Centro MCS has informed unitholders of the proposed wind up and termination of its Centro Direct Property Fund.

The move follows the redemption of more than 93% of units in the Direct Property Fund (DPF) after the Centro group restructured in December 2011 resulting in a decline in net assets from $1.32 bn in November 2011 to $71.3 million as at May 4 this year.

Prior to the restructure, the redemption of DPF units had been suspended since December 2007. The actions taken to achieve the liquidity required to lift that suspension saw the fund's investment mix change from a diversified exposure to a range of Centro managed unlisted direct property funds to the current position where most of DPF property exposure is now through Centro Retail Australia.

"DPF now has over 90% of its remaining assets exposed to one listed group - CRF. This means that DPF is in effect a conduit to owning the CRF stapled securities directly and the size of DPF does not allow for any meaningful ongoing diversification of the direct property exposure for which it was formed," chairman W. Peter Day wrote to unitholders this week.

Further redemptions have been suspended and unitholders have until June 6 to call a meeting in relation to the proposal and vote on a resolution, after which time Centro MCS is entitled to begin the wind up.

Centro Retail Australia was involved in a $200 million settlement earlier this week in a class action, with the property investor contributing $85 million of the total.

The class action was launched by Slater and Gordon and Maurice Blackburn against both Centro Group and its auditor PricewaterhouseCoopers more than four years ago.

Investors accused Centro of misleading and deceptive conduct by not disclosing at least $3bn of interest-bearing debt falling due in 12 months in its 2007 financial report.

The subsequent restructure saw Centro Group reformed as Centro Retail Australia.