[COM] Armada Arndale (Redevelopment) | $200m

[Howie]

Wow, thanks for the update Burger. Please keep up us to date, this is going to get interesting.

[AG]

Personally I think it might not be a bad idea to sell of some of the small ($25-$50M) centres as there are more sharks in the range to help keep the price up than out in the $200-$400M range for centres such as Colonnades and Arndale where there are only really three or four big players who could seriously make them work (Westfield wouldn't buy either of these 2, remember they bought Colonnades from AMP and then on-sold it to Centro and Arndale is too close to West Lakes).

I have a few sources, as I'm sure a few of you do, and will be sure to keep the forum up to date on the juicy bits.

Interesting to note also that Westfield previously owned Arndale before it was sold and asset picked up by Centro. It's going to be interesting to see how Centro attempts to refinance $2.7 billion in short-term aquisition funding.

[Howie]

Let's have a look at what shopping centres Centro manage in SA in terms of size (lettable area m2)

Arndale - 40,206m2
Colonades - 63,674m2
Hilton - 4,441m2
Hollywood Plaza - 23,151m2
Kurrulta - 10,675m2
Murray Bridge - 8,321m2
Newton - 13,598m2
Pirie - 8,640m2
Charles St - 4,114m2
Katherine Oasis - 7,059m2
Lakes Village - 12,935m2
St Agnes - 10,274m2

Because of Arndale's proximity (close to the cbd), and size (being one of the largest western suburb shopping complexes), combined with the fact they scored it at a below market value price from Westfields at the time, from the outset it'd look like this shopping centre still has alot of legs and after the redevelopment should give pretty good ROI.. i believe last year's annual report they cited Arndale as one of it's best performing assets.

[rev]

In true Arndale style, the renders are terrible (they sort of look ok, but you can only just tell what they're meant to be)

Also, the billboard text doesn't give any information really. It's vague to say the least.

Anyway on the positive side, it does seem to show that at long last, we might actually see some action there soon!

There's been action on the site for a while now. Demolition seems to be almost complete, just site clearing and some dudes with those post-hole drilling truck things.

The only way I can see Arndale becoming anything but a hole, is if the Westwood development completely changes the surrounding neighbourhoods. As far as I see it, too many old trust homes have remained so far, too many dodgy people still living in the immediate area to the centre, coincidentally in those trust homes and homes immediately next to Arndale that haven't been touched.

[pushbutton]

Yes but I think the Westwood development will slowly cause the surrounding areas to improve. Obviously it may take quite a few years for the demographics to change very significantly. However the ball has started rolling now and I'm sure it will continue to roll.

Look at Salisbury / Elizabeth as an example of what can happen.

As little as 10 years ago both these areas were virtually "no go zones" for most people, due to their being absolutely riddled with crime and nasty, offensive people.

Now house prices are going through the roof in parts of Salisbury and Elizabeth, in part this started with developments such as Mawson lakes, Springbank Waters, and Elizabeth Shopping Centre redevelopment.

Granted there are still some dodgy areas, but things are changing noticably for the better there and I'm sure the same will happen around Kilkenny area too.

The result should be that ferral types are slowly forced to either get jobs and become part of civilised society, or move to far outer suburbs where it's still cheaper to live.

[pushbutton]

Well Burger that is a big disappointment.

If Centro do decide to sell Arndale, I'm sure the new owners would be keen to proceed with the redevelopment asap. I doubt Westfield would want it back though as, like you said, it's too close to West Lakes really (although they did own both these centres a few years ago, and previously they owned both these centres a few years before that too!).

Otherwise who knows, maybe it would be a suitable site for Stockland? I don't think much of Stockland as a shopping centre management company but at the end of the day it's only a name I suppose.

I don't think Colonial would be interested because they really prefer centres in better demographic areas. That said though they bought Elizabeth Shopping Centre when it was a hole, because they saw the potential of both the centre and surrounding area to improve, so maybe Colonial might consider it?

I would prefer it if Centro hangs on to Arndale if they can (as I'm sure Centro would) because I really think they are the best suited owners and managers for that centre. But we'll have to wait and see for now I suppose.

[pushbutton]

Another story on this here:

http://www.insideretailing.com.au/artic ... cleId=1945

[ReallyBad]

From Bloomberg.com 17 December 2007

Centro, Australia's second-biggest shopping-mall owner, plunged A$4.34, or 76 percent, to A$1.36. Centro Retail Group, a unit of Centro, slumped 57.5 cents, or 40 percent, to 85 cents.

http://www.bloomberg.com/apps/news?pid= ... =australia

[Howie]

Yeah it was crazy today, i thought i'd do a little speculation and got in at 0.725.

[rhino]

Well done Howie - a tidy little profit there! Something good has come of it then!

[pushbutton]

Centro Australias' latest statement: Does sound like they're keeping ALL options open for now, but intend to have made some decisions within the next 8 weeks.

http://www.centro.com.au/NR/rdonlyres/D ... Update.pdf

[Burger]

It seems there are two versions of the fiscal state of Centro doing the rounds at present.

If anyone's seen The Australian today, there's a bloke from a "small Sydney investment house" looking to make a name for himself as one of those "I told you so" people, telling everyone the company is up the creek without a paddle and possibly even the canoe. Would be interesting though to see how many of those advising against holding stock in Centro have been playing off the volatility over the last few days to make some quick money (props to Howie). Along with him there are a few others looking at the sale of assets angle.

Internally though, apparently the word is they are going to try and trade out of it with all assets intact but I don't see how they can do that - they'll need to get at least some equity freed up to please the banks but how are they going to do that without either selling down their interest in the larger Centres or selling some centres outright (apart from JV-ing the white knight financier, but it seems there are some in management who are too proud/stubborn to go down that route) Apparently management are saying that what's being published is a lot of speculation from a lot of people hanging around the fringe of the company (brokers, bankers, advisors) who have the occassional dealing with the company and think they are on the inside when in fact they're not and have little/no idea of the truth. The bigger story they say is that there is a phoenix about the rise from the ashes?!

The truth is probably somewhere in between....

[how_good_is_he]

Centro's "deadline" is Feb 2008 to re-finance $1.3 billion of debt...a few big Aussie banks have big unsecured loans of hundreds of millions [cba, st george etc] and are at risk of losing their investment. So the questions is will they [or others] put in more good money after bad to bail Centro out?

[pushbutton]

I suspect they would only be willing to do that within certain limits, which will probably not be enough to fully bail them out. Should be interesting though.

[Mr.Frodo]

My understanding is that the St. George Loans are secured.
http://www.news.com.au/story/0,23599,22 ... 02,00.html
And supposedly 50% of the CBA loans are too.