Elanor Retail Earnings up 12% with 3 Malls Now For Sale16 February 2020
Elanor Retail Property announced its interim financial results for the half year ended 31 December 2019 with core earnings up 12%.
Commenting on the result, ENN CEO, Glenn Willis, said: “We are pleased that the Fund continues to deliver strong risk-adjusted returns for security holders. As announced recently, we have commenced a structured sales program for the Fund’s Income Assets, with the proceeds to be recycled into ValueAdd retail opportunities or utilised for a buy-back of securities. We remain confident that the Fund is well positioned to continue to grow value for security holders.”
- Statutory net profit for the period of $6.0 million.
- Core Earnings for the period of $7.1 million (1HFY19: $6.3 million), or 5.52 cents per security.
- Distributions for the period of $6.7 million, or 5.24 cents per security based on maintaining a 95% payout ratio.
- NTA per security of $1.54 as at 31 December 2019.
- As at 31 December 2019, ERF had a total investment portfolio of $337.4 million, with $207 million in Value-Add assets, consistent with the strategy of the Fund.
- The portfolio comprises 7 high investment quality retail shopping centres, with a strong focus on non-discretionary retailers, representing 62% of rental income.
- Gearing of the Fund of 39.3% as at 31 December 2019, within the Group’s target gearing range of between 30% and 40%.
- Following the opening of Aldi in Tweed Mall on 21 August 2019, the asset has experienced a significant increase in sales and footfall traffic of 15.4% and 13.8% respectively.
- The Fund has entered into an Agreement For Lease (“AFL”) with Aldi at Auburn Central for a new 1,755 square metre supermarket, secured by a new 15-year lease with two further five year-options. Replacing BIG W as the asset’s second anchor retailer, the introduction of the new Aldi supermarket is consistent with the Fund’s strategy to reposition Auburn Central as a non-discretionary focused, retail offering for the local trade area.
Fund Manager, Michael Baliva, said “We remain focused on unlocking the significant value upside in both the Auburn Central and Tweed Mall assets. These properties will continue to benefit substantially from the repositioning of the centres’ retail mix, as well as unlocking Tweed Mall’s significant development potential. The introduction of Aldi at Auburn Central is consistent with our strategy to reposition Auburn Central as a non-discretionary focused, retail offering for the local trade area. The increased sales and foot traffic generated by Aldi will provide further substantial benefits for the centre and its retailers, thereby driving value for ERF security holders.”
The Neeta City Fairfield Centre which Elanor acquired in 2019 sits outside of the listed vehicle. That Centre is also being re-positioned following the closure of Big W.
Update on Strategic Review
On 8 October 2019 the Manager of the Fund announced that it had concluded a strategic review of the Fund, which was first outlined at the release of the 1HFY19 results. As a result of the strategic review, the Manager has commenced a structured sales program for the Fund’s Income Assets, with the proceeds to be recycled into value-add retail or utilised for a buy back of securities.
The Fund has engaged Savills National Retail Investments team to manage the divestment of three shopping centre assets: Moranbah Fair, Manning Mall, and Gladstone Square. The Fund is committed to growing the value of its investment portfolio and continues to evaluate further high investment quality shopping centre acquisition opportunities. Further asset recycling opportunities in the investment portfolio are currently being considered.
The Fund's core strategy will remain focused on actively managing and growing earnings from its investment portfolio and acquiring additional high investment quality retail properties. The Fund is well positioned to enhance value for security holders in the short term following execution of current initiatives to realise the operational and strategic opportunities across the Portfolio.