CNP - Centro Properties Group

surfingman said:

Isn't the whole problem CNP don't actually own the property? The supplier of the funding to purchase does... (or shortly will)

They are in too much debt to pay for the property they partly own...

I could have it wrong, correct me if i am...

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If you buy a home and have a mortgage because you borrowed to buy it you still are the owner (with restrictions). You have the right to sell the home. The only problem is if it is worth less than the mortgage. I doubt this is the case with Centro.

nioka said:

There is a big difference between the two. Rams did not OWN property they only held mortgages so they had no property to sell unless by default. CNP do OWN the property so they can sell property. Only my opinion, I hold neither RHG or CNP (but I am watching CNP closely).

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Like all property purchase you dont own anything until you pay out your debt.
You can control the property asset and get the income but when it comes to crunch time and cant repay your interest, the liquidators comes in and sell the asset and pay it back to the bank, what left over is your after all the debt is pay but in these cases Share holders usually get nothing if sh**t happens ..

They may end up where the debt cost more than the mortgage because CNP pay premium price for alot of properties they acquire, they wont be getting the same premium if they force to sell doesnt matter how many competition they got for the bid.
these buyers are not stupid..they wont pay the price when CNP bought the properties, why the hell do they want to pay the premium now knowing the company is in trouble and they have no choice but to liquidate some of the asset.

take an example from Westfield...they stop buying in the US a while ago because they reckon there is no values in those properties but CNP keep going ahead and pay crazy price for them.. Westfield can now sit back and grab stuff cheap otherwise they dont touch it at all and if CNP goes to sh**t it one less competition for Westfield ... a win-win for them.

nioka said:

The only problem is if it is worth less than the mortgage. I doubt this is the case with Centro.

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More to the point, what is left may not reflect the shareholder value.

I expect that the final value will be well below the present share price...happy to be proved wrong and keen as to buy in should re-financing prove possible.

Yes, value is still a bit murky at this stage.

I've had a small nibble but suspect may be a bit premature.

ROE said:

Like all property purchase you dont own anything until you pay out your debt.
You can control the property asset and get the income but when it comes to crunch time and cant repay your interest, the liquidators comes in and sell the asset and pay it back to the bank, what left over is your after all the debt is pay but in these cases Share holders usually get nothing if sh**t happens ..

They may end up where the debt cost more than the mortgage because CNP pay premium price for alot of properties they acquire, they wont be getting the same premium if they force to sell doesnt matter how many competition they got for the bid.
these buyers are not stupid..they wont pay the price when CNP bought the properties, why the hell do they want to pay the premium now knowing the company is in trouble and they have no choice but to liquidate some of the asset.

take an example from Westfield...they stop buying in the US a while ago because they reckon there is no values in those properties but CNP keep going ahead and pay crazy price for them.. Westfield can now sit back and grab stuff cheap otherwise they dont touch it at all and if CNP goes to sh**t it one less competition for Westfield ... a win-win for them.

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Good summation ROE..

These "interested parties" that CNP refer to will be sniffing for bargain basement, fire-sale prices - that in all probability won't total enough to get CNP out of the melt-down pot. I personally wouldn't touch Centro shares with a barge-pole right now...

AJ

Do you think that CNP will still be trading toll February 15, or do you think there doomed way before then.

zefstar said:

Do you think that CNP will still be trading toll February 15, or do you think there doomed way before then.

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here are traders who are willing to take a punt on this. even alot of mum and dad traders are getting into it on the perception that someone will dig CNP out of the current situation. myself a lot know a lot of families taken money out of their mortgage and bought into CNP at around the $1 mark , thinking it would go back to it's glorious days of $10 in the future... in my opinion, there is still a chance for CNP, a punt is still viable, but definitely not at $1, or $1b+ market cap. As to cover its short term debt, CNP would need to sell majority of its assets at basement price in a short time frame. So in short, the "risk takers" will keep the price at its current level for now, until the reality hits them...

