analysis paralysis , page-26

29 February 2008
Centro Properties Group First Half FY08 Results

Centro Properties Group (Centro) today announced a loss of $1,112.4 million for the first
half FY08. The loss is mainly attributable to non-cash items including a $578 million writedown
in New Plan goodwill, a $278 million write-down of direct US property investments and
losses related to the mark-to-market of financial instruments including currency and interest
rate hedges.
First half distributable income of $185.9 million was up 14.2% compared to the prior
corresponding period. The increase in distributable income is primarily due to an increase in
assets under management from the New Plan acquisition and the benefit of a full period of
the Heritage acquisition.
Centro’s distributable income for the period equates to 22.00 cents per security, up from
19.86 cents per security for the prior corresponding period. However, as previously advised,
no distribution will be paid for the half. Until the outcome of the recapitalisation process is
known, Centro has suspended guidance on its forecast operating distributable income.
Various components of Centro’s business have shown growth with net operating income
(NOI) and rental income growth in both Australia and the US, as well as increases in
property management and funds management income.
The operating performance of Centro in the past six months includes:
• US Portfolio performance
The US property portfolio, which accounts for 62% by value of total properties under
management, has grown significantly and produced the following results for the half:
�� Stabilised NOI growth as anticipated at 2.0%;
�� 82.2% renewal rate on specialty leases;
�� Rental income growth on new leases of 11.1% for the period; and
�� 92.9% occupancy for the stabilised portfolio.
• Australian Portfolio performance
The Australian property portfolio is underpinned by solid trading conditions and
produced the following results for the half:
�� 5.4% comparable sales growth for the past 12 months;
�� 9.9% rental income growth compared with 8.6% for the December 2006 half;
�� 4.8% comparable stabilised NOI growth; and
�� 99.6% stabilised portfolio occupancy.


And later, Glen Rufrano's comments upon becoming CEO....

14 March 2008
Dear Securityholder
There have been a number of developments for Centro since we wrote to you in December last
year. I am writing to you to provide an update on these developments, particularly following the
release of Centro’s results for the first half of financial year 2008.
The recapitalisation process is on track with a high degree of interest and ongoing support of
the lenders. Various datarooms are open with companies representing both local and offshore
interests granted access in order for them to undertake due diligence. Once formal bids are
received and evaluated, the Board will have the necessary information to determine the optimal
strategy in the best interests of all Centro stakeholders. I will provide you with a further update
on the process at that time.
As Centro announced on 15 February 2008, Centro secured an extension from its US banks
until 30 September 2008 and an extension from its Australian banks and US private placement
noteholders until 30 April 2008.
Centro released its half year results (for the period ended 31 December 2007) on Friday 29
February 2008. In summary:
• Centro announced a loss of $1,112.4 million for the first half FY08. It is important to
note, however, that this loss was mainly the result of non-cash items including write
downs in New Plan goodwill and direct US property investments and losses related to
the mark to market of financial instruments including currency and interest rate hedges;
• First half distributable income was $185.9 million;
• Distributable income for the period equates to 22.00 cents per security, up from 19.86
cents per security for the prior corresponding period – although, as previously advised,
no distribution will be paid for the half year; and
• the underlying components of Centro’s business have shown growth during the period.
Both the Australian and US portfolio have delivered net operating income and rental
income growth and continue to perform in line with our expectations. Our well
established services business also delivered significant income during the period with
increased income across each of property management, development and leasing and
funds management.
As Centro foreshadowed in its announcement to the ASX on 15 February 2008, the detailed half
year report released with the results last Friday restated the historical position of Centro’s
current and non-current debt in its audited 30 June 2007 accounts. Interest bearing liabilities in
the sum of $1,514,097,000 which were classified as non-current have been reclassified as
current. This is in addition to the A$1,096,936,000 classified as current in the audited 30 June
accounts. The total amount of interest bearing liabilities stated in the 30 June 2007 accounts
was unchanged.
Centro’s property-related results show that Centro does not have an operating issue. The
current issue we are facing is one of capitalisation. Our review is focused on recapitalising the
Centro balance sheet. The Board, management and staff at Centro remain completely focused
on developing and implementing a strategic plan to improve securityholder value.