Federation Sells A$602 Million Mall Stakes to Challenger

Federation Centres, the shopping mall operator formerly known as Centro Retail Australia, agreed to sell half stakes in six properties for A$602 million ($579 million) to investment management firm Challenger Ltd.

The properties, in New South Wales, Victoria and Western Australia states, have a total value of A$1.2 billion, Melbourne-based Federation Centres said in a statement to the Australian stock exchange. The company will continue to manage the malls, it said.

Federation Centres settled the sale of half stakes in three malls to Perron Group a year ago, and agreed to sell 50 percent interests in five malls to Industry Superannuation Property Trust in February. The sales are part of Federation Centres’ plan to fund redevelopments by taking on partners to invest in its malls and follows the sale of its retail assets in Surfers Paradise, Queensland, in January to Challenger.

Federation Centres forecasts balance sheet gearing, a ratio of debt to equity, of about 22 percent as at July 31, and said it plans to reduce its debt facilities by as much as A$450 million “in the near term.”

“We have now agreed to extend our alliance to also include co-ownership of a larger group of other centers,” Steven Sewell, managing director of Federation Centres, said in today’s statement. “The co-ownership strategy provides Federation Centres with the liquidity and balance sheet flexibility for the future funding of our redevelopment and enhancement program of our portfolio.”

Federation Centres’ shares fell 0.4 percent to A$2.45 at the close of trading in Sydney, paring this year’s gains to 7.9 percent. The benchmark S&P/ASX 200 index declined 1.3 percent today.

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