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The fallout from the Centro collapse

Discussion in 'Real Estate Investment Trusts (A-REIT / LPT)' started by Simon Hampel, 19th Dec, 2007.

  1. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    The 7.30 Report - ABC

    7.30 Report - 18-Dec-2007

     
    Last edited: 17th Sep, 2016
  2. Tropo

    Tropo Well-Known Member

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    Nice move from $5 to 80c.
    Short sellers are laughing all the way to the bank or Bahamas right now.
    CrC_error are you going to buy more Centro shares???. They are cheap, cheap :D
    PS – When Centro hits $0 – I am in big time.;)
     
  3. coopranos

    coopranos Well-Known Member

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    Up almost 100% today from yesterday, and closed about 50% higher.
    It would take balls to buy it but that is some good returns for your nuts!
     
  4. Tropo

    Tropo Well-Known Member

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    Possibly short sellers bought it back.
    If timing and decision is right, return is always good for your nuts !:p
     
  5. The Stig

    The Stig Well-Known Member

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    Thanks for that Sim.

    Pitty they didn't have Centro directors for the interview.
     
  6. DaveJ

    DaveJ Well-Known Member

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    Centro is in another Trading Halt...

    Hope those that gambled on this stock have taken profits! :rolleyes:

    Should be an interesting announcement
     
  7. Tropo

    Tropo Well-Known Member

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    You bet :p
     
  8. The Stig

    The Stig Well-Known Member

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    Ohhh, the big gamble people took comes to a head :D

    What are we betting. Good news or bad news??

    I'll put $2 on bad news and the stock tanking 50% (so now it will definately go up LOL!!)
     
  9. Tropo

    Tropo Well-Known Member

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    "I'll put $2 on bad news "

    O.K. Same here...;)
     
  10. crc_error

    crc_error The Rule of 72

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    all they announced is the CEO got fired? no good news to go?
     
  11. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    All I've been hearing is lots of spin saying that the lenders are discussing options for extending their finance ... as well as even more spin about there being lots of interest in other companies buying in to Centro.

    Heck, at their current price - I'm sure Westfield and all the other big players are begging their lenders to finance a buyout of the entire Centro portfolio - I didn't think the quality of the property was in question (although they are perhaps a bit too exposed to the US ??)
     
  12. crc_error

    crc_error The Rule of 72

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    this is what I think is the issue with 'the current price' your reffering to.

    Your not actually buying the portifilo but rather shares in the Centro management business. If all the properties have loans against them, you as the shareholder don't actually own the property, but rather the business. The banks own the property.

    I think this is the lession I learned here is that LPT's are not property investments, but rather property management business's. You as the shareholder are the last one in the chain to get your money.

    Your better investing into unlisted property trusts like Cromwell which use shareholders money to purchase the property assets, hence you have a direct holding of the property. What will effect the unit price would be re-valuations of the underlying assets. Or if the property can't be tenented, hence you miss out on the rent.
     
  13. Glebe

    Glebe Well-Known Member

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    crc,

    I'm not sure if whether it's a listed or unlisted trust has any relationship to whether or not you're buying the management or the physical assets, as you describe.
     
  14. The Stig

    The Stig Well-Known Member

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    I saw on Sky news today that Centro had double whammy bad news. The CEO left and that management have understated their liabilities. And they said the share price dropped 40% before coming back a bit.
     
  15. DaveA

    DaveA Well-Known Member

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    i say it does...

    if you buy a upf, your price is a derivative of the asset (ie asset value divided by number of units). UPFs only hold assets for passive income and capital growth (generally), there is a RE (or trustee) who decides what to do with the asset and if it needs capex. The RE mades the decision on thier behalf coz you pay them for it...

    a true LPT has a similar way, however LPT is more likely mixed in with the management/business risk as they are less likely to just be in passive assets....

    Remember passive assets doesnt get as larger return as developing/renovating etc so LPTs (and some new UPFs) are starting to mix thier assets to ensure the returns look good enough to attract people, and for the returns be good enough so they can promote something again... Its not in Stocklands/Lend Lease/ GPT etc to put dud assets into a fund just to get rid of them, have the fund perform poorly and the brand loose reputation.
     
  16. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    Last edited: 17th Sep, 2016
  17. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    Last edited: 17th Sep, 2016
  18. AsxBroker

    AsxBroker Well-Known Member

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    Hi CrC,

    Each LPT is different...

    You may remember a few years ago that there was Westfield Trust, Westfield America and Westfield Management. Westfield Trust and Westfield America were the actual properties and Westfield Management was the managing company. Same as the Macquarie model of listing assets to sell them off and then keep the recurring revenu by being the manager. A few years ago, Westfield wanted to borrow money, being a management company it was a little skinny and needed fattening up (since it's real assets weren't the shopping centres but the recurring revenue).

    They decided to fatten up their balance sheet by buying back the assets, it was all rolled into Westfield Group (with the cute asx list code as WDC standing for the Westfield Development Corporation when it was originally listed in 1960).

    Getting back to the point, each LPT is different, this is where it is important to do your homework before investing in any business or asset and make sure you understand it. Like Buffett, if you don't understand it the business don't buy it.

    Cheers,

    Dan

    PS Before buying any asset or business make sure you understand it. This is not a recommendation to invest in any business or property. Speak to an FPA registered Financial Planner before making your investment decisions.