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centro says retail trust solid: shares jump...

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    UPDATE 1-Centro says Retail Trust solid, shares jump
    Wed Feb 27, 2008 7:49pm EST
    By Victoria Thieberger

    MELBOURNE, Feb 28 (Reuters) - Australia's troubled Centro Properties Group (CNP.AX: Quote, Profile, Research) said its affiliate Centro Retail Trust (CER.AX: Quote, Profile, Research) had a strong portfolio and was well placed to weather a U.S. economic downturn, boosting the trust's shares by as much as 90 percent.

    Centro Retail Trust, which has US$6.6 billion in shopping mall assets in the U.S. and A$2.1 billion in Australia, has won an extension on its short-term debt but remains under pressure to recapitalise or sell assets to raise cash.

    Centro Properties, one of Australia's biggest casualties of the global credit crunch, has won an extension on a total of A$5.4 billion ($5.1 billion) in debt till April 30, including Centro Retail's debt.

    Centro Retail shares were up 55.5 percent to A$0.49 after its market update, having risen as high as A$0.60, but are still far below December levels around A$1.50.

    Centro Properties shares were up 17 percent to $0.58, but remain about 90 percent below mid-December levels when the company first revealed debt problems.

    Centro Properties Chief Executive Glenn Rufrano told a briefing on Thursday that Centro Retail's assets were widely diversified with solid tenants.

    "Our property performance continues to be strong and our challenges are primarily capital markets related," Rufrano said.

    He said Centro Retail Trust's 419 U.S. shopping malls would not be severely hit by a U.S. economic downturn.

    "We will not have a significant decline in occupancy or income," he said. The property trust was not concentrated in any one tenant company, had a large proportion of supermarket tenants that were insulated from slower retail spending, and was diversified across U.S. geographic regions.

    However, Centro Retail revealed a writedown of its U.S. property assets in its six-month earnings report on Thursday.

    It announced a loss of A$260.8 million, down from a profit of A$41.8 million, mainly due to a writedown in U.S. retail valuations of A$198 million.

    Centro Retail Trust has appointed advisers including Rothschild to help with a business review to help refinance short-term debt and consider a longer-term recapitalisation.

    Rufrano told the briefing that the Australian property market was a strong one in which to receive full value, making it more likely to sell assets locally if required than in the U.S.

    Centro Retail has been granted an extension by its lenders till Sept. 30, but that is dependent on Centro Properties winning an extension beyond April 30. ($1=A$1.06) (Editing by James Thornhill)

    © Reuters 2008 All rights reserved


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