Centro Properties Group $25 billion portfolio includes the Kelston Shopping Centre in Auckland. Photo / Kenny Rodger

Centro Properties Group $25 billion portfolio includes the Kelston Shopping Centre in Auckland. Photo / Kenny Rodger

MELBOURNE - Centro Properties Group, which became one of the first casualties of the global credit crunch, says there are signs that the retail environment in the United States may be improving.

Centro, which is the second largest manager of retail property in Australia and the third largest manager of shopping centres in the United States, manages a A$20 billion ($25 billion) portfolio of 733 shopping centres in Australia, New Zealand and the US.

Two-thirds of the portfolio by value are in the US.

Centro global chief executive Glenn Rufano said at the group's annual meeting yesterday that the operating environment had been tough this year.

In the United States, occupancy levels in the shopping centres had declined, primarily as a result of retailer bankruptcies.

"[However,] we are seeing a stabilising retail environment in the US, with consumers starting to emerge and tenants, for the first time, considering expansion," Rufano said.

"We will be closely watching Christmas to see how these signs progress."

Centro booked a loss of A$3.54 billion in fiscal 2009.

Last week, Centro Properties warned that underlying profit for the year ending June 30, 2010, was expected to fall about 45 per cent from the underlying profit of A$229 million in the 2009 year.

Underlying profit excludes asset revaluations, impairments, mark-to-market adjustments of derivatives, foreign exchange impact on assets and liabilities, and restructuring costs.

Centro said last week that 60 per cent of the expected fall in underlying profit would be because of the significant appreciation in the Australian dollar, and the impact on fee income from asset sales and the full-year effect of the previous year's property devaluations.

Centro chairman Paul Cooper told security holders that Centro's gearing was too high and a restructure was required to reduce debt to sustainable levels.

"We will advise investors when the appointment of an adviser is made," he said.

Cooper said the matter of US$448 million in exchangeable notes that remained on issue - part of a US$500 million issue in June 2007 - and which mature in June 2010 was being considered as part of the group restructure.