Elanor Funds Management Limited | GPO Box 1511, Sydney NSW 2001 | www.elanorinvestors.com
1
30 September 2024
Company Announcements Office
ASX Limited
Exchange Centre
Level 4, 20 Bridge Street
Sydney NSW 2000
Dear Sir/Madam
Elanor Commercial Property Fund Annual Report for Year ended 30 June 2024
Attached is the Elanor Commercial Property Fund (ASX: ECF) Annual Report for the year ended
30 June 2024.
Yours sincerely,
Symon Simmons
Company Secretary
Elanor Funds Management Limited
Authority and Contact Details
This announcement has been authorised for release by the Board of Directors of Elanor Funds
Management Limited
For further information regarding this announcement please contact:
Symon Simmons
Company Secretary
Elanor Funds Management Limited
Phone: (02) 9239 8400
Annual Report
For the year ended 30 June 2024
Acknowledgement of Country
Elanor is proud to work with the communities in which we
operate, to manage and improve properties on land across
Australia and New Zealand.
We pay our respects to the traditional owners, their elders past,
present and emerging and value their care and custodianship of
these lands.
2
Elanor Commercial Property Fund
Annual Report 2024
SEP
September 2024
Estimated interim distribution announcement
and securities trade ex-distribution
NOV
November 2024
Interim distribution payment
DEC
December 2024
Estimated interim distribution announcement
and securities trade ex-distribution
FEB
February 2025
Interim results announcement and interim
distribution payment
MAR
March 2025
Estimated final distribution announcement
and securities trade ex-distribution
MAY
May 2025
Interim distribution payment
JUN
June 2025
Estimated interim distribution announcement
and securities trade ex-distribution
AUG
August 2025
Full-year results announcement and final
distribution payment
SEP
September 2025
Annual tax statements
04 —
FY24 Results Highlights
05 —
Environmental, Social and Governance (ESG)
06 —
Message from the Chair
08 —
Financial Report
75 —
Corporate Governance
76 —
Securityholder Analysis
78 —
Corporate Directory
3
Responsible Entity
Elanor Funds Management Limited
ABN 39 125 903 031. AFSL 398196.
Contents
Financial Calendar
WorkZone West, Perth
FFO
per Security
Distributions per
Security
per Security
Occupancy1
Portfolio WALE3
Like-for-like
income growth
10.47c
Above market
guidance
8.50c
Reflecting an 81%
payout ratio
98.4%
Significantly
above national
occupancy of
84.0%2
4.0 yrs
Increase from 3.1
years at 30 June
2023
4.7%
Strong,
sustainable
growth in rents
Weighted average
capitalisation
rate4
Total portfolio
value5
NTA
per Security
Balance sheet
gearing6
Hedged interest
rate exposure
7.67%
Up from 6.95%
$512.6m
Decrease of 8.1%
from 30 June
2023
$0.83
Decrease from
$1.00 at 30 June
2023
40.1%
Up from 35.1% at
30 June 2023
76.7%
Weighted average
hedge expiry of
2.2 years
FY24 Results Highlights
1.
Weighted by area, including Heads of Agreements
2.
JLL REIS June 2024, national CBD occupancy
3.
Weighted by income, including Heads of Agreements
4.
The WACR includes ECF’s investment in Harris Street. On an equity accounted basis, the WACR is 7.78%
5.
On a consolidated basis. Treating 19 Harris Street as an equity-accounted investment results in an investment portfolio of $443.7 million
6.
