CNP - Centro Properties Group

[Bolivia]

Trojax - You really do have to wonder why, the scenario you painted, has not unfolded. It makes so much sense to take a large equity stake, which has easily been possible given the trading volumes, and then make the banks happy by paying some of them off ie reduce gearing. Share price would then rise appreciably and your equity stake would look great. So why hasn't this happened? The banks cannot afford to have centro go down. The ripple effects from this would be so huge.

The fact that this scenario has not unfolded, is what makes buying into the shares so dicey. I have 3 answers as to why.

1. Fear - no one is willing to stick their neck out and take a punt. The enviroment we are in is just scaring the .... out of any potential suitors.

2. The company is just plain and simply F.....d.

3. It has already started to happen, but they have not disclosed their stakes in the company yet.

Points to note:

1. Banks WOULD refinance on attractive terms (long term basis with acceptable spread), if the company reduced it's gearing to an acceptable range.

2. The business IS cash flow positive.

 

[vida]

It was down to .30 cents earlier this year and shot up almost a day later to .78 cents - and now back to .30c levels a few weeks later. What can one say about that, it is just extraordinary volatility and it is scarey. It may even go down to .20 cent levels in coming days I would not be surprised now, but if it does it may be great buying opp but everyone will be too spooked to dip in

I didn't expect this share to be hit so much in the last few days. A lot of it's caused by the overall market falls. One concern with high interest rates is that property prices may come down (for australian assets). Also with the US now in a 'recession', there's a concern that the cashflow from operations may start to shrink. All of these impacts the SP but not to this extent.

The SP levels for the past few months are based more on fears that CNP may collapse. It is very difficult to judge the reaction to a positive or negative variable on CNP's share price.

Currently holding this for up to 6 more months unless there's more adverse news coming from the company.

 

[ricky0252003]

The US and european markets show an uptrend this moring. It is expected that the aussie shares will recover a bit to last week's level by Fri.

 

[vida]

What about the raiders who are trying to take over management of one of the critical fee earning companies? What will this do to CNP Sp?

The US and european markets show an uptrend this moring. It is expected that the aussie shares will recover a bit to last week's level by Fri.

 

[ricky0252003]

Anyone can explain the news in regard to Centro MCS. The announcement kinda confused me? I bought more this morning to cover the margin. Not sure what's gonna happen next

 

[vida]

Hard to know what's going to happen next, particularly when Glenn Rufrano refuses to comment when asked by the media about the raid by that "P"
company according to news reports today. We are all travelling blind at present is how it feels to me with this one. Oh well. What fun it is !!

Anyone can explain the news in regard to Centro MCS. The announcement kinda confused me? I bought more this morning to cover the margin. Not sure what's gonna happen next

 

[ricky0252003]

Pelorus is trying to get the shareholders to divide part of CNP into the management of itself. but why? I am totally lost. Coz Pelorus also did something to CER and CER's price jumped 64%. Anyone pls explain wat's going on

 

[ghostworld]

Pelorus is trying to get the shareholders to divide part of CNP into the management of itself. but why? I am totally lost. Coz Pelorus also did something to CER and CER's price jumped 64%. Anyone pls explain wat's going on

I'll try and explain it simply. Pelorus is not the reason for the share price increases.

Pelorus is trying to get shareholders or unit holders of MCS syndicates to replace Centro as managers of these entities. Centro earns management fees from these entities. With the current debt status of Centro, Cashflow is king.

Pelorus has the backing of some of the shareholders. The size of the backing was enough for them to call a meeting where they will vote for the proposed changes listed on today's announcement.

Pelorus is basically trying to steal a person's wallet after they have just been hit by a bus.

I'm not sure of the impact on cashflow if they were to succeed. I'm also unsure as to pelorus's chances. Centro is a majority holder of these syndicates (28% according to the article) and will vote against this.


http://business.theage.com.au/pelorus-launches-attack-on-big-centro-syndicate/20080305-1x89.html


Pelorus launches attack on big Centro syndicate


* Eli Greenblat
* March 6, 2008
*

CENTRO Properties Group's grip on its lucrative stable of property syndicates was severely weakened last night when Pelorus Property Group won enough shareholder support to challenge Centro's control of a $232 million investment vehicle.

It is the third and biggest to date of Centro's 36 syndicates to be raided by the Sydney-based Pelorus, which will ask unit holders to remove the debt-ridden Centro as manager at a meeting slated for April 10.

Pelorus and other potential raiders threaten to punch a hole in Centro's already shaky balance sheet by grabbing the management rights and the fees that flow from them. For the half-year, Centro posted revenue of $255.8 million, of which about $70 million was sourced from acting as the responsible entity and manager of its property syndicates. The syndicates have a combined value of more than $8.5 billion.

It comes as media-shy Centro chief executive Glenn Rufrano held a series of meetings yesterday with analysts who still cover the company, taking questions on its recent profit result. Centro last week unveiled a $1.1 billion loss for the first half, as a result of big write-downs and a drop in the value of its shopping centres.

