Centro, the fifth-largest retail property owner and manager in the United States, said on Monday it was considering a restructure because of the fallout from the U.S. subprime crisis.
It has extended some debt facilities to a Feb. 15, 2008, deadline and is expected to sell assets to raise cash and help reduce gearing levels to satisfy the banks.
"Given refinancing risk and readily available sources of equity, we believe that there's a very real scenario where Centro could cease to be a going concern," Merrill Lynch analysts wrote in a note.
Centro is the first Australian casualty of the subprime fallout outside of the banking sector.
Elsewhere in the property sector, Mirvac Group extended Monday's losses, down another 4.7 percent, but Goodman Group bucked the trend with a 1.0 percent increase after a broker upgrade. Goodman had fallen 32 percent in the previous three sessions.
Analysts believe Centro's crisis stems from its inability to refinance a bridging loan for its $3.4 billion acquisition of New Plan Excel Realty Trust made earlier this year, when it accelerated its push into the U.S..
Centro is the second major Australian victim of the subprime crisis after non-bank lender RAMS Home Loans Group failed to refinance its loans in August.
The subprime crisis has pushed up the cost of lending as lenders turn wary, and has almost shut down markets for some credit products, often those used by companies like Centro to refinance debt.
Centro has almost 700 shopping centers under management in the United States valued at over A$17 billion. Tenants include TJ Maxx and Wal-Mart Stores.
The group, which has A$26.6 billion under management in retail property funds in Australia, the United States and New Zealand, said it would begin a complete review of its structure. It also suspended withdrawals from two of its funds, Centro Direct Property Fund and Centro Direct Property Fund International.