Carolyn Cummins has finally written an article that DOESN'T use the word "beleagured"to describe Centro. We can make 3 observations: 1. Centro may now have "turned the corner" 2. Carolyn may have amended the auto text in her WP software from "beleagured" to "once debt-plagued" 3. Good news doesn't sell as well as bad news - hence it's taken a substantial lift in the share price before Carolyn could file another Centro article.
Article in SMH today is.....
"THE turnaround of the once debt-plagued Centro Retail Australia is near complete, with the group's maiden 2012 result well received by investors.
Although the headline number was a loss, that was due to one-off costs from the restructure and the final payment from the long-running class action.
Its underlying earnings in the seven months to June 30 were $123.2 million. That enabled the group to distribute 6.5¢ per security.
Now that Centro's negative past is behind it, the retail landlord will focus on a possible name change or an upgraded logo and a strong growth program. Advertisement
The new chief executive, Steven Sewell, said being a single-focused and food-anchored retail landlord would help it weather any volatility in the retail sector.
Centro was the first Australian company to feel the brunt of the subprime crisis, when in 2007, after taking big loans out for its US expansion, it revealed it did not have enough cash to repay debt due that year.
It was run by banks for the next few years, until they agreed on a restructure and rescue package.
The head of property research at Bank of America Merrill Lynch, Simon Garing, said that post the most urgent ''to-dos'' Centro's focus could now turn to three areas to drive earnings per security and return on equity.
''These will be to maximise asset performance and pursue efficiency gains; activate the $300 million development pipeline and deal with the $1.1 billion of managed syndicates expected to be wound up in the next three years,'' he said.
''Centro has secured sufficient liquidity to fund both the development pipeline and the potential acquisition of the equity it does not already own in the syndicates.''
A research analyst at Citi, Adrian Dark, said following on from the retailer's result, he saw ''little reason to change our positive view on the outlook for the group.
''As we have highlighted previously, we see potential debt cost savings as a major driver for Centro's earnings over the medium term,'' he said.
''The group is making good progress on this front, having received credit-approved commitment letters for the restructuring of the core facility, at a reduced margin.
''Finalisation of the restructure continues to represent upside to our forecasts.''
Centro's improved performance comes as the latest Colliers International National Retail Investment Review 2011-12, found there had been a particularly strong start to the retail investment market in 2012, with nearly all of the top 10 largest sales of the 2011-12 financial year taking place over the first half of this year.
The report covered transaction activity of greater than $10 million across Australia.
Colliers International recorded 83 major retail investment transactions during 2011-12, with a total value of $4.24 billion, which was an impressive rise of 8 per cent on the previous financial year.
The national director of retail investment services at Colliers, Lachlan MacGillivray, said in the report that investor demand for quality shopping centres was resilient over the 2011-12 financial year despite volatility in monthly retail trade data.
''Investor demand for quality shopping centres was buoyant, but there was also strong interest in underperforming centres with repositioning potential,'' he said.
