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Centro goes BLAM! (probably)

Discussion in 'Real Estate' started by Mark Laszczuk, 16th Sep, 2008.

  1. Mark Laszczuk

    Mark Laszczuk Well-Known Member

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  2. Tropo

    Tropo Well-Known Member

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    Hmmm.... If I am not wrong, I think it was a taxi driver...:eek:
    I would say that at $0.00 Centro will become a real bargain !! ;)
     
  3. Mark Laszczuk

    Mark Laszczuk Well-Known Member

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    Hahaha, yeah pretty much! By the looks of it, that isn't too far away. I can't see their financiers giving them any more extensions.

    Mark
     
  4. Billv

    Billv Getting there

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    Mark,

    I was thinking of buying them because they have assets
    and it's not like shopping centres can go bust but their loan situation in the US was worrying me.

    I stayed away because I thought that if the majority of their assets are mortgaged and if they go bust the lender takes it all...:eek:
     
    Last edited by a moderator: 17th Sep, 2008
  5. Mark Laszczuk

    Mark Laszczuk Well-Known Member

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    Bill, this is the situation:

    Bank: Dear Centro, please pay us the money you owe us. We have already given you four extensions, you can't sell any of your assets to raise cash, even at a discount. We're over it.
    Centro: We don't have enough money to pay you.
    Bank: Give us your assets.

    The End.

    Mark
     
  6. Rick

    Rick Well-Known Member

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    If it was that simple Mark they would have done it by now.

    My understanding is lots of different banks are owed differing amounts of money. To break up the assets and repay each creditor would be a nightmare since the assets are all in very complicated financial structures that most of Centro management probably don't even know how are set up.

    At the moment the financiers are receiving some cashflow from Centro, if they make the whole thing collapse, how long will it be before they receive anything??? :eek:

    Might be wrong but I reckon we have some way to go yet in this little saga.
     
  7. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    I agree. The assets Centro holds are fundamentally sound ... they just can't sell them because nobody wants to buy them (or more specifically, nobody can get the finance required to be able to buy them).

    I've read a couple of reports which suggest that the banks might be best to wait for the credit markets to settle down a bit so that Centro can actually get some money from their assets - otherwise the banks are merely left (in the short term) with an asset that they can't sell either.

    That being said, I still wouldn't be touching Centro - and anyone who considers doing so is playing a very dangerous speculative game.
     
  8. Mark Laszczuk

    Mark Laszczuk Well-Known Member

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    Hi Rick,

    Did you read the article? If not, have a look at the AIR front apge and click on the 'Centro All But Out' link.

    Mark
     
  9. Billv

    Billv Getting there

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    I would, I don't believe that Centro will go down.
    I am actually surprised than none has bought them yet.

    Cheers
     
  10. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    Why would you buy now when you can probably cherry-pick the best assets in a fire-sale when they do collapse?

    I'd suggest it isn't the management business that is valuable (they seem to be rather incompetent really) ... it is the assets.

    Look what's happening to Lehman Brothers - Barclays were one of the parties looking to potentially step in and rescue them over the weekend - but they obviously didn't like what they saw, so they walked away. Now that the plug has been pulled, they are circling and looking to pick off some of the assets which most suit them (and at bargain prices).
     
  11. Mark Laszczuk

    Mark Laszczuk Well-Known Member

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    Guys, essentially what seems to have happened over at Centro is that they went on a spending spree when debt was cheap and paid way too much for properties. Now they are required to refinance their debt. Problem is that interest rates have gone way up, the numbers don't work and no one is willing to refinance because the properties aren't worth anywhere near what Centro paid for them.

    So they need to sell assets in order to reduce their debt obligations. Of course no one wants the assets, cause as Sim said, why buy now when they can get them at a heavy discount in the near future. The investors that were looking at buying their U.S. assets walked away from an offer that was already 10% under market value.

    Mark
     
  12. Mark Laszczuk

    Mark Laszczuk Well-Known Member

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  13. Mark Laszczuk

    Mark Laszczuk Well-Known Member

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  14. Mark Laszczuk

    Mark Laszczuk Well-Known Member

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    Centro lives to see another day.

    Centro soars on loan extension | businessday.com.au

    The question is - are their bankers just delaying the inevitable? I dunno about anyone else, but I'm personally not banking on relief from the credit queeze anytime soon.

    Mark
     
  15. Billv

    Billv Getting there

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    Mark

    Is your opinion on Centro the same or has it changed since your last posts?

    Sooner or later the credit markets will be opening up again so I am thinking of buying $20K of Centro shares.

    I know it's speculative buying and I don't need them to go back to $6 each but $3 each would be nice...:D

    Cheers