Centro to Face Crisis amid Downgrading of Portfolio

Submitted by Jim Thesiger on 29 July, 2009 - 05:54

The recent downgrading of the US and Australian property portfolio value by $2.62 billion have lead to considerable danger for some of the managed funds for Centro Properties Group (CNP) raising the fear that they might breach the banking convents. According to the Centro authority, in June 30 the value its Australian managed property portfolio was $7.69 billion where in December it remained at $8.17 billion.

However, the US managed property portfolio was the one that took the biggest hit. In June 30 the US portfolio was valued as $10.08 billion US dollars where in December it was worth of $12.42 billion. The capitalisation rate on the Australian portfolio saw a rise of 36 base points where the US portfolio went up for 84 basis points.

On yesterday, Centro Retail Trust declared that its Australian and US property portfolio value dropped $1.02 billion for the later half of the financial year. It is to be mentioned that the group owns 51 percent of the trust. According to some market experts, few of the individual funds might face technical breaches in their banking convents after going through revaluation. A Centro spokesman claimed on Tuesday that none of the banking convents were breached by the group. However, he also admitted that the group hasn’t yet formally signed off the accounts. The maturities that are to come up for renewal across the group and its management funds were worth of $2.1 billion at December 31. However, no significant reaction could be noticed in the stock exchange for Centro shares regarding the recent developments.

Last year the group escaped a massive collapse when an Australian and US bankers syndicate pulled back from refinancing a $5 billion loan. Centro managed to win a stabilisation plan that gave the company a deadline until December 2011 to refinance a senior secured debt worth of 4 billion. The group is due to release its results for 2009 financial year at the end of August.