Federation Limited

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Federation Limited
(Trading as Federation Centres)
Type Public company
Traded as ASXFDC
Industry Property Development, Property Management, Retail Property
Founded 18 February 1985 (1985-02-18)
(as Jennings Properties Limited). Aggregate as CRF 14 December 2011. Re-branded as Federation Centres on 22 January 2013.
Headquarters Melbourne, Australia
Area served Australia
Key people Steven Sewell (CEO & Managing Director)
Bob Edgar (Chairman)
Tom Honan (Chief Financial Officer)
Colleen Harris (EGM People & Culture)
Dimitri Kiriacoulacos (General Counsel & EGM Corporate Development)
Mark Wilson (EGM Property Operations)
Jonathan Timms (EGM Development & Asset Strategy)
Peter Coroneo (EGM Leasing)
Kerrie Lavey (EGM Corporate Communications)
Products Federation Centres (FDC)
Services Retail property ownership and management
Profit Increase $226.7 million (for the Half Year ended 31 Dec 2013)[1]
Total assets A$6.7 billion[2]
Employees ~ 500+ (within Australia)[3]
Website www.federationcentres.com.au

Federation Limited, trading as 'Federation Centres' (FDC), and formerly known as 'Centro Properties Group' is an Australian Real Estate Investment Trust (REIT) company specialising in ownership and management of Australian shopping centres. With approximately $6.6 billion of shopping centres under management.[4]

The company is Headquartered in Melbourne[5] with offices in Sydney, Brisbane, Adelaide and Perth, Federation Centres (FDC) employs over 500 people in Australia.[4]

Listed on the Australian Securities Exchange (ASX),[6] Federation Centres consists of Federation Limited and its controlled entities, which includes Federation Centres Trust No. 1, Federation Centres Trust No. 2 and Federation Centres Trust No. 3. Although separate entities, the securities of each are stapled together as ‘Federation Centres’ to ensure that they are traded as a single interest. The ASX ticket code for Federation Centres is FDC.[6]

History[edit]

Federation Limited was established on 18 February 1985 under the name Jennings Properties Limited, and shares were issued in the same year on the Australian Stock Exchange. In January 1991, Jennings Properties Limited was renamed Centro Properties Limited, with the stock being changed across in May 1991. In September 1997, Centro was restructured to become a stapled security structure named Centro Properties Group. Centro was a stapled security comprising one unit in Centro Property Trust (CPT) stapled to one share in Centro Properties Limited (CPL). CPT is the owner of Centro's interests in the properties and CPL, along with its subsidiaries, provides management services to CPT.[citation needed]

In September 1999, Centro acquired the management rights for Prime Retail Property Trust (PRX), and in October 2004, it merged with Prime Retail Group under a court-approved scheme with a ratio of 5 Prime securities per 1 Centro security.

Throughout the 2000s, Centro acquired numerous assets:

  • CT Retail Investment Trust (July 2001)
  • MCS Syndication Business (July 2003)
  • 14 international assets located in California (August 2003)
  • Centro launched its first international syndicate, MCS 32 (November 2003)
  • Kramont Realty Trust (a listed US REIT) (August 2005) – USD $1.6 billion
  • Centro Retail Trust was spun off from the main fund (August 2005)
  • Heritage Property Investment Trust (a listed US REIT) (July 2006) – USD $4.3 billion
  • New Plan Excel Realty Trust (a listed US REIT) (February 2007) – USD $5.0 billion.
  • Galileo Funds Management (May 2007)
  • Centro Watt Joint Venture (May 2007)

After entering the United States market in late 2003, Centro acquired, redeveloped and renovated a number of mall properties. On 9 May 2006, Westfield announced the sale of eight United States shopping centres which it deemed to fit outside its strategic plan, which Centro subsequently acquired. Centro was the fifth-largest retail property owner/manager in the United States with 682 properties. The Oakleigh store was one of the largest available. It had over UsD $10 billion worth of property under management. Its USA corporate operations were primarily in Philadelphia, Pennsylvania and Los Angeles. Centro in the USA is now independently known as Brixmor. Centro has no affiliation with Brixmor. Centro Retail Trust sold its entire USA assets and platform to BRE Retail Holdings, Inc. an affiliate of Blackstone Real Estate Partners VI, L.P. in 2011.[7]

Between 2003 and 2007, Centro and its managed funds acquired MCS's property syndicate business and substantial portfolios of US convenience shopping centres and operating businesses. On 17 December 2007, Centro announced it was continuing to negotiate the refinancing of A$1.3 billion in maturing facilities, and had obtained an interim extension until 15 February 2008 of all facilities maturing prior to that date. In addition, US joint venture facilities were also been similarly extended.

