Australia's Centro Properties Group bet big on U.S. shopping malls, financing more than $15 billion during a spending spree in 2007. Thanks to the credit crisis caused by the U.S. subprime meltdown, Centro can't refinance debt due Feb. 15 and has put itself up for sale [subscription required]. The stock lost 89% of its value in 2007, giving it the title of Australia's worst performer in the S&P/ASX 200 index.
Centro owns 810 shopping malls in Australia, New Zealand and the U.S. Potential buyers may find that a sale of the company's assets may be more valuable than buying the company itself, and Centro already indicates it may sell properties as part of its plan to restructure and pay back debt. Analysts expect Centro will have to sell assets at less than book value, especially recent U.S. purchases that have been hit hard by the real estate crisis in the U.S.
Centro could become the second Australian company lost because of the U.S. subprime crisis. RAMS Home Loans Group sold most of its holdings to Westpac Bank Group when it couldn't refinance its loans. Lenders holding Centro debt include the Royal Bank of Scotland, J.P. Morgan Chase (NYSE: JPM), BNP Paribas, Australian and New Zealand Banking Group, National Australia Bank, St. George Bank and Commonwealth Bank of Australia. Just looking at this list of lenders, you can see how global the subprime mortgage and credit crisis has become.
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