Investor confidence in the struggling real estate investment trust market has plummeted in the wake of Centro Properties Group’s (Centro) record $1.1 billion half-year loss.
Friday was a dark day for Australian REITs after Centro disclosed its earnings had dropped 805 per cent on the group’s $157.6 million net profit a year earlier.
Centro attributed Friday’s results to write downs in the United States, including a $578 million write down in its $5.2 billion investment in the New Plan Excel Realty Trust.
The beleaguered shopping centre group is facing an April 30 deadline to refinance $2.3 billion in debt to its Australian banks.
Other REITs hit by the collapse of the commercial real estate collateralised debt obligation market failed to fare any better.
APN Property Group (ASX: APD) recently reported a net profit after tax of over $10 million for the half year to 31 December 2007. One of the funds for which APN is a responsible entity for – APN/UKA European Retail Property Group (ASX: AEZ) – announced a small write down of 3.1 per cent in the value its properties.
Allco Finance Group-backed Rubicon America Trust (RAT) said it would sell off $800 million of assets after its full-year profit halved to $50.2 million on the previous corresponding period.
“The tenor of some of the results to this point has clearly not restored confidence in the investors that some had hoped,” Property Investment Research head of research and reporting Mark Wist said.
“We were fairly bearish [on the results] and that is the way it has transpired. There are a few who have materially disappointed and the market really took fright at some of the debt they had and really punished the prices.
“There is no obvious end to the credit woes over the past few months…the market has taken a bit of a pounding and confidence has flowed out,” Wist said.
Centro’s stock price dropped 17.5 per cent to 48 cents, RAT plunged 33.9 per cent to 18.5 cents while AEZ fell 27 per cent to 42 cents at close of trade on Friday.