It was speculated that the American-based subprime mortgage meltdown was the cause of a decline in lending and credit market problems.[8] While Centro also announced they would be solvent until at least February 2008, shares in the group underwent a dramatic decline.[9][dead link] Applications and withdrawals were suspended from Centro's Direct Property Fund (DPF) and the Centro Direct Property Fund International (DPFI).

The company's difficulties were worsened by the 2008 global credit crunch and by two shareholders' class actions claiming up to $1 billion, while the company was required to refinance loans of $4.5 billion in December 2008.[10]

On 16 January 2009, Centro announced completion with its financiers for a long term refinancing and debt stabilisation agreement.

The key features of the refinancing and debt stabilisation included:[11]

  • A three year extension on A$3.9 billion of the senior syndicated debt facility.
  • A$1.05 billion Hybrid Security.
  • Extension of the debt facilities within Super LLC (Centro’s US joint venture investment with Centro Retail Trust (CER) and CMCS 40).
  • Agreement for the extension of debt facilities for many of Centro’s managed funds
  • Reduced pressure to sell property assets within Centro and its managed funds.

On 4 November 2010, a process designed to allow CNP and its managed funds to jointly evaluate these expressions of interest through a formal competitive market process commenced[12]

On 1 March 2011, CNP and its managed funds announced its proposed restructure including:[13]

  • US Assets Sale – Centro and its managed funds entered into a binding stock purchase agreement with BRE Retail Holdings, Inc, an affiliate of Blackstone Real Estate Partners VI, L.P. ("Blackstone") to sell all of their US assets and platform for an enterprise value of approximately US$9.4 billion;
  • Headstock Debt Restructure – Centro has agreed with holders of approximately 73% of Centro’s senior debt ("Senior Lender Group") to progress a creditors scheme of arrangement to effect the cancellation of all Centro’s senior debt in consideration for substantially all Centro’s Australian assets. The Senior Lender Group has agreed that $100 million would be made available for ordinary security holders and other stakeholders, junior to the senior lenders; and
  • Discussions of Australian Funds Amalgamation – Centro has entered into discussions with its senior lenders, Centro Retail Trust (CER), and other Australian managed funds with a view to aggregating their respective portfolios to create a listed fund ("Amalgamated Fund") owning a retail property portfolio of high quality Australian regional and sub-regional shopping centres. Centro’s share of the Amalgamated Fund would be distributed to its senior lenders as part of the scheme of arrangement described above.

On 29 June 2011, the sale of the US portfolio was completed.

In a landmark Australian legal decision,[14][15] in June 2011 the Federal Court of Australia found that eight executives and directors of Centro breached the Corporations Act by signing off on financial reports that failed to disclose billions of dollars of short-term debt. The legal action was commenced by the Australian Securities and Investments Commission, who sued Andrew Scott (ex-CEO), Brian Healey (former chairman), Paul Cooper (current chairman), Romano Nenna (ex-CFO), former non-executive directors Peter Wilkinson, Sam Kavourakis and Peter Goldie, and Jim Hall, who remains on the board.[16] A class action from investors seeking A$200 million in damages due to alleged deceptive conduct and breaches of continuous disclosure obligations has commennced in the Federal Court against Centro Properties Group, Centro Retail Group, and their auditors, PriceWaterhouseCoopers, and relate to conduct from August 2007 to February 2008.[17]

At a series of meetings on 22 November 2011, CNP securityholders, Convertible Bondholders, Hybrid Lenders and Senior Lenders, as well as Centro Retail Trust (CER) securityholders, voted in favour of the restructure of Centro and its managed funds.[18]

The Supreme Court of New South Wales approved the Senior Lenders’ and Hybrid Lenders’ schemes of arrangement necessary to effect the restructure.

