Shares in retail property investor Centro Properties Group (Centro) collapsed yesterday after the management slashed its profit forecasts and admitted the firm was struggling to refinance its debt.

Its shares fell a whopping 76 per cent on Monday to $1.36 after the firm issued a statement saying it had failed to renegotiate $1.3 billion worth of debt.

Dividend forecast was downgraded from 47 cents a share, to 40.6 cents.

Centro, which has extensive property investments in the United States, is the latest Australian casualty of the sub-prime panic gripping the developed world.

"Tightened credit conditions have had the effect that negotiation of a comprehensive refinancing package of short term facilities has not yet been finalised," the company said in a statement to the Australian Securities Exchange (ASX) yesterday.

"Due to the US sub-prime contamination, the historically reliable debt capital market source of the US CMBS (Commercial Mortgage Backed Securities) market has effectively shutdown."

The statement said Centro's current debt package matured in December, but that it had managed to gain an extension until February 2008.

Standard and Poor's (S&P) placed the Centro Direct Property Fund on hold pending the completion of a strategic review.

Centro said it would look into selling off core assets, renegotiating its debt packages and seeking equity injections from potential partners.

Applications and redemptions for the Centro Direct Property Fund were frozen on Monday.

"The fund will remain on hold until daily applications and redemptions resume, and Centro's strategic review is completed," S&P fund analyst Kelly Napier said.

Through its various funds Centro has investments in over 700 shopping centres in the US worth $17 billion.

The firm has a total of $26.6 billion under management.

Its shares have lost 85 per cent of their value since May when they were worth $10 each.