Elanor Retail Property Fund announced its financial results for the half year ended 31 December 2021, reporting a drop in earnings per security and a lower NTA .
The Fund has been impacted by Queensland border closures and the loss of income following the sale of Moranbah Fair in August 2021. Earnings per security for the period were 3.17c, -37% lower than pcp with the NTA per security dropping 11.6% to $1.22. Earnings in the prior period were higher due to some one off lease surrender payments. The REIT is trading at $1.10 per security, representing a 10% discount to NTA. The distribution reflects an annualised yield of c 5.7% on the current price.
The portfolio now consists of 5 core assets worth $191m.
Co-Head of Real Estate and ERF Fund Manager, Michael Baliva, said “We are pleased with the performance of the Portfolio over the six months to 31 December 2021. The Fund’s Assets have performed strongly with sales growth from the major retailers of 8% since the beginning of the pandemic. We are well positioned to deliver strong and growing income returns and capital growth.”
The Group’s ‘defensive’ shopping centre portfolio has performed well during the COVID-19 pandemic. Given the geographic spread and non-discretionary nature of the ERF portfolio, the ongoing effects of the COVID-19 pandemic continue to be relatively minimal. As at 31 January 2021, 94% of rental billings for the six months ended 31 December 2021 had been collected.
Negotiations are continuing with certain tenants in respect to COVID-19 related rent relief and deferral arrangements in accordance with the Code of Conduct. For the six months to 31 December 2021, the impact of COVID-19 rental abatements was $0.51 million, representing only 5.9% of Rental Income.
Highlights
- Funds From Operations (FFO) for the period of $4.1 million or 3.17 cents per security for the six months ended 31 December 2021
- Distribution for the six months of $3.8 million or 3.01 cents per security (95% payout ratio)
- Moranbah Fair sale completed in August 2021 at a gross sales price of $28.0 million (in line with book value), providing balance sheet capacity for accretive growth
- Notwithstanding challenging market conditions, the Fund collected 94% (97% excluding the impact of the Queensland border closure on Tweed Mall) of its rental income during the six months to 31 December 2021
- Fund’s trading occupancy is 100% of leased area
- Valuation of the Fund’s portfolio increased by $4.2 million to $191.2 million, reflecting a weighted average capitalisation rate of 7.0%
Commenting on the result, ENN CEO, Glenn Willis, said: “The resilient performance of the Fund’s supermarket-anchored shopping centre portfolio has been pleasing. The defensive nature of the portfolio is highlighted by its strong rental collections and the growth in the Fund’s property valuations.
ERF’s income and capital value upside, coupled with its conservative gearing, positions the Fund well to grow value for securityholders.”
Summary of Financial Results
A summary of the key financial results for the half year ended 31 December 2021 is as follows:
| Key financial results | 31 December 2021 |
| Net profit ($’m) | 2.72 |
| Distributions payable to securityholders ($’m) | 3.85 |
| Funds From Operations per stapled security (cents) | 3.17 |
| Distributions (cents per stapled security) | 3.01 |
| Net tangible assets ($ per stapled security) | 1.22 |
| Gearing (net debt / total assets less cash) (%) | 18.3 |
Outlook
The Fund’s key objective is to provide investors with strong and growing income returns, and capital growth, from its portfolio of high investment quality supermarket-anchored shopping centres that provide everyday goods and essential services.
The Fund’s portfolio of supermarket-anchored shopping centres is well positioned to enhance value for securityholders. The active asset management of the portfolio is generating improved operational performance and returns. Furthermore, the Manager is progressing strategic initiatives to grow securityholder value.
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