Dec. 17 (Bloomberg) -- Centro Properties Group, the owner of 700 U.S. shopping malls, slumped 76 percent in Sydney trading after saying it's struggling to refinance debt because of the collapse in the subprime mortgage market.

Melbourne-based Centro suspended dividends and said in a statement that it may have to sell assets, after lenders set a Feb. 15 deadline to negotiate maturing debt. Traditional sources of funding are ``shut for business,'' Chairman Brian Healey said in the statement.

The share slump wiped A$4.98 billion ($4.3 billion) from the market value of Centro and Centro Retail Group, the listed real estate investment trust it manages. A sale of assets threatens to undo Chief Executive Officer Andrew Scott's $9 billion expansion into the U.S., where the company owns the Roosevelt Mall in Philadelphia and Clearwater Mall in Florida.

``Centro are no longer in charge of their own destiny,'' said Callum Bramah, a Sydney-based analyst at Macquarie Group Ltd. in a report. ``We believe Centro will be required to sell assets at a loss simply to use the cash proceeds to pay down debt.''

Centro will undertake a strategic review of its business, the company said in the statement. Asset sales, new debt facilities and equity injections will all be considered.

Centro shares plunged A$4.34 to A$1.36 at the close of trading in Sydney. The stock has declined 85 percent this year, making it the worst performer on the benchmark index.

More than 120 million shares, or 14 percent of the stock on issue, changed hands. The listed trust slumped 58 cents to 85 cents. They were the two worst performers on the MSCI's 1,960-member World Index during Asian trading. Centro's German-traded shares fell 72 percent to 0.9 euros at 11:14 a.m. in Berlin.

Biggest Shareholders

Commonwealth Bank of Australia is Centro's largest shareholder with a 13 percent stake, according to data compiled by Bloomberg. Barclays Global Investors owns a 9.2 percent stake and Macquarie Group Ltd, Australia's biggest securities firm, has a 5.8 percent stake, the data show.

``If investors see a company struggling to refinance they don't want anything to do with them,'' said Angus Gluskie, who helps manage the equivalent of $500 million at White Funds Management in Sydney.

Centro's debt rose to 44.1 percent of assets in fiscal 2007 from 29.8 percent a year earlier. It has more than A$5 billion in outstanding bonds and loans, according to data compiled by Bloomberg.

Its biggest lenders are Australia & New Zealand Banking Group Ltd., BNP Paribas, Royal Bank of Scotland and Commonwealth Bank, Bloomberg data show.

The company is continuing to negotiate the refinancing of A$1.3 billion of maturing debt, it said today.

Rating Cut

Standard & Poor's today cut the rating on Centro NP LLC, a U.S. real estate investment trust managed by the company, to speculative grade, or junk status. The rating was lowered two levels to BB+.

The 20-member S&P/ASX200 Property Trust Index fell 11 percent, more than three times the decline in the benchmark index. The drop was the biggest one-day fall in the property index since it began in March 2000.

Westfield Group, the world's biggest shopping center company, declined 5.8 percent; GPT Group, a Sydney-based real estate investment trust, fell 8.7 percent. Valad Property Group slumped 18 percent.

Investors, concerned that losses on securities backed by U.S. home loans will escalate, have shunned all but the safest of debt, driving up corporate borrowing costs. Centro may spend about A$40 million refinancing and restructuring its debt. New debt refinancing will restrict plans to spend more on the U.S. malls, which were expected to generate higher earnings, Centro said.

New Plan

``We never expected nor could reasonably anticipate that the sources of funding that have historically been available to us and many other companies would shut for business,'' Centro's Healey said in the statement.

Centro in April completed its biggest U.S. acquisition --the $3.7 billion takeover of New Plan Excel Realty Trust. The deal was partly funded the sale of A$250 million shares at A$9.80 each.

U.S. malls helped Centro increase operating profit by 14 percent to a record A$335.3 million in the 12 months ended June 30, as rents rose in the world's biggest economy.

Since then, concern has increased that the slump in U.S. housing will curb retail sales and commercial property construction, hurting U.S. shopping mall owners.

``We have certainly seen some approaches from a number of parties'' for those assets, Centro's Scott told reporters. His stakes in Centro Properties and Centro Retail fell A$26.6 million today, according to data compiled by Bloomberg.

Companies relying on the U.S. short-term debt markets to raise funds face increased difficulties to find investors as losses tied to U.S. home loan securities mount. Banks including Citigroup Inc. have written down more than $76 billion on the securities.

To contact the reporter on this story: Laura Cochrane in Melbourne at lcochrane3bloomberg.net

Last Updated: December 17, 2007 06:48 EST