MacCookPSF – Reuters

Investors count Centro losses, rivals eye assets

MELBOURNE (Reuters) – Some of Australia’s top fund managers face big losses from the this week’s 80 percent slump in Centro Properties Group shares, as several of the mall operator’s rivals begin to scan its assets for possible purchases.

Centro (CNP.AX: Quote, Profile, Research), which owns 700 shopping malls in the United States, has lost some A$4.5 billion (1.9 billion pounds) in market value after it revealed that it and its affiliates were having trouble refinancing A$3.9 billion in debt due to the global credit crunch.

Documents filed with the Australian Securities and Investment Commission show that Barclays (BARC.L: Quote, Profile, Research) unit Barclays Global Investors Australia, Colonial First State, and UBS Asset Management (UBSN.VX: Quote, Profile, Research) all held stakes of over 5 percent in Centro.

“It was a concentrated register. When you see the end of month performance numbers, you’ll see it’s had an enormous negative impact on those who owned it. Bonuses will be on the line,” said BT Investment Management portfolio manager Jack Chemello.

“The demise of Centro is going to be a defining event in property investment in Australia, between those who got it right and those who got it wrong.”

Centro shares fell as much as 86 percent to an all-time low of $0.42 on Tuesday, before recovering to $0.80. They have since risen to A$1.32 at Thursday’s close after the company said it was still viable and did not have to sell assets. It has to renegotiate some debt facilities by a mid-February deadline.

Colonial, the wealth management arm of Commonwealth Bank of Australia Ltd (CBA.AX: Quote, Profile, Research), said it had a 12.18 percent stake in Centro as at December 12, across a large number of funds.

The stake was worth A$587 million on December 12. If unchanged, it would now be worth less than a quarter of that — about A$136 million — based on Centro’s last traded price.

A Colonial spokeswoman declined to comment on the specific value of the stake.


Barclays’ Australian arm raised its Centro stake on December 4 to 9.3 percent, worth some A$568 million then. The stake would have been worth A$103 million on Thursday. Barclays did not return calls seeking comment.

UBS Asset Management said its stake in Centro on December 13 was 5.09 percent, worth A$258 million. That compares with A$57 million as of Thursday. UBS confirmed the shareholding on Thursday, but declined to comment further.

Close to 90 percent of the shares on issue have been traded in the past four days.

Australia’s big banks have declined to comment on reports about their exposure to Centro. Local media has put Commonwealth’s exposure at A$1.2 billion, National Australia Bank Ltd’s (NAB.AX: Quote, Profile, Research) at A$1.1 billion and Australia and New Zealand Banking Group’s (ANZ.AX: Quote, Profile, Research) at A$1.2 billion.

Meanwhile, some of Centro’s rivals are preparing to make bids for some A$2.6 billion worth of the company’s retail assets, The Australian newspaper reported on Thursday, citing no sources.

The paper said Westfield Group (WDC.AX: Quote, Profile, Research), Commonwealth Bank-managed CFS Retail Property (CFX.AX: Quote, Profile, Research) and GPT Group (GPT.AX: Quote, Profile, Research) were among those vying for Centro’s Australian wholesale trust, which has assets of A$2.6 billion, including interests in shopping malls in Melbourne, Sydney and Perth.

“We look at any opportunity that meets our business model and strategy and that is across all opportunities in the market place,” a GPT spokeswoman said, declining to comment on Centro.

The other firms declined to comment.

“There is definitely significant demand for some of their assets, and there are clearly some good quality assets,” an industry source told Reuters.

“Good quality Australian assets are generally not available, so when they do become available they are in very high demand.”

Source : Reuters

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