Centro America Fund sale terminated
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Susan Murdoch |
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| Shopping mall owner Centro Properties said today a $US714 million sales agreement for its Centro America Fund has been terminated. But Centro also said it remained in talks with the potential purchaser | |
Centro (ASX: CNP), one of the highest profile Australian victims of the sub-prime crisis, announced on July 15 the proposed sale of 29 of the 31 shopping malls in its wholesale Centro America Fund.
Shares of Centro Properties shares lost 20 per cent to 0.084 cents this afternoon, as the benchmark S&P/ASX 200 index plunged 2.15 per cent.
Centro Retail Trust (ASX: CER) had lost 24 per cent to 0.11 cents.
Centro Properties, which manages almost 800 malls worth $22.6 billion and is the fifth-biggest shopping mall owner in the US, is selling assets to pay down debt.
It has already had several debt extensions from its lenders. Centro's chances of survival will now be under further pressure, with the sale of its America Fund looking less likely.
Richard Morris, analyst at Constellation Capital Management in Sydney, which holds shares in Australian property trusts, said: “They've got to be getting closer to oblivion, but the question is, do the lenders want to liquidate all these property assets in the current environment or would they prefer to leave them in the hands of Centro a bit longer in the hope the markets turnaround and there can be a more orderly sell down?
“Signing the death warrant for the company may not be the best outcome, that's what the banks would be thinking I'd assume.”
Centro said the due diligence period had expired and the purchaser had elected to terminate the agreement.
“Notwithstanding termination of the agreement, discussions between Centro and the purchaser are continuing,” Centro said.
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