Elanor sells Queensland shopping centre, reports growth

Auburn Central sold in December for $129.5m.

Elanor Investors Group (ENN) has sold Moranbah Fair Shopping Centre after four years.

The deal, with Sentinel, is worth $28 million – book value.

It also reflects an 8.6 per cent yield.

ENN paid Charter Hall $25m.

The Moranbah asset has been held it the Retail Property Fund (ERF).

One of Queensland’s youngest towns

About 190 kilometres south west of Mackay, Moranbah is marketed as ‘one of Queensland’s youngest towns’ – developed in 1969 to house coal mine workers and their families

Today, its population is close to 9000; the community has a hospital, two primary schools and tourist accommodation.

The catchment’s household income level is 74pc above benchmark, according to Savills’ Peter Tyson and John Tyson, who acted for Elanor.

JLL’s Sam Hatcher and Nick Willis represented the buyer – which is now the largest owner of commercial property north of the Sunshine Coast.

“There has been a clear flight to essential service-based assets as demand for defensive income streams and capital preservation are at all time highs,” Mr Hatcher said.

“Convenience retail has been strongly sought after by private investors and institutional funds, as demonstrated by the significant liquidity shown in the neighbourhood shopping centre sector with over $2.4 billion worth of stock trading throughout FY21,” he added.

“Despite the high transaction levels, the market fundamentally remains stock constrained with demand for convenience retail significantly outpacing supply of new stock to the market”.

Moranbah Fair

On 1.68 hectares at 12-14 Saint Francis Drive, Moranbah Fair contains 7095 square metres of lettable area – anchored by a Coles supermarket.

There is also a mini major – vacated last year by Target Country and replaced by The Reject Shop – 12 specialty stores, six office suites and a pad site occupied by KFC.

The centre includes 195 car parks too.

According to Sentinel the asset is fully leased with a Weighted Average Lease Expiry of 6.4 years (it was 5.9 in January, 2020, when the property was listed and Target still occupied).

Last year ERF sold Auburn Central to SCA Property Group for $129.5m – a four pc premium to book value.

ENN reports growth

Reporting its FY21 results today, ENN said its funds under management increased $383m – to $2.075 billion (story continues below).

Its income during the period also surged 38pc to $29.7m.

The manager launched two new funds following the acquisition of Toowoomba’s Clifford Gardens for $145m and an office and medical sector property in Woolloongabba ($80.2m).

The Healthcare Real Estate Fund grew in value by $209m following purchases in Brisbane (Woolloongabba Community Health Centre) and Perth (2 Civic Boulevard, Rockingham and Ellenbrook’s Broadway Medical Centre).

A syndicate was also created following a deal last September to buy Riverside Plaza, just outside of Canberra, for $60m (another syndicate in June sold a Belconnen car park).

The group also recently snapped up a zoo for its Wildlife Park Fund.

Appraisals conducted to June 30, 2021 increased ENN’s portfolio value by $70m.

The manager’s gearing is 21pc, down from 29.7pc at the end of FY20.

“Despite challenging market conditions in some of our investment sectors we are pleased with performance of funds over the period,” ENN chief executive Glen Willis said.

“Given our pipeline of funds management opportunities across all our sectors of focus and the significant expansion in our wholesale and institutional capital partner base during the year, we are well positioned for further strong growth,” he added.

Shareholders will receive a distribution of 7.14 cents per unit for the last six months and 11.27c for the year.

Stocking up for FY22

This financial year, for its Commercial Property Fund, ENN paid $113.5m for 50 Cavill Ave in Surfers Paradise.

It has also established the $346m Elanor Hotel Accommodation Fund, through the acquisition of the Elanor Luxury Hotel Fund and Albany Hotel Syndicate by the Elanor Metro and Prime Regional Hotel Fund.

“The group’s key strategic objective remains unchanged: to deliver strong investment returns for ENN’s capital partners and securityholders,” it added.

“The group will look to grow income from managed funds and redeploy co-investment capital to facilitate future funds management growth in a ‘capital-lite’ manner.

“ENN is committed to growing funds under management through the [purchase] of high investment quality assets based on the group’s investment philosophy…of acquiring assets with strong and differentiated market positions.

“While market conditions in some of our sectors of focus remain challenging and uncertain, the group has a strong and mature pipeline of funds management opportunities.

“Further, the group is actively pursuing opportunities in new real estate sectors and continues to explore strategic opportunities to deliver its growth objectives”.

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Marc Pallisco

A former property analyst and print journalist, Marc is the publisher of realestatesource.com.au.