Australia Centro pulls mall sale as deadline looms Tue Sep 9, 2008 12:00am EDT
By Victoria Thieberger
MELBOURNE, Sept 9 (Reuters) - Centro Properties Group (CNP.AX: Quote, Profile, Research, Stock Buzz), one of the highest profile Australian victims of the subprime crisis, has scrapped a planned asset sale, adding to pressure ahead of a key refunding deadline.
Centro and its affiliates, which own 665 U.S. shopping malls and 129 in Australia, have been pursuing asset sales and a recapitalisation to help pay down A$5.3 billion ($4.6 billion) in debt, and have had several repayment extensions from banks.
Centro ran into trouble after a rapid expansion in the U.S. last year when it became unable to refinance short-term debt as credit markets seized up. Its next refinancing deadline is Sept. 30, and it needs to demonstrate to its bankers it is making progress on its asset sale programme.
But in a letter to investors, Centro said the sale of one of its major properties, Centro Bankstown in western Sydney, would not go ahead because no satisfactory offers had been received.
The news pushed its shares, which are down about 90 percent this since December, down another 10 percent to a record low of A$0.135.
Bankstown, which analysts valued at around A$300 million, was one of several Australian malls that Centro is trying to sell with a combined value of over A$1.4 billion.
Analysts said that any large property transactions would be difficult at present because of tight credit conditions.
"It's certainly not limited to Centro, any sizeable asset is going to be difficult to move in this environment," said fund manager Stephen Hiscock at boutique fund S.G. Hiscock & Co.
Centro was not immediately available to comment on Tuesday because executives were on a roadshow with local investors. Centro and its affiliates have already had several extensions from bankers. Current agreements with U.S. bankers are due to expire on Sept. 30 and with Australian bankers on Dec. 15.
Hiscock said he thought the banks would remain patient.
"They do have the short-term support of the banks, which allows them not to feel they are forced to take a fire sale price. The banks are being sensible and if there is no material asset sale progress, it doesn't neccessarily mean they will pull the pin," Hiscock said.
In July, Centro announced the sale of 29 of the 31 funds in its Centro America Fund for $714 million, its only major asset sale so far.
Last month it said its 129 Australian malls were worth some A$9.3 billion and had occupancy rates of 99.5 percent. It is the second largest mall manager in Australia and the third largest in the U.S. ($1=A$1.23) (Editing by Jonathan Standing)
Ends.
Cheers, Pie :)
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