Poker ace seeks Centro assets

JULIUS Colman, who sold his MCS syndicates business to Centro Properties five years ago, has made a series of approaches to buy part of the embattled shopping centre group's fee-generating "services business", which only a year ago carried a bull market valuation of $5.5 billion.

Fond of a gamble, Mr Colman, who flew to Las Vegas on Friday to play in the World Series Poker championships, is understood to have made the offers over the past four months in partnership with former MCS shareholder Mike Fitzpatrick and a group of other investors.

Mr Colman declined to comment, but Melbourne sources said the group had put in offers over the past four months, though none looked like generating a deal at present.

Centro's services business is the engine room of the group, generating funds and property management fees from Centro's rash of property acquisitions in Australia and the US.

Credit Suisse listed property analyst Andrew Rosivach said the services business could be worth "roughly in the range of $500 million to $1 billion, but nowhere near what KPMG valued it at".

In May last year, accountant KPMG put a $5.5 billion valuation on the services business, up from $2.5 billion in June 2006, on the back of Centro's acquisition spree.

In its June 2007 results presentation, Centro said the services business would deliver cash flow (EBITDA) of $266 million in the 2008 financial year.

Centro, which controlled $26.6 billion of shopping centres at last year's valuations, had been aggressively acquiring assets culminating in its top-of-the-market $US3.7 billion acquisition of US shopping centre owner New Plan Excel in February last year.

The spending spree rapidly boosted the management fees earned from both the properties and entities that managed them, such as the syndicate business Mr Colman and MCS's other 158 shareholders sold to Centro for $193.5 million in 2003.

Mr Colman, who started MCS with a single property syndicate in the early 1990s, is currently a director of aged care and property trust group Japara, which owns and operates 32 facilities in Victoria, South Australia, NSW and Tasmania, according to its website.

Mr Colman's partner in the bid, Mike Fitzpatrick, initially sold a stake in his infrastructure and property funds group, Hastings Funds Management, to Westpac Bank in 2003 with Westpac buying full control in 2006.

Hastings had held an 18 per cent interest in MCS when it was bought by Centro.

Centro is currently surviving on the goodwill of its bankers, who earlier this month granted it a debt extension until December 15.

In a 2003 interview with The Australian, when MCS was sold to Centro, Mr Colman said he had no regrets about selling the successful business he had built over 10 years.

Centro, then run by Andrew Scott, who resigned in January as the company teetered on the brink, had been courting MCS since Mr Scott took on the CEO role in 1997.

The MCS deal delivered Centro 19 retail property syndicate assets valued at $1.5 billion and 100 MCS employees, a launching pad for what would grow into Australia's second-biggest shopping centre owner and a dominant US property owner.

News Australia

News Added: 16 June, 2008

Number of views : 832