CNP’s $2.7 billion Senior Debt which matured on 15 December 2011 was cancelled in return for the transfer to Senior Lenders of substantially all of CNP’s Australian assets and interests. CNP Securityholders, Convertible Bondholders and Hybrid Lenders received their relevant proceeds, allocated as follows:

  • 5.03 cents per CNP security or $48,925,082 in total to CNP securityholders;
  • 5 cents in the dollar or $21,074,918 in total to Convertible Bondholders in exchange for redemption of their convertible bonds; and
  • $20,000,000 in total to secured Hybrid Lenders in return for the cancellation of their debt.

Centro Properties Group has since changed its name to CNPR, and is in the process of being wound up.

CNP managed funds including CRT, CAWF and DHT aggregated their respective portfolios to create the listed Australian retail property trust, CRF. CRF was formed by the stapling of CRL, CRT, CAWF and DHT through schemes of arrangement that were approved by the Supreme Court of New South Wales on 1 December 2011 (the Aggregation).The Aggregation implementation date was 14 December 2011. CNP contributed its Australian assets (including its funds and services business) to CRF, in exchange for scrip in CRF. That scrip, in addition to the CRF scrip which CNP held as a result of its investments in the aggregated funds resulted in CNP’s ownership of the A-REIT being approximately 72% on implementation of aggregation. On implementation of the Senior Lenders’ schemes of arrangement, CNP’s scrip in CRF was distributed to the Senior Lenders on a pro-rata basis to their senior debt holdings. CNP securityholders did not receive any securities in CRF.

At an extraordinary general meeting of on 22 January 2013, shareholders voted to change the name of Centro Retail Limited to Federation Limited, and amend the company constitution to reflect the change of name:. (99.76% of votes in favour)

Stock return information[edit]

As at June 2013, Federation Centres owned and managed a portfolio consisting of 73 Australian shopping centres with a total value of $6.5Bn.[19]

To date, the Group has undertaken a number of significant co-ownership transactions selling approximately $1.4Bn [20] of assets to Groups such as Perron Group,[21] ISPT [22] and Challenger.[23] These transactions have also helped Federation Centres attain an ‘A-‘ credit rating for its secured debt.[24] Property ownership accounts for almost 90% of total income derived by Federation Centres, with the balance sourced from property management, development and syndicate management fees.[25]

Properties[edit]

Federation Centres owns and/or manages approximately 70 shopping centres in Australia.[26] Its vision is to be a pure property REIT with a simplified structure – a shopping centre owner and manager in the Australian market – with an emphasis on sub‐regional centres.[27]

Each Federation Centres retail property typically has its own name, such as “The Glen”[28] or “Colonnades”[29] which reflects the way that the local community’s refer to the shopping centre and a logo that contains the Federation Centres’ ribbon swirl.[30] The name "Federation Centres" is derived from the concept that the Group consists of many parts (Centres) which are largely independent of each other, and yet which all gain strength from being part of the overarching Corporate Group.[27]

Federation Limited is the third largest shopping centre investment and management company by GLA (gross lettable area) in Australia,[31] and the largest provider of retail space to Australia’s major supermarket operators Coles and Woolworths.[32] It has over 500 staff in Australia.[33]

Financial performance[edit]

The Group has now removed the legacy issues relating to the assets former ownership structure under Centro Properties Group (see History). Federation Centres retains a positive financial position with balance sheet gearing as at July 2013 of 18.3%.[34] As of the Australian financial year of 2013, Federation Centres has posted a statutory full year profit of $212.7 million.[35]

Location images[edit]

See also[edit]

References[edit]