Debt less cash divided by total assets less cash. Look-through gearing of 45.9%
4
Elanor Commercial Property Fund
Annual Report 2024
Geographic Diversification
WA (22%)
QLD (47%)
NT
SA (6%)
VIC
200 Adelaide Street Brisbane, QLD
Nexus Centre Mt Gravatt, QLD
Limestone Centre Ipswich, QLD
34 Corporate Drive Cannon Hill, QLD
19 Harris Street
Sydney, NSW
Garema Court
Canberra, ACT
Campus DXC
Adelaide, SA
50 Cavill Avenue
Gold Coast, QLD
WorkZone West
Perth, WA
NSW (14%)
ACT (11%)
Impact
•
NABERS Energy rating increased
from 3.5 to 5.5 star
•
Estimated 67.6 tonnes of avoided
CO² emissions per annum – 40%
reduction
•
Estimated 76 MWh energy
reduction per annum
•
Carbon Neutral asset – Climate
Active certification means net zero
emissions
Environmental, Social and Governance (ESG)
Assets with strong green credentials strengthen the portfolio’s overall ESG position
Environmental
•
Total Scope 1 and Scope 2 emissions intensity
(location-based) was 41.9 tCO2e/m2 for the year
•
5.2 NABERS Sustainable Portfolios Index 2024
Energy rating – targeting 5.5
•
4.3 NABERS Sustainable Portfolios Index 2024
Water rating
•
Desktop Climate Exposure Assessments have
been carried out for all assets in the portfolio
•
Building Analytics and Optimisation program of
work commenced to drive down consumption and
emissions, and is expected to reduce operating
costs
Social
•
Elanor implemented a WHS system (HSI
Donesafe), and established an Employee
Assistance Program (Telus Health)
•
Elanor facilitated an inaugural FSHD Global
Research Foundation Partnerships Day and
provided sponsorship for the annual FSHD Sydney
Chocolate Ball
•
The Smith Family and Elanor hosted a two-day
work inspiration program for disadvantaged high
school students
Governance
•
Type I Audit was completed during the year for
GS007 across the Elanor office portfolio
•
Elanor’s Modern Slavery Statement was refreshed,
and a tier 1 supplier review commenced
Upgrade over 2 years
•
Building management system
•
Awnings, signage, LED lighting
•
Solar panel installation
•
Analytics technology provides
live energy data to improve
efficiency of building operation
19 Harris Street, Pyrmont, NSW
Operational changes
•
Originally constructed 2013 to
5-star NABERS
•
Lighting schedules were
adjusted
•
Sensor lighting systems installed
•
Control strategy for air
conditioning implemented.
•
Lighting was upgraded from
inefficient T8s to LEDs.
WorkZone West, Perth WA
Impact
•
Energy consumption has fallen by
28% and WorkZone West has
maintained its 6-star NABERS
energy rating
•
First building in WA with 6-star
NABERS energy rating and carbon
neutral status
•
Carbon Neutral asset – Climate
Active certification means net zero
emissions
5
Case Studies: Two Properties are Carbon Neutral Certified
Message from the Chair
Elanor Commercial Property Fund (ASX: ECF) is an
externally managed real estate investment trust that
currently owns nine1 Australian commercial office
assets with a portfolio valuation of $512.62 million.
ECF’s investment portfolio has continued to perform
strongly during the financial year, generating
Funds from Operations (FFO) of $33.1 million, or 10.47
cents per security, above its FY24 Earnings
Guidance. The Fund distributed $26.9 million or 8.50
cents per security, reflecting a payout ratio of 81%.
Strategy
The Fund’s key strategic objective is to provide
strong risk-adjusted returns by:
•
Investing in commercial office properties with
strong competitive advantages; and
•
Actively managing the Fund’s assets to grow the
income and capital value of the properties.
Key Results
In a challenging market for the office sector, the
Fund performed strongly during the year, achieving
above its FY24 Earnings Guidance.
A range of new leases and lease renewals were
successfully executed over the period for over
26,000m2, further enhancing the Fund’s income
security
and
tenant
quality.
ECF’s
portfolio
occupancy
was
98.4%3
at
30
June
2024
(significantly above the average market occupancy
of 84.0%4), with a WALE of 4.0 years5 (an increase
from 3.1 years at 30 June 2023). FY25 lease expiries
were reduced to 8% of gross income. These leasing
outcomes strongly position the Fund for FY25 with
secure income in the prevailing market conditions.
ECF’s office assets performed strongly over the
period. However, the valuation of the Fund’s portfolio
decreased by 8.1% since 30 June 2023, largely due
to softening capitalisation rates (FY24 WACR: 7.67%6;
FY23 WACR: 6.95%). Capitalisation rate softening has
been partially offset by 5.8% positive market rental
growth.
A consequence of the movement in asset values has
been the Fund’s increased gearing ratio to 40.1%7 at
30 June 2024 (up from 35.1% at 30 June 2023). We
expect this gearing ratio to materially reduce as we
execute several capital initiatives in the coming
months.
Strategic Partnership With Lederer Group
In September 2024, the Lederer Group acquired
Elanor Investors Group's (ASX: ENN) 12.6% interest in
ECF and became ECF's largest securityholder, having
a
14.76%
equity
interest.
ENN
retains
the
management rights to ECF and remains committed
to the successful management of the Fund.
