This article is from the Australian Property Journal archive
ELANOR Investor Fund founder Glenn Willis will retire as CEO and managing director effective immediately, as will chief operating officer Paul Siviour, as part of a strategic shift for the ASX-listed group which is trying to sell down assets and refinance debt.
Elanor shares have been suspended from trading since 23rd August, with a market update anticipated for weeks.
Yesterday it reaffirmed that it would aim to strengthen its balance sheet and reduce gearing through asset divestments, simplify the business to focus on the retail, office, healthcare and industrial sectors, and execute cost management initiatives to drive profitability in its funds management platform.
Under Willis, Elanor has grown from its inception with less than $200 million in assets under management to $6 billion in assets under management today, turbo-boosted last year by acquisition of Challenger’s $3.4 billion Australian real estate funds management business.
“On behalf of the board, I would like to thank Glenn for his leadership and contribution to Elanor since its listing 10 years ago and his stewardship of the significant growth in real estate funds under management,” said Elanor chairman Ian Mackie said.
“I’d also like to thank Paul for his dedication and significant contribution to Elanor over the last 10 years as part of his senior leadership role in the growth and development of the business.”
Non-executive director Tony Fehon has been appointed as interim managing director. Fehon was appointed to the board of directors in August of 2019 and has experience in operational and leadership roles in the financial services and funds management sector, including at Macquarie Group.
“It has been a privilege to have founded and led Elanor over the last decade. I am confident that the actions outlined by the Board today will enable the Group to successfully navigate this next phase for the business,” Willis said.
Asset selldown
“The group will simplify its funds management platform to focus on the core real estate sectors of retail, office, healthcare and industrial, with the divestment of fund assets in the hotels, tourism and leisure sector,” it said yesterday.
Elanor has begun a selldown of all the hotel assets within the Elanor Hotel Accommodation Fund, which includes Tasmania’s Cradle Mountain Lodge and the Mayfair Hotel in Adelaide. Media reports have detailed unhappy investors blaming Elanor for the mismanagement of assets in the struggling unlisted fund.
Elanor is also looking to offload Bluewater Square and Belconnen Markets out of single-asset retail managed funds, and is progressing through sales of assets in its Elanor Property Income Fund.
The planned divestments are expected to release over $100 million of Elanor’s balance sheet capital over the next 18 months, it said. Net gearing for the group will be “substantially” reduced.
This divestment program has already commenced and is planned to be “substantially” completed by the end of the financial year.
In addition, Elanor has also struck an off-market agreement for the sale of its 12.6% interest in Elanor Commercial Property Fund (ECF) to billionaire Paul Lederer’s Lederer Group for around $23.9 million, at a sale price of $0.60 per ECF security. Elanor said proceeds from the sale will be used to reduce the its debt facility by $15 million and for working capital requirements.
Lederer will tip in another $50 million in backing to the fund, of which Elanor will continue as the responsible entity and manager.
Elanor said that following the integration of the Challenger and ADIC real estate funds management mandates, it is executing a “range of cost management initiatives to grow the profitability of the funds management platform”.
“These cost management initiatives are expected to achieve a sustainable reduction in the Group’s run-rate corporate overheads and grow funds management EBITDA margin.”
Elanor expects to release its FY24 results at the end of September. Preliminary recurring funds management income lifted 44% year-on-year to around $49 million, and base recurring management fees increased by 73% to about $40 million.
Preliminary FY24 recurring funds management EBITDA was about $12.5 million, up from $1.7 million, while core earnings lifted modestly to $12.9 million.
Net tangible assets per security is $0.69, or $0.94 including contract assets.
