This article is from the Australian Property Journal archive
ASX-listed Elanor Investors Group (ENN)’s integration of the $3.4 billion Challenger real estate business will underpin its funds management EBITDA in FY24 as it continues to execute its “capital-lite” strategy.
ENN’s funds under management is now $6.2 billion following completion of the acquisition of Challenger’s real estate funds management business last month, and after $250 million in growth over FY23.
ENN posted full-year funds management EBITDA growth of 16% to $17.1 million, with funds management income up 20% to $49.5 million and recurring funds management income lifting 19% to $34.1 million.
Core earnings for the year came in at $12.5 million, or 10.15c per security, down from $18.2 million.
FY23 distributions was 9.13c per security, after a second-half distribution of 1.62c per security, and down from 13.48c in FY22.
ENN’s portfolio weathered the valuation headwinds better than many others, with a decline of less than 0.7% during the year.
“The resilience of the group’s managed fund investments and stability of asset valuations reflect our risk-first approach to real estate investing and highly active approach to asset management,” ENN CEO Glenn Willis said.
“We are particularly pleased to have executed on a key objective of the group to grow funds under management through strategic acquisitions. The successful integration of Challenger’s real estate business into our funds management platform has realised significant transaction synergies for the group and underpins our forecast incremental funds management EBITDA of over $12 million in FY24.”
“The group is acutely focused on continuing to grow recurring funds management income and EBITDA, and executing its ‘capital-lite’ strategy to drive ROE and grow EPS.”
Among the funds management initiatives in the full year was the acquisition of the Tweed Mall shopping centre by an unlisted fund for $87 million, privatisation and delisting of the Elanor Retail Property Fund with the launch of an open-ended, unlisted $117 million fund in its place, recapitalisation of the $289 million Elanor Healthcare Real Estate Fund, repositioning and refinancing of the Riverside Plaza shopping centre, and acquisition of four hotels in NSW and Victoria.
Last month, ENN and its co-owners put a 100% interest in the 106,000 sqm, convenience-focused, triple-supermarket-anchored Waverley Gardens Shopping Centre in Melbourne up for sale.
Listed fund posts FFO growth
The Elanor Commercial Property Fund posted funds from operations for FY23 of $34.9 million, or 11.01c per security, an increase on last year’s $30.1 million, at $10.94c.
Its property portfolio – which includes office buildings 50 Cavill Avenue on the Gold Coast and 19 Harris Street on Sydney’s city fringe – lost $51.6 million in value, or 8.5%, as a result of market conditions and softening capitalisation rates. Weighted average capitalisation rate increased from 6.09% to 6.95%.
Occupancy increased from 95.6% to 98.4% as a result of 38 leasing transactions totalling 25,429 sqm.
ECF struck a lease renewal agreement with the Commonwealth government’s Department of Employment and Workplace Relations during the period over the entirety of the near 11,000 sqm Canberra office building at 140 City Walk.
