Takeover rumoured as relaunched Centro ends trading with $2.3bn capitalisation
by: Bridget Carter From:The Australian December 06, 201112:00AM
Source: The Australian
CENTRO Retail Australia, a newly amalgamated $7 billion shopping centre empire, ended its first day of light trade on the Australian Securities Exchange yesterday with a $2.3bn market capitalisation.
The shares hit the boards at 11am at $1.70 before touching a high of $1.82 and finishing in what was a broadly positive market at $1.74, representing a 26 per cent discount to its net tangible assets per share of $2.35.
Of 1.34 billion units on issue, just 3.74 million units traded. More than 70 per cent of the stock is owned by hedge funds and lenders, and the company is touted as a potential new-year takeover target by one of Australia's large listed property trusts.
Centro Retail Australia is trading on a deferred settlement basis, with normal trade beginning on December 15. In total, the vehicle has net equity of $3.3bn and the trust's net tangible assets per share are $2.35, according to a Merrill Lynch note.
Merrill signalled the trust was likely to trade at a larger discount to its listed retail property peers (which trade at discounts to NTA of 9-21 per cent), given a lack of clarity on the future chief executive, board composition and strategy.
Other factors playing a part were uncertainty on outstanding litigation and the high level of hedge fund ownership.
However, the investment bank predicted earnings growth for the fund would be 5.8 per cent annually to the 2016 financial year, compared with 3.1 per cent on average for its peers. Merrill valued the company's units at $2.05 each.
Analyst John Kim from CLSA put a price target of $1.90 on the stock and estimated the cost of class actions against the company would be $300m.
Centro Retail Australia comprises Centro Retail Trust, and Centro's former unlisted trusts as well as other shopping centres previously owned by the Centro headstock company Centro Properties Group, with $4.4bn of direct property and total assets under management of $7.bn.
Centro Retail shareholders have taken 15 per cent of the new company, while shareholders in two other funds hold the rest of the equity.
CRF Price at posting:
$1.77 Sentiment: Hold Disclosure: Held