The strategic partnership with the Lederer Group
brings
significant
benefits
to
ECF
and
its
securityholders:
•
Enhanced Capital Support: The Lederer Group
has committed to providing an additional $50
million in equity capital to ECF, strengthening our
market
position
and
providing
increased
flexibility for future opportunities.
•
Strategic Expertise: The Lederer Group will have
participation on a new investment committee
(one of four positions alongside representatives
of Elanor Funds Management Limited (EFML), the
RE (Responsible Entity), and Investment Manager,
of ECF). The new investment committee will
oversee material ECF investment or divestment
initiatives, including major capital expenditure
initiatives,
and
will
make
non-binding
recommendations to the RE of ECF in relation to
those matters having regard to the best interests
of all ECF securityholders.
•
Market Confidence: This partnership with a
respected real estate investor signals confidence
in ECF's strategy and growth potential.
We believe this strategic alliance positions ECF for
continued success, providing additional resources
and expertise to navigate market challenges and
capitalise on opportunities in the commercial
property sector.
Elanor Commercial Property Fund
Annual Report 2024
6
On behalf of the Board, I am pleased to present Elanor
Commercial Property Fund’s Annual Report, including its
Financial Statements for the year ended 30 June 2024.
1.
This includes the property 19 Harris Street, which ECF holds a 49.9% equity interest in
2.
On a consolidated basis. Treating 19 Harris Street as an equity-accounted investment results in an investment portfolio of $443.7 million
3.
Weighted by area, including Heads of Agreements
4.
JLL REIS June 2024, national CBD occupancy
5.
Weighted by income, including Heads of Agreements
6.
The WACR includes ECF’s investment in Harris Street. On an equity accounted basis, the WACR is 7.78%
7.
Debt less cash divided by total assets less cash. Look-through gearing of 45.9%
Sustainability
We are pleased to highlight our commitment to
environmental,
social,
and
governance
(ESG)
initiatives, showcasing our accomplishments over
the past year. This year, we renewed the Climate
Active carbon neutral certifications at 19 Harris St
and WorkZone West properties.
Total Scope 1 and Scope 2 emissions intensity
(location-based) for the fund was 41.9 tCO2e/m2 for
FY24. Pleasingly, ECF achieved a 5.2 NABERS
Sustainable Portfolios Index 2024 Energy rating and
a 4.3 NABERS Sustainable Portfolios Index 2024
Water Rating. In addition, desktop Climate Exposure
Assessments have been carried out for all assets in
the
portfolio,
and
a
building
analytics
and
optimisation program of work has commenced to
drive down consumption and emissions, expected to
reduce operating costs.
Elanor recently implemented a WHS system and
launched an Employee Assistance Program. Elanor is
committed to social impact and over the past year
has hosted programs for disadvantaged students
with The Smith Family and supported the FSHD
Global Research Foundation. For governance, Elanor
completed a Type I Audit for GS007 over the year
and is updating its Modern Slavery Statement with a
tier 1 supplier review.
We remain dedicated to integrating ESG initiatives
across ECF as part of our core fund strategy.
Outlook
The Fund’s portfolio is near full occupancy and
strong leasing momentum continues for future
expiries. The execution of asset management
initiatives and lease renewals is a priority to maintain
high occupancy and grow rental income.
The Fund’s strong earnings performance is a direct
result of our disciplined, risk-first approach to
investing
in
properties
that
deliver
strong,
sustainable income. With the Fund’s properties
invested in favourably positioned markets, there are
significant opportunities to further enhance value for
Securityholders.
ECF has provided FY25 distribution guidance of 7.5
cents per security. This guidance reflects the
security of the Fund’s income (with approximately
8% of leases expiring in FY25) and its interest rate
risk position (76.7% hedged until August 2026). The
Fund’s properties have significant potential for
income growth, with market rents well below
economic rents.
I wish to thank my fellow Board members, our
executive leadership team and the Fund team led by
David Burgess, ECF’s Fund Manager, for their hard
work and commitment to driving the performance of
ECF’s portfolio of commercial office properties.
Finally, I would like to thank all ECF Securityholders
for their continued support.