  1. ^ http://www.theaustralian.com.au/business/property/reborn-federation-lifts-its-guidance/story-fn9656lz-1226833199559#
  2. ^ http://www.asx.com.au/asxpdf/20140220/pdf/42mvcq6sgpgwbs.pdf
  3. ^ [1]
  4. ^ a b CRF Interactive Annual Report 2012 - http://www.centroretailaustralia.com.au/CRF-Annual-Report-2012/
  5. ^ http://www.linkedin.com/company/federation_centres
  6. ^ a b ASX Listing - http://www.asx.com.au/asx/research/companyInfo.do?by=asxCode&asxCode=FDC
  7. ^ http://nreionline.com/deals/report-blackstone-acquires-centro-s-us-assets-94b
  8. ^ "Centro on the brink as shares plunge". The Age. 17 December 2007. Retrieved 17 December 2007. 
  9. ^ "Centro falls 77% on profit downgrade". The Australian. Retrieved 17 December 2007. [dead link]
  10. ^ Dunlevy, Maurice (28 November 2008). "Centro acts to cut losses from class actions". The Australian. 
  11. ^ http://www.cerinvestor.com.au/uploads//company-and-asx-announcements/2009/16-january-2009---centro-retail-trust-completes-debt-stabilisation-agreement.pdf
  12. ^ http://www.cerinvestor.com.au/uploads//company-and-asx-announcements/2010/CER_-_Restructure_and_recapitalisation_Update.pdf
  13. ^ http://www.centroinvestor.com.au/uploads//News_Publications_and_Financial_Reports/Company_and_ASX_Announcements/2011/CNP_Letter_to_investors_-_March_2011_Final_Web.pdf
  14. ^ Lannin, Sue (27 June 2011). "ASIC hails 'landmark' ruling against Centro directors" (transcript). PM (ABC Radio) (Australia). Retrieved 26 August 2011. 
  15. ^ Wood, Leonie (28 June 2011). "Centro loses landmark decision". The Sydney Morning Herald. Retrieved 26 August 2011. 
  16. ^ Akerman, Pia (27 June 2011). "Federal Court finds Centro executives broke Corporations Act". The Australian. Retrieved 26 August 2011. 
  17. ^ "Centro class action boosted by court decision: IMF". The Sydney Morning Herald. AAP. 28 June 2011. Retrieved 26 August 2011. 
  18. ^ http://www.centroinvestor.com.au/uploads//News_Publications_and_Financial_Reports/Company_and_ASX_Announcements/2011/CNP_-_Stakeholders_approve_Centro_Group_restructure.pdf
  19. ^ Federation Centres 2013 Financial Year Results Presentation – Slide 14 http://www.federationcentres.com.au/sites/default/files/FDC%20FY13%20results%20presentation.pdf
  20. ^ Federation Centres 2013 Financial Year Results Presentation – Slide 10 (http://www.federationcentres.com.au/sites/default/files/FDC%20FY13%20results%20presentation.pdf)
  21. ^ ASX Announcement (http://www.federationcentres.com.au/sites/default/files/CRF%20and%20Perron%20Group%20Finalise%20Co-ownership%20of%20Galleria%2C%20The%20Glen%20and%20Colonnades.pdf)
  22. ^ ASX Announcement (http://www.federationcentres.com.au/sites/default/files/Federation%20Centres%20and%20ISPT%20complete%20co-ownership%20transaction.pdf)
  23. ^ ASX Announcement (http://www.federationcentres.com.au/sites/default/files/28-06-13%20-%20Federation%20Centres%20and%20Challenger%20complete%20co-ownership%20transaction%20for%20Bankstown%2C%20Toormina%2C%20Roselands%20and%20Karratha.pdf)
  24. ^ Federation Centres 2013 Half Year Results Announcement (http://www.federationcentres.com.au/sites/default/files/FDC%202013%20Half%20Year%20Results%20Announcement.pdf)
  25. ^ Federation Centres 2013 Financial Year Results Presentation – Slide 7 (http://www.federationcentres.com.au/sites/default/files/FDC%20FY13%20results%20presentation.pdf)
  26. ^ http://www.reuters.com/finance/stocks/companyProfile?rpc=66&symbol=FDC.AX
  27. ^ a b http://www.federationcentres.com.au/invest/asx-announcements/chairmans-address-to-egm
  28. ^ http://www.theglen.com.au/
  29. ^ http://www.colonnades.com.au/
  30. ^ http://www.sunraysiadaily.com.au/story/1843321/centro-gets-name-change/
  31. ^ Slide 16 – FDC Global AREIT investor presentation September 2013 - http://www.federationcentres.com.au/sites/default/files/FDC%20Global%20AREIT%20investor%20presentation%20September%202013.pdf
  32. ^ Page 42 – CER Disclosure Document - http://www.federationcentres.com.au/sites/default/files/CER%20Disclosure%20Document.pdf
  33. ^ http://www.linkedin.com/company/federation_centres?trk=tabs_biz_home
  34. ^ http://www.asx.com.au/asxpdf/20130819/pdf/42hr0fkz3vyzr7.pdf
  35. ^ http://www.news.com.au/finance/business/stocks-to-watch-on-monday/story-e6frfkur-1226699624995

External links[edit]