Morgan Stanley, Starwood Capital Said to Bid for Centro U.S. Mall Assets

Morgan Stanley’s global real estate fund is teaming with Barry Sternlicht’s Starwood Capital Group LLC to bid for U.S. shopping centers being sold by Australia’s Centro Properties Group, a person briefed on the plans said.

Centro said on Dec. 22 it had received several expressions of interest. Blackstone Group LP made a preliminary bid for some assets, a person with knowledge of the offer said in December. Centro, based in Melbourne, ceded control to its bankers at the end of 2008 and put its assets up for sale after an acquisition spree in the U.S. backfired as the credit markets seized up.

The person briefed on Morgan Stanley and Starwood’s plans asked not to be identified because the information is private.

Mark Lake, a spokesman for Morgan Stanley in New York, and Tom Johnson, a spokesman for Greenwich, Connecticut-based Starwood Capital, declined to comment. Stacy Slater, a New York- based spokeswoman for Centro, also declined to comment.

The Wall Street Journal reported Morgan Stanley and Starwood’s interest on Feb. 8. Blackstone and a consortium led by Lend Lease Group and NRDC Equity Partners also may submit formal offers by Feb. 24, the newspaper said. The bids were close to the $8 billion of debt on the U.S. properties and the $9.5 billion book value of the malls, according to the Journal.

An NRDC spokeswoman declined to comment on the report.

Morgan Stanley last June raised $4.7 billion for a new global real estate fund, less than half its target before the financial crisis. The company has reported gains in its real estate funds during the past four quarters as the commercial property market began to recover.

Share Decline

Centro shares fell A$0.01 to A$0.15 yesterday in Sydney trading, and have declined 35 percent in the past year. They reached a peak closing price of A$10.02 in May 2007.

The company has about 600 properties in the U.S., which it leases to tenants including TJX Cos., the owner of T.J. Maxx, Marshalls and HomeGoods stores; and Kroger Co., the largest U.S. grocery store chain. The U.S. properties were 88.3 percent leased in the year through June 30, compared with 88.7 percent a year earlier, according to Centro’s annual report.

To contact the reporter on this story: Hui-yong Yu in Seattle at hyu@bloomberg.net

To contact the editor responsible for this story: Kara Wetzel at kwetzel@bloomberg.net