Feb 28 - Private equity firm Blackstone Group LP has struck a deal to buy nearly 600 U.S. shopping malls and other properties from Australia's Centro Property Group for about $9.4 billion, a person with direct knowledge of the transaction said on Monday.

Centro Arndale, one of the shoppig centres from the Australia's Centro Property Group

Blackstone beat rival bidders that include Morgan Stanley Real Estate, which had teamed up with Starwood Capital Group, and New York-based NRDC, according to the person, who was not authorized to talk to the media and did not want to be identified.

The portfolio includes 560 U.S. shopping centers, whose tenants include grocery store operators such as Kroger Co, Safeway Inc , and Koninklijke Ahold NV, which owns Stop & Shop and Giant.

It is the latest addition to Blackstone's rapidly expanding property empire, which includes the Hilton hotels chain. A sale would allow Centro to reduce its large debt load.

Centro shares were halted ahead of an expected announcement on Tuesday. Blackstone shares were unchanged in trading before the U.S. markets opened.
A Centro spokeswoman declined to comment, while Blackstone officials were not immediately available.

The $9.4 billion purchase price equals book value for the assets, the source said, confirming a report in the Wall Street Journal.

The mall sector has weathered the U.S. commercial real estate downturn better than most, but still faces pressure as consumers struggle with high unemployment and rising energy prices and turn increasingly to online shopping.

While consumer confidence is at a three-year high, this has not triggered robust economic growth. Last week, the U.S. government said the economy grew at a lower-than-expected 2.8 percent annualized rate in the fourth quarter.

By Michael Smith