CNP - Centro Properties Group

[Tekwrek]

Re: CNP - Centro

I think that's one of the hardest questions you could ask. It depends on our economy, the US economy, US retail in particular, plus interest rates for their huge debt and any possible restructuring. Roll the dice on this one.

It seems from my reading of the situation that CER is in a much better situation. (Hence I hold CER and not CNP.)

Yes CER touched 20.00 cents today, but CNP has greater potential, i hold both, remember what these stocks were worth before the meltdown.

 

[oldblue]

Re: CNP - Centro

Yes CER touched 20.00 cents today, but CNP has greater potential, i hold both, remember what these stocks were worth before the meltdown.

Two points there.

Don't confuse shareprice with value.

CNP has taken on a huge amount of debt since and a lot of this is potentially going to result in massive dilution for current shareholders if it ends up being converted to equity.

 

[noie]

Re: CNP - Centro

Two points there.

Don't confuse shareprice with value.

CNP has taken on a huge amount of debt since and a lot of this is potentially going to result in massive dilution for current shareholders if it ends up being converted to equity.

Just the one point

Don't confuse Debt with Loss

Show me a Property stock in Australia with land and assets in the US and AUS without debt.

 

[nioka]

Re: CNP - Centro

Just the one point

Don't confuse Debt with Loss

Show me a Property stock in Australia with land and assets in the US and AUS without debt.

The problem with the debt of CNP is that it exceeds the NTA. Not a happy situation to be in when you are talking to your very edgy lenders.

CNP has assets of $1.69billion but liabilities of $2.46billion. CER has assets around the same value but liabilities of $1.98. Those figures talked me into recently selling out of CNP and buying more CER. CER is tarred with the Centro name because of this. CER ,I believe, will survive but I'm not so sure about CNP. One of CNP's largest assets is its 51% shareholding in CER. Its biggest liability is its association with SuperLLC.

 

[Tekwrek]

Re: CNP - Centro

Two points there.

Don't confuse shareprice with value.

CNP has taken on a huge amount of debt since and a lot of this is potentially going to result in massive dilution for current shareholders if it ends up being converted to equity.

CNP up 12.50% to 18.00 cents today, and CER up 17% to 21.00 cents also today not a bad WINDFALL. Most Aussies have 80% debt on their homes does that call for panic.

 

[ParleVouFrancois]

RE: Noie, I think you don't understand how the property business model works, it's unfeasible to fund a property company with 100% equity as the returns are too low.

So what the company does is borrow at say 6%, buy property, collect the 8% rent and add this to the equity pile, using somewhat aggressive lending, you can take a boring 8% return on equity and spruce it up to 12% making it more appealing to income investors, but perversely making it less stable. The problem arises when there is a lack of credit, or the credit is too expensive, then the whole stack of cards crumbles down (which is what we've been seeing post-GFC in most property shares).

That being said they usually are a somewhat stable investment, but similarly to exploration juniors in resources, quality management is a must.

 

[Julia]

So what the company does is borrow at say 6%, buy property, collect the 8% rent and add this to the equity pile, using somewhat aggressive lending, you can take a boring 8% return on equity and spruce it up to 12% making it more appealing to income investors, but perversely making it less stable.

Could you give an hypothetical example (or a real life one for that matter) of the above, step by step, including where the 8% return is derived, and how it is 'spruced up' to 12%?

 

[skc]

Didn't they just announced that there is only $100m available to the CNP shareholders, junior creditors, and class action settlement? With 972m shares on issue, how much of that is leftover to the shareholders??

An SMH article put the share value at 1c...and it traded up to 18c yesterday. Some retail holders just have no clue.

 

[skc]

Could you give an hypothetical example (or a real life one for that matter) of the above, step by step, including where the 8% return is derived, and how it is 'spruced up' to 12%?

Buy a $1m property using 90% debt.
Equity = $100K
Debt say interest rate of 7.5%, so annual interest cost = $67.5K
Rental return = 8% ($80K) which is quite achievable for commercial properties

So the net return is $12.5K on my equity of $100K = 12.5%

QED

 

[oldblue]

Re: CNP - Centro

CNP up 12.50% to 18.00 cents today, and CER up 17% to 21.00 cents also today not a bad WINDFALL. Most Aussies have 80% debt on their homes does that call for panic.

The reality of the situation is hitting home now.

CNP has considerably more than 80% debt on their properties. In fact yesterday's announcement confirmed that it's a negative equity situation and the market is reacting accordingly.

 

[nioka]

The way I read the latest announcements I see CNP as "history". The company should come out with an announcement setting out clearly the position. Maybe the board and management are too busyvacating their desks to think about shareholders!.

 

[godzillaismad]

What's with the latest trading halt? Can't find a reason for it on anywhere. Anyone?

 

[oldblue]

What's with the latest trading halt? Can't find a reason for it on anywhere. Anyone?

CNP requested the halt while they compose an answer to the ASX's "please explain the recent shareprice movement".

Probably nothing more than more speculation.

 

[drsmith]

Where's the pls explain ?

There's nothing on CNP's recent announcements.

 

[nulla nulla]

I look at cnp and i am reminded of how far bbi fell before they found a cornerstone investor and everyone else got paid out at $0.04c per share.

 

[oldblue]

Where's the pls explain ?

There's nothing on CNP's recent announcements.

Correct.

It's referred to in the Trading Halt announcement though. Probably an oversight on CNP's part.

 

[drsmith]

It's referred to in the Trading Halt announcement though. Probably an oversight on CNP's part.

After seeing the sign off on the first page of the trading halt, I assumed there was no second page. One to remember for the future.

Centro's board of directors could never say that life is booring.

 

[oldblue]

Answer from CNP.

"We know nothing"

http://asx.com.au/asxpdf/20110325/pdf/41xnhw48v8gql7.pdf

 

[oldblue]

Brian Frith of The Australian isn't too optimistic about CNP. For good reason, IMO.

http://www.theaustralian.com.au/bus...tail-from-centro/story-e6frg9if-1226031007993

 

[nulla nulla]

Good article. A significant point made in the article is that the alleged negative Net Tangible asset value per share was calculated at the nadir of the market during the global financial crisis and that American Commercial properties have recovered close to 60% of their value since then. You only have to look at Dexus and GPT to see that U.S. commercial properties are now being unloaded at more favourable prices.
Amazing how the executives and directors continue to get well paid while they concoct strategies to restructure the company at the expense of the shareholders.