Through an alliance with New Zealand financial services group Money Managers, Pelorus has secured enough unit holder support to call a meeting to dislodge Centro as the manager of MCS 19 NZ/I, which owns shares in Australian shopping centres totalling $23.7 million, and MCS 16, which owns the $35 million Centro Toormina in NSW.

Pelorus said last night investors holding 12.7% of MCS 11 had rallied to call for a meeting next month where they would seek to reduce the management fees linked to the syndicate and replace Centro with Pelorus as the manager.

MCS 11 owns the Paradise Centre in Surfers Paradise, a property recently valued at $232 million. The property, whose main tenant is Woolworths, was bought eight years ago for $88 million. It has been one of the best-performing syndicates for Centro, with units tripling since inception to $3 just recently.

It is estimated that Centro earns about $1 million a year in fees from MCS 11 and — like its other funds — is entitled to property management, performance, rollover and wind-up fees. Centro has mooted changes to this structure that could add other fees.

Pelorus chief executive Stuart Brown said it was in the best interests of investors to separate the management of Centro MCS 11 from Centro and its funding issues.

"Clearly, Centro has issues which have already affected these syndicates," he said. "By their own admission, the hedging situation could increase interest costs and reduce net asset backing, and separating the management from Centro's problems is the safest route for investors."

He rejected suggestions Pelorus did not have the experience to run the syndicates, arguing it had arranged and managed syndicated property investments for more than 10 years.

Centro has a 28% stake in the syndicates and will use it to defeat the resolution. Pelorus says Centro is not entitled to vote and it could take action to block Centro from voting. Mr Rufrano declined to comment.

 

[sonicwind]

Pelorus gained support from enough shareholders...so what can these shareholders gain from the deal??? lower cash flow certainly won't help SP

 

[ghostworld]

Pelorus gained support from enough shareholders...so what can these shareholders gain from the deal??? lower cash flow certainly won't help SP

Enough support to hold a meeting. Doesn't mean they have enough vote to win. MCS syndicates shareholders and CNP shareholder's interest may not be aligned.

 

[Trojax]

DEBT-LADEN shopping centre empire Centro may be able to block property minnow Pelorus' attempt to seize a key investment syndicate.

Pelorus yesterday formalised its bid for management of MCS 16, one of 10 syndicates it plans to take over.

But Centro holds a near-blocking stake in that syndicate, and Pelorus must clear steep voting hurdles if it is to grab control of MCS 16 and the other nine syndicates.

Pelorus, which yesterday announced a net profit of $3.2 million for the half year, is mounting the raid at the request of controversial New Zealand financial advisers Money Managers, which tipped its clients into the syndicates.

Control of the MCS syndicates would boost the funds Pelorus controls from about $500 million to about $1.5 billion.

For each fund, Pelorus requires 50 per cent of syndicate members to approve its proposal before it can replace Centro as responsible entity.

Pelorus yesterday officially called a meeting of investors in MCS 16, a syndicate which owns the $36.9 million Toormina shopping centre in New South Wales.

In a letter sent to investors yesterday, Pelorus said investors who did not vote would be "supporting Centro as the manager of your investment and, potentially, the retention of the existing high fee structure."

Pelorus managing director Stuart Brown declined to rate his company's chances of seizing control of the MCS syndicates.

"I reckon it's too early for us to put chances on it," he said.

Mr Brown said Pelorus had no debt on its balance sheet and the $150 million owed by individual bankers could not be sheeted home to the company.

"The bank has loaned to the project -- if the project goes t1ts up the bank's security is the project only," he said.

He said a 2 dividend would be paid in scrip because the company needed liquidity to snap up distressed properties thrown up by the volatile market.

"The more cash we've got in the business the more quickly we can respond to opportunities."

Centro spokesman Jim Kelly said the company's Diversified Property Fund was considering how to use its 28 per cent share of MCS 16.

"DPF's view is that it does have voting rights over its interest in MCS 16, which stands at 28 per cent of the fund," he said.

If Pelorus succeeds in its bids to control the MCS syndicates, it has agreed to pay Money Managers a trailing commission.

Earlier this month, New Zealand barrister James MacFarlane announced he was preparing a class action against Money Managers over $NZ457 million lost by 7000 investors in the company's First Step funds, closed in October 2006.

In 2002, the New Zealand Securities Commission banned a mortgage investment scheme run by Money Managers because the company was not properly registered.

http://www.news.com.au/heraldsun/story/0,21985,23286784-664,00.html

 

[ghostworld]

"The bank has loaned to the project -- if the project goes t1ts up the bank's security is the project only," he said.


http://www.news.com.au/heraldsun/story/0,21985,23286784-664,00.html

Had to check the original article and yeah it does say 't1ts up'. Lol. They need to proof read some of this before they post.

 

[Trojax]

Had to check the original article and yeah it does say 't1ts up'. Lol. They need to proof read some of this before they post.