Brokers bullish on Centro sale

SYDNEY AAP
2008-Jan-03 01:40 PM

Brokers believe Centro Property Group will ride out its credit crunch woes and that its securities could rebound to within the $2 range.

The nation's second-largest owner of shopping centres went into a tailspin midway through December when it was unable to refinance about $1.3 billion of maturing debt.

The company was nearly annihilated by investors, losing more than four-fifths of its market capitalisation.

Since then, Centro securities have stabilised around the $1 - $1.10 range and on Wednesday, it announced it had received unsolicited approaches from parties wishing to invest in the group or buy up some of its assets.

In response, Centro said it was open to offers that maximised the interests of its security holders.

Aequs Securities institutional dealer Ric Klusman said there was now a lot of chatter in the market about either financial institutions or rival shopping centre operators buying in.

"The rumour is that they are talking to Westfield," Mr Klusman said.

"Westfield sold them a lot of assets and whether Westfield wants to buy them back or not, I think they will now ride through this, this is different to the RAMS situation."

At 1336 AEDT Centro Securities were up 6.5 cents, or 5.77 per cent, to $1.10 in a broadly weaker market.

That was fuelled partly by media reports that US hedge funds Blackstone and Citadel had flown teams to Australia to participate in the Centro sale.

Mr Klusman said he would be surprised if Centro's advisers, Lazard Carnegie Wylie, hadn't attracted the interest of such global finance giants.

"I think it's an opportunity for someone to raid them and my gut feeling is you're going to get a bid and the buyers are positioning to get themselves a good deal," he said.

"Carnegie Wylie are very professional advisers and I would think they'd be naturally talking to all these people as a matter of course."

He also pointed to the huge volume of trade in Centro securities and said it would not be difficult for a potential suitor to quietly build up a significant stake in the company.

"About ten per cent of the company was traded yesterday, and if you went in gently over a week and soaked up ten per cent and then said you'd lend them the money needed to cover the financing problems, you'd be pretty well placed," he said.

Mr Klusman predicted the stock will "go back to $2".

By Nick Lucchinelli

Good to hear, Onecap! The sheer amount of volume over the past week cannot be attributed to mum and dad traders + day traders.

The last few substantial shareholder notices released :

Barclays reduced 9.32% -> 7.96%
then another notice, reduced the 7.96% down to 6.83%
CBA reduced 11.07% -> 10.11%
MacBank reduced, tho I don't have the %ages

and on the other hand UBS increased 5.09% -> 8.63%

Who is soaking up all this volume? I'm taking a big punt that there is some serious positioning going on. That was my reason to jump in, but way too early ($1.36). I'm sure there's a lot of day traders though, that have made big $$$ in the past couple of weeks with CNP - Wildly volatile swings and big volumes, but little comfort for people who bought in @ $6 - $10

mrWoodo said:

Good to hear, Onecap! The sheer amount of volume over the past week cannot be attributed to mum and dad traders + day traders.

The last few substantial shareholder notices released :

Barclays reduced 9.32% -> 7.96%
then another notice, reduced the 7.96% down to 6.83%
CBA reduced 11.07% -> 10.11%
MacBank reduced, tho I don't have the %ages

and on the other hand UBS increased 5.09% -> 8.63%

Who is soaking up all this volume? I'm taking a big punt that there is some serious positioning going on. That was my reason to jump in, but way too early ($1.36). I'm sure there's a lot of day traders though, that have made big $$$ in the past couple of weeks with CNP - Wildly volatile swings and big volumes, but little comfort for people who bought in @ $6 - $10

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Interesting to see CBA reduce its holdings, since colonial was the one that first wanted to get into it when CNP declared its problems. I think people who are buy are your average mum and dad investors, the big players will have a clearer picture of how hard it is for CNP to get funding atm...

