Elanor Commercial Property Fund posts lift in FFO as valuations fall
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The news: Elanor Commercial Property Fund (ECF) has posted a funds from operations (FFO) of $35.4 million, or 9.4 cents per security, above its guidance of 9 cents for financial year 2025.
The numbers: Its FFO was up 6.9% from the previous year. ECF also posted an improvement in net loss of $5.39 million, compared to a loss of $26.70 million during FY24.
However, rental income fell to $40.48 million, compared to $42.12 million, and the fund’s property valuations decreased by $18.8 million. The decrease in valuation, it said, was largely due to rising capitalisation and discount rates driven by the high interest rate environment and broader market conditions.
ECF noted these impacts had been partially offset by increasing portfolio rents for the fund.
The fund’s properties have an occupancy of 96.3%, down from 98.4% in FY24 and a weighted average lease expiry (WALE) of 3.4 years, down from 4 years.
Its gearing was at 38.1%, which it said was within the target range of 30-40%, while its loan to value ratio was at 39.2% under its covenant maximum of 52.5%.
The directors noted in the report that its going concern included the fund’s net current asset deficiency of $4.3 million and net assets of $279.7 million.
They said the net current asset deficiency of the fund was attributable to a current payable of $7.6 million for the June quarter distribution. ECF has access to $20 million of undrawn capex debt facilities, of which $9.3 million can be claimed for capex works funded from working capital.
The context: The fund warned that its secured debt facilities could become immediately due and payable if there was a change in the majority of the board of directors of the responsible entity or a change in persons having voting power of more than 50% in the fund.
Earlier this month, family office the Lederer Group placed a 70 cents per share bid to acquire the fund as it was dissatisfied with the governance and management of the fund.
ECF said if the takeover occurred, Lederer Group would need consent from the lender if it did not refinance the debt facility.
ECF’s independent board committee has since recommended to reject the offer.
What they said: ECF managing director Tony Fehon said: "ECF has delivered on its FY25 earnings guidance despite challenging market conditions, underscoring the strength of the fund’s strategy and the quality of its portfolio".
"With assets concentrated in markets showing resilient tenant demand, the fund is well positioned to continue generating attractive risk-adjusted returns for investors."
The source: ASX
