More red ink at Centro Properties and Centro Retail trust, the two high geared property groups.
Their problems in December 2007 in rolling over debt triggered the sharp plunge in the local stockmarket and alerted investors to the financial disasters that were to come from the likes of Allco, Babcock and Brown, MFS, the various Macquarie funds, Goodman, GPT, Mirvac and a host of over leveraged property players.
The groups have already revealed huge losses for 2008 and for the first half of the latest financial year; yesterday they updated the market for the second half and revealed more red ink.
Centro Properties’ $2.6 billion write-down is second to the $3.4 billion write-down revealed by westfield at the start of this year for its 2008 year.
Centro Properties owns 51% of Centro Retail Trust.
The announcements follow the impaired losses revealed by Australand on Monday which pushed company to a loss of $268 million for the first half, and saw it put its hand out for $475 million in fresh capital.
The two Centro trusts can’t access the market, their securities are near worthless.Both are in continuing negotiations over existing debt. They are effectively in the hands of their banks.
Centro Properties closed at 9.5 cents yesterday, CER securities at 9.6c.
Both groups are being kept alive by their banks which effectively control the two groups, although there’s a bunch of Chinese punters who claim they can raise $5 billion and want millions in fees to do so.
The losses yesterday of over $3.6 billion would have eaten up over 60% of that supposed raising, had the investors been able to get it and invest it.
In fact the losses for both groups since January 1, 2008 are around $A11 billion, $7 billion at Centro Properties and around $4 billion at the retail trust.
Centro Properties looks like reporting losses of at least $5 billion for 2009; Centro Retail, over $3 billion.
Investors in the various syndicates linked to Centro have shared in this crippling news.
Centro Properties Group says the value of its Australian and US property portfolios fell by $2.62 billion in the second half of its financial year.
Centro said its "look through share (on a property ownership basis) is A$1,524.5 million"
The value of its Australian managed property portfolio was $7.69 billion at June 30, down from $8.17 billion at the end of December and down from $9.09 billion at the end of 2007-08.
The value of its US managed property portfolio was $US10.08 billion ($A12.25 billion) at the end of 2008-09, down from $US11.81 billion at the end of December and from $US12.42 billion at the end of the last financial year.
Centro said all of its properties were valued as at 30 June and independent valuations were conducted for 57% and 29% of Centro’s Australian and US properties, respectively.
Centro will release its full year results on August 26.
Its allied Centro Retail Trust (CER) announced preliminary property valuation results for its Australian and US property portfolios as at June 30, 2009 with over $A1 billion in losses revealed. .
"The total decline in property valuations for the six months to 30 June 2009 was A$1,023.8 million (US$ converted at the 30 June 2009 spot rate of 0.8064).
"All properties in CER’s managed property portfolio were valued as at 30 June 2009 in keeping with CER’s valuation policy.
Independent valuations were conducted for 47% and 25% of CER’s Australian and US properties respectively. The retail trust is due to report on August 25.
Centro Properties Group reported a $2.4 billion first half loss for 2009 as the shopping centre owner was hit by falling property values, slumping derivative values and losses from the movement in exchange rates.
In 2008 Centro Properties Group lost $2.053 billion full-year loss, while Centro Retail Trust was $868 million in the red.
Centro Retail had a $2.06 billion loss for the December 2008 half.
The first half and 2008 losses includes currency and hedging losses, plus other costs. These are still to be worked out for both groups for the June 30 half and full year.
