Elanor Retail Fund Half Year Results
Elanor Retail Property Fund announced its interim financial results, for the half year ended 31 December 2018.
The Fund is an externally managed real estate investment trust investing in Australian retail property, with a focus on neighbourhood and sub-regional shopping centres. The Fund’s objective is to provide investors with strong and growing income returns, and capital growth.
Statutory net profit for the period of $1.97 million.
Core Earnings for the period of $6.3 million, or 4.90 cents per security.
Distributions for the period of $6.0 million, or 4.65 cents per security, reflecting a payout ratio of 95% of Core Earnings.
As at 31 December 2018 ERF had a total investment portfolio of $313 million, reflecting an increase of $2.0 million from 30 June 2018, (excluding the podium strata lots at Auburn Central as at 30 June 2018).
As at 31 December 2018 the portfolio comprises 7 high investment quality retail shopping centres, with a strong focus on non-discretionary retailers. The Fund’s portfolio reflects an average capitalisation rate of 6.8%.
The landlord works relating to the introduction of Aldi to Tweed Mall began during the period and is on track to be completed by 30 June 2019. Aldi is expected to move into the centre in August 2019. The net operating income of Tweed Mall has been impacted by tenant vacancies during capital works for the Aldi tenancy. The impact of this downtime is approximately $0.3 million. The introduction of Aldi to Tweed Mall has resulted in strong speciality leasing inquiries from potential tenants.
The Fund has acquired a vacant site adjacent to the Auburn Central shopping centre for $2.5 million. This is an important strategic initiative to significantly improve access to the secondary loading at the centre in preparation for the reposition of the DDS space. This acquisition was completed on 21 January 2019, management anticipates significant short term value appreciation in relation to the repositioning of the DDS space.
A renewal for a 5-year lease term was signed with Target at Manning Mall in November 2018, providing security over future cash flows at the centre.
The Fund completed the disposal of the balance of non-core podium strata lots at Auburn Central during the half. The sale of the strata lots realised total proceeds of $21.8 million, consistent with book value, reflecting an average capitalisation rate of 6.22%.
The Fund refinanced debt facilities of $43.8 million for a new 5-year term, which extending the weighted average debt maturity to 3.3 years, from 2.1 years as at 30 June 2018. The weighted average cost of debt maintained at 4.0% per annum. No debt is due to expire in the next 12 months.
Fund gearing of 38.0% as at 31 December 2018, within the Group’s target gearing range of between 30% and 40%
ERF Trading Chart vs ASX200 AREITs
Blue - ERF
Purple - ASX200 AREITs