tenants include top grocers such as The Kroger, Safeway and Ahold USA Inc. It is the latest addition to Blackstone’s rapidly expanding property empire, which includes the Hilton hotels chain.
Shares in Centro were earlier placed on a trading halt ahead of an announcement about a potential transaction. A deal is expected to be announced on Tuesday.
Officials for Blackstone were not immediately available to comment. A Centro spokeswoman declined to comment.
Centro had narrowed down bidders for the U.S. shopping mall assets to three bidders, including Blackstone, a source told Reuters on Feb. 9.
Blackstone agreed to pay book value for the assets which Centro has valued at around $9.4 billion, the source said, confirming a report in the Wall Street Journal.
Debt-laden Centro was one of corporate Australia’s first casualties of the 2008 global credit crisis. The company said last week its total portfolio was valued at A$16.5 billion, while it has A$16 billion in debt.
Any asset sales would need approval from Centro’s lenders, which are now largely made up of hedge and distressed debt funds.
Blackstone acquired Hilton for $26 billion at the peak of the buyout bubble in July 2007.
In November last year, Blackstone bought 180 properties, totaling 23 million square feet, from ProLogis for $1.01 billion. Earlier in 2010, it paid $900 million for industrial real estate from Eaton Vance.
UBS and JPMorgan are running the sale process for Centro. Moelis & Co is financial adviser to Centro. (Editing by Ed Davies and Muralikumar Anantharaman)