Centro Properties Turmoil Shaves More From Superannuation Fund Returns
The Age
Friday December 21, 2007
CENTRO Properties' struggles have cut up to 2% from the average superannuation fund returns so far this month, worsening a 1.1% dip in November.
Monthly figures from SuperRatings show returns on the median "Listed Property Option" - where funds invest with a bias towards listed property - lost more than 5% last month. "Balanced" funds, which have a smaller exposure to property and hold about 80% of the money invested in super, will not be hit as severely, but they have not escaped unscathed. In August, when credit markets clenched in reaction to rising US foreclosures, balanced funds managed to grow by 1.3%.SuperRatings has recorded only six months of negative growth in super funds over the past three years but expects another this month. On Monday, Centro Properties, Australia's second-largest shopping centre owner, said it was struggling to refinance $1.3 billion of debt that was due. Listed property trusts, measured by a subindex on the S&P/ASX 200, shed 11.4% on Monday.SuperRatings managing director Jeff Bresnahan said the typical balanced fund held just 3.5% of its assets in LPTs. But he said the exposure varied among funds. The average retail fund held about 6.2% of its money in LPTs while industry funds held about 3%."On both sides of the fence, there are some that hold about 15%," he said. "Those are the ones that are going to get poleaxed in December."Centro's shares regained another 11.5? yesterday to close at $1.32. Over trade on Monday and Tuesday, the shares lost about 86% of their value. They traded above $10 in May. Centro said yesterday it had spent the past two months negotiating a way to avoid returning to the US debt market. It refinanced $300 million there in August, when investors started fleeing the market in droves.Centro said it turned to the commercial banks for help, hoping to delay the debt for 13 months. Earlier this month, it considered selling shares or some of its properties, but said it could not put together the plans quickly enough.Only last week did it realise that it would pay a much higher rate to borrow money to pay off the debt that was due, and that the higher rate would cut into the company's earnings forecast. It requested a trading halt pending the announcement of a new earnings forecast and the halt was enforced by the Australian Securities Exchange on Thursday of last week."At that time, Centro still considered it achievable to agree and announce an acceptable 13-month refinancing package before open of market on Monday, 17 December," Centro said in a statement. "As the negotiations continued, on or about Friday, 14 December, Centro became aware that it would have material difficulties in obtaining the 13-month refinancing."Unable to come to terms, and facing the return of its shares to trade, Centro agreed with the banks to extend its debt until February 15, "to allow time for Centro to develop the strategic plan and agree the terms of the longer-term financing with its financiers"."That process is ongoing," Centro said.LINK? Read Centro's response to the ASX at tinyurl.com/2mxf6x
© 2007 The Age
