1) Centro owns commercial property not residential property so your comparison is flawed. Even 100% gearing is fine if the income can service the debt.
2) How much they have overpaid is debatable because the capital markets are all but closed.
3) The look through gearing is 73% however Centro's book gearing is 48%.
4) Even though the capital markets are closed conservative writedowns and impairment write offs have already been made i.e. they have already been factored into the gearing ratios.
5) Revenue is projected to rise and even at current levels can easily service the debt.
It's pretty obvious to me that you haven't even bothered to look through the half year results.
Centro's only problem for now is that the banks are trying to capitalise on Centro's achilles heel - the need to roller over the loans in a credit squeeze - and they will try to extract as much of a premium as they can from the situation.
But the banks won't be so stupid as to put Centro into liquidation becuase then everyone would lose. The banks in the US already have enough bad debt from the subprime disaster and the Australian banks will as well. They can't afford to offload good debt especially not when they will incur huge capital losses as well.
All you can come up with "they did the wrong thing so they're going down" but you can't explain yourself based on the actual numbers.
Have another go.
CNP Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