If the journo quoted him Verbatim can't blame them for printing a 'turn of phrase', though not the wisest choice of words by someone trying to pull off a multi million dollar deal lol

Sounds like a guy selling real estate with waterfront views of Lake Eyre

 

[ghostworld]

If the journo quoted him Verbatim can't blame them for printing a 'turn of phrase', though not the wisest choice of words by someone trying to pull off a multi million dollar deal lol

Sounds like a guy selling real estate with waterfront views of Lake Eyre

Yeah wouldn't have to much confidence with Pelorus if the manager actually said that in the interview.

 

[vida]

HMmmm, very questionable this Mr Brown!!!

"Pelorus chief executive Stuart Brown said it was in the best interests of investors to separate the management of Centro MCS 11 from Centro and its funding issues". IN BEST INTERESTS OF PEROLUS AND STUART BROWN NO DOUBT !!

"Clearly, Centro has issues which have already affected these syndicates," he said. "By their own admission, the hedging situation could increase interest costs and reduce net asset backing, and separating the management from Centro's problems is the safest route for investors." SAFEST ROUTE .. WHAT A SPRUIKER! WHY DO THEY WANT TO AND NEED TO STEAL CNP IF THEY ARE SUCH SAFE AND BETTER MANAGERS ? THIEVES NEVER PROSPER.

He rejected suggestions Pelorus did not have the experience to run the syndicates, arguing it had arranged and managed syndicated property investments for more than 10 years. TEN YEARS SO WHAT!! WHO EVER HEARD OF THEM BEFORE NOW?

Centro has a 28% stake in the syndicates and will use it to defeat the resolution. Pelorus says Centro is not entitled to vote and it could take action to block Centro from voting. Mr Rufrano declined to comment. USURPING LIKE A DELUSIONAL AND MEDIOCRE PIRATE - PROBABLY GOT THIS IDEA FROM SOME HALF BAKED LAWYER. MAYBE HE MEANS HE WILL STEAL THEIR PENS SO THEY CAN'T VOTE

I THINK THIS PELORUS AND MR BROWN WILL GO t1ts UP... talks like a sleazebag and who can trust someone who spruiks like that.. yUK

Yeah wouldn't have to much confidence with Pelorus if the manager actually said that in the interview.

 

[ProRip]

mmm. well im new at shares and stocks, I am considering buying my 1st set of stocks and I have been watching centro for 3 months now tempted to by while low, now that this PELORUS deal has come about would it be a good time to do a 50/50 investment on each stock so that if one loses the other should cover any financial loss?

 

[ghostworld]

mmm. well im new at shares and stocks, I am consider buying my 1st set of stocks and I have been watching centro for 3 months now tempted to by while low, now that this PELORUS deal has come about would it be a good time to do a 50\50 investment on each stock so that if one looses the other should cover any financial lose?

I believe Centro holds MCS syndicates in both CER and CNP. Unsure of the weighing on either of these stock. So you're not really hedging there. Even so, It doesn't seem likely that Pelorus will be able to get enough votes to remove Centro as the managers.

Due to the complex structure, if the banks pull the plug on CNP, CER will also go down. The only difference i can think of is that CER's debt obligation is limited to $1 billion something.

It looks like the SP may have hit a floor yesterday. Management has been awfully quiet about their restructuring process or progress so i don't expect much of an increase in SP until they improve their communications to the market.

 

[ricky0252003]

Email replied from Centro

Hi Rick,

Thank you for your enquiry.

We appreciate your desire for additional information. The Strategic Review is currently underway and covers virtually all key aspects of our operations. Centro and its related entities will continue to meet their disclosure obligations. Unfortunately at this stage we are unsure when the next announcement will be.
If you have any further queries, please contact Investor Services on 1800 802 400 or email investor@centro.com.au.
Kind regards,
Alicia on behalf of the Investor Services Team
| Centro Investor Services | Centro Properties Group |
| Toll Free: 1800 802 400 | Fax: +61 3 8847 1868 |
| www.centro.com.au | investor@centro.com.au |
| Corporate Offices, 3rd Floor | Centro The Glen |
| 235 Springvale Rd | Glen Waverley VIC 3150 |

 

[ricky0252003]

If CNP doesn't release any announcement today(friday), I suspect CNP's SP will go under 0.3. The US market is down pretty bad right now. The only reason CNP has a $0.01 yesterday wasdue to the commodity, and banking sector.

Really don't want to see this happening but greater profit always come with greater risk.

I think we have to hang on there and have some faith.

 

[ghostworld]

If CNP doesn't release any announcement today(friday), I suspect CNP's SP will go under 0.3. The US market is down pretty bad right now. The only reason CNP has a $0.01 yesterday wasdue to the commodity, and banking sector.

Really don't want to see this happening but greater profit always come with greater risk.

I think we have to hang on there and have some faith.

The major reasons for the fall in SP was due to several brokers putting a 'Sell' rating on CNP. I can't remember where I read this from. I read several papers in a given day.

I haven't read the actual broker reports so I don't know what the justifications are for 'sell' rating now as opposed to 2-3 months ago. Spooked by the accounting losses i imagine. I'm sceptical of broker's in general. They don't make money by investors holding on to shares. They want you to churn and trade daily.