Friends
I am referring to an eminent expert : Mr Robert Gottliebsen an ex editor of a financial daily has moved into columnist in Eureka REport. In this famous journal he has chosen few shares to create a portfolio on hypothetical basis and created $10000 in each of the shares. Consistently he advocated for CNP even when it started into slide. There was no sale ever or warning.
Most of his (75%) of his portfolio has been downgraded far below than original investment value.
One would expect that these experts would know better than day traders or naive mum and dads. That is the irony. Many of the financial analysts are like him - too knowledgable. When real crunch time comes their analysis (??) falls flat to withstand the test. By sheer backing of a high fund and getting prioritised backing of seed money, promoters'quota and financial muscles the analysts are giving returns. When it is sunshine every one can make a hey. Test comes when there is a problem.
If any one would have followed Mr Gottliebsen's recommendation would been bankrupt.
So lesson learnt is DYOR. NO one would take more care for your money than yourself. Planner gets 2.5% of your investment (with no risk) you have the probability to loose rest 97.5% of the advice becomes nonfinancially viable.

Bottom line CNP is in great trouble but still just because CBA and other financial institutions are shied away could be the right time to invest by those who dare.

This is not a financial advice but sharing some observation .

REgards

Well, how much will this stock drop next week after its profit warning, which was issued after today's close of trade?

re read the announcement, they are not affected to 2010 in us loans which is about 40%, and the aussie component isnt due till 2014 i think and thats 50% of their debt.

il get back to you on monday night with my thoughts on what will happen with SP

Hedge fund managers and many big time trades make calculated moves every day ... buying into CNP in large quality is nothing surprising ...

It doesn't mean this stock is cheap or good .They all have their reasons and buying into something just because you see other buy in without much knowledge about the product is risky.

Just as they are people who make millions from trading forex and many more goes backward or even bankrupt, same goes for the stock trading.

what about those guys that buy big into CNP when they are trading above $5 ... they make a calculated move and they got it wrong... Now they are licking the wounds .. they do the same now at $1 ish ...it could go up to $2 or $3 who knows but it has the possibility of going south as well..

Another Calculated move that could go wrong again

http://business.theage.com.au/centro-shocks-the-market-with-two-more-bombshells/20080104-1k8i.html

ROE said:

Another Calculated move that could go wrong again

http://business.theage.com.au/centro-shocks-the-market-with-two-more-bombshells/20080104-1k8i.html

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Sounds like CNP has gone from a mild cold to having a severe case
of Phenomia and also Lung Hematoma in the space of a couple of days.
With the Dow Jones down over 200 points and the directors once again choosing to put out an announcement after the close its hardly suprising that the financial controller is on stress leave. I read the paper this morning and they didn't seem to know when he was coming back?? Who would come back to that job..

Gosh, what will make Monday a very interesting day for CNP indeed. Wonder whether it will retest its recent low of 42 cents. It couldn't get any worst, could it?

Media painted the hedging thing far too big. It only happens in next 4 - 6 years time. NOW we are talking about a situation for the next couple of months!

What are the newspapers thinking of?

I saw this in sky news last Friday (4/1/08):
"The embattled Centro Properties Group, has issued a warning to the markets, saying earnings may be driven down even further because of the rise of interest rates.

It says its current interest rate hedging is now below historical levels meaning its increased exposure to interest rate movements could translate into volatility in earnings.

Centro says it traditionally maintained a high level of fixed interest rate hedges on its borrowings, but because of the credit crunch its unable to extend maturing interest rate hedges."

nitpra said:

I saw this in sky news last Friday (4/1/08):
"The embattled Centro Properties Group, has issued a warning to the markets, saying earnings may be driven down even further because of the rise of interest rates."

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Expect Centro to be dragged like a Golly Wog between two sisters for the next 7 weeks.

And seriously. Look at the divvy payments over the past years. It's around 43 cents. Correct me if I'm wrong please.

Now I read divs will fall by 28% by 2010. So we have a $1 share returning what ... 30 cents? Not a bad ROI is it.