This article is from the Australian Property Journal archive
ELANOR Investors Group (ASX: ENN) has secured a major investment from wealth manager Atlas Advisors Australia in its $88 million Burke Street Real Estate Fund, which holds Brisbane healthcare assets.
The listed group established $200 million of new managed funds over the first half of the financial year, and funds under management grew 11% during the period to $1.87 billion.
Funds management income lifted by 79% on the prior corresponding period to $14.9 million.
First half core earnings fell from $12.41 million in the pcp to $5.5 million, and distributions from $11.17 million to $5 million. Core earnings dropped from 10.57c per stapled security to 4.64c.
Assets under management grew from $1.895 billion to $2.083 billion across six months. Valuations of the group’s managed funds asset portfolio reflected an increase of 3% over six months.
The Burke Street Real Estate Fund is made of two fully occupied premises at 2 Burke Street and 163 Ipswich Road in Woolloongabba, which Elanor picked up in November for $80.2 million. The QLD Health Building on Burke Street is occupied by the Queensland government, and the Catholic Education Building is leased to the Catholic Church Archdiocese of Brisbane.
Executive chairman of Atlas Advisors Australia, Guy Hedley said Atlas was now the largest co-investor in Elanor’s Burke Street Real Estate Fund, as well as Elanor’s Healthcare Real Estate Fund which itself added the Woolloongabba Community Health Centre as well as a medical facility in Perth’s Rockingham to its portfolio during the half.
“Atlas Advisors Australia’s strategy is to continue seeking opportunities for high quality commercial healthcare real estate assets with secure, long-term tenancies in established health precincts,” Hedley said.
“The Burke Street Real Estate Fund has all these attributes, promising our investors strong long-term rental growth and capital value appreciation.”
The QLD Health Building offered potential for expansion and was subject to a current development approval for sub-division into two lots.
“While other areas of commercial real estate face headwinds, we believe demand for health care services will continue to increase in line with the needs of an aging population and the rising prevalence of chronic disease,” Hedley said. “The low volatility and high growth of the sector means real estate assets in health care will undoubtedly remain at a premium.”
Also during the half, ENN established the Riverside Plaza Syndicate in September with the acquisition of the Riverside Plaza neighbourhood shopping centre in Queanbeyan for $60 million.
The sale of Auburn Central from the Elanor Retail Property Fund (ASX: ERF) was completed in December, for $129.5 million, a 4.0% premium to book value. Elanor repositioned the asset to a triple supermarket-anchored neighbourhood centre after picking it up for $68 million four years earlier. The sale generated a 24.5% IRR.
ENN’s Net tangible assets per security increased 13% to $1.47. Gearing decreased to 25.0%.
“We are pleased with the continued growth in our funds under management to $1.9 billion and particularly pleased with the 79% growth in our funds management income over the comparative period,” Elanor chief executive officer, Glenn Willis, said.
Retail fund profit falls
ENN’s interim profit slumped from $5.971 million to $960,000 during the half. Core earnings were down from $7.1 million to $6.5 million, and on a per stapled security basis dropped from 5.52c to 5.10cps. Distributions dropped from $6.75 to $6.2 million, and on a per security basis from 5.24 cps to 4.84 cps.
Despite the impacts of COVID, the fund collected 95% of rental income during the period its portfolio is trading at 99% of leased area. Portfolio valuations were unchanged at $209.2 million.
It is currently introducing an Aldi supermarket to its Tweed Mall asset and repositioning the centre’s retail mix towards non-discretionary focused offerings.
