Barkruptcy hmmmmmm. Centro are only on the verge of this if the...

Barkruptcy hmmmmmm. Centro are only on the verge of this if the Banks decide they do not want to extend the loans they issued happily in the first place. It is highly abnormal for the Banks not want extend their loans if the loan is properly serviced (which Centro continues to do) and the loan to property valuation ratio remains at acceptable levels over the period of time. Centro’s LVR is well within acceptable levels - hence why all the banks lent them the money in the first place. The Australian property market is still healthy and the commercial market in the US is shaky it is not falling apart.

The credit squeeze (which was created by the very industry Banks are part of) has created an atmosphere of distrust for lenders and there is minimal credit in the market - this is not Centro’s fault however it is their problem.

If the Banks wanted to be mean spirited and pull future lending to Centro despite the fact they are servicing the loans properly then yes they will be bankrupt territory. This would be an incompetent act by the Banks though. It is simply an unlikely event if Centro continues to service their loans. It would be like a individual like you or I getting a 25 year loan with a Bank then after a couple of years they come along a say look we want out money back even though you have been meeting the repayments on time - huh? Of course (assuming no-one else would lend you money because everyone it too scared) you would have to sell the house to pay the loan out - pretty stupid really. It defeats the purpose of going to the Bank in the first place - you just wouldn't go back again if this how Banks behaved.

Centro has a very sound business model founded on shopping centre development, acquisitions and management. Shopping centres that provide the general staples that people require for day to day survival irrespective of the economic conditions.