Yours sincerely,
Ian Mackie
Chair
19 Harris Street, Pyrmont
7
Financial
Report
For the year ended
30 June 2024
9 — Director’s Report
27 — Auditor’s Independence Declaration
28 — Consolidated Statements of Profit or Loss
29 — Consolidated Statements of Comprehensive Income
30 — Consolidated Statements of Financial Position
31 — Consolidated Statements of Changes in Equity
33 — Consolidated Statements of Cash Flows
34 — Notes to the Consolidated Financial Statements
69 — Directors’ Declaration to Stapled Securityholders
70 — Independent Auditor’s Report
ELANOR COMMERCIAL PROPERTY FUND
DIRECTORS' REPORT
The Directors of Elanor Funds Management Limited (Responsible Entity), as responsible entity of the Elanor
Commercial Property Fund, present their report together with the consolidated financial report of Elanor
Commercial Property Fund (ECF, Group, Consolidated Group or Fund) and the consolidated financial report
of the Elanor Commercial Property Fund II (ECPF II) for the year ended 30 June 2024.
The annual financial report of the Consolidated Group comprises Elanor Commercial Property Fund I (ECPF
I) and its controlled entities and Elanor Commercial Property Fund II (ECPF II).
The Responsible Entity is a company limited by shares, incorporated and domiciled in Australia. Its registered
office and principal place of business is Level 38, 259 George Street, Sydney NSW 2000.
ECPF I and ECPF II were registered as managed investment schemes on 18 October 2019. The units of ECPF
I and the units of ECPF II are combined and issued as stapled securities in the Group. The Group's securities
are traded on the Australian Securities Exchange (ASX: ECF). The units of each scheme cannot be traded
separately and can only be traded as stapled securities. Although there is no ownership interest between
ECPF I and ECPF II, ECPF I is deemed to be the parent entity of the Group in accordance with the Australian
Accounting Standards.
Elanor Asset Services Pty Limited (ABN 83 614 679 622), a wholly owned subsidiary of Elanor Investors
Group, is the Manager of the Fund, providing services in accordance with the Investment Management
Agreement. The Trust Company (Australia) Limited is the Custodian of the Fund, pursuant to the Custody
Deed.
The Directors' report is a combined Directors' report that covers both schemes. The financial information for
the Group is taken from the consolidated financial reports and notes.
1.
Directors
The following persons have held office as Directors of the Responsible Entity during the year and up to the
date of this report:
•
Ian Mackie (appointed as Chair on 1 January 2024, appointed as Director on 25 August 2023)
•
Paul Bedbrook (resigned as Chair and Director on 31 December 2023)
•
Anthony (Tony) Fehon (Director, and appointed as Managing Director on 9 September 2024)
•
Glenn Willis (resigned as Managing Director and Chief Executive Officer, on 9 September 2024)
•
Nigel Ampherlaw (resigned on 23 September 2024)
•
Su Kiat Lim
•
Karyn Baylis
•
Victor Rodriguez (appointed on 7 July 2023 and resigned on 3 September 2024)
•
Kathy Ostin (appointed on 1 January 2024)
2.
Principal activities
The principal activity of the Fund is the investment in Australian commercial office properties, located in major
metropolitan areas or established commercial precincts.
9
ELANOR COMMERCIAL PROPERTY FUND
DIRECTORS' REPORT
3.
Distributions
Distributions in respect of the year ended 30 June 2024
The following table details the Consolidated Group's distributions that were declared and / or paid in respect
of the year ended 30 June 2024:
Distribution
30 June
Cents per
2024
Consolidated Group
stapled security
$'000
Distribution paid: 1 July - 30 September 2023
2.125
6,727
Distribution paid: 1 October - 31 December 2023
2.125
6,727
Distribution paid: 1 January - 31 March 2024
2.125
6,727
Distribution payable: 1 April - 30 June 2024
2.125
6,727
Total distribution relating to the year ended 30 June 2024
8.50
26,908
4.
Operating and financial review
OVERVIEW AND STRATEGY
The Elanor Commercial Property Fund is an externally managed real estate investment fund that invests in
high investment quality commercial office properties.
The Fund's objective is to provide strong, risk-adjusted returns through a combination of regular distributions
and capital growth. To achieve this objective, the Fund's strategy is to:
•
Invest in commercial office properties with differentiated competitive market positions that are located
in major metropolitan areas or established commercial precincts;
•
Execute leasing strategies and actively manage the properties to grow the income and capital value of
the assets;
•
Acquire additional high investment quality commercial office properties in line with the Fund's
investment criteria; and
•
Maintain a conservative capital structure with a target Gearing range between 30% and 40%.
During the year ended 30 June 2024, the Fund completed and achieved the following key initiatives and results:
•
Funds from Operations (FFO) for the period of $33.1 million or 10.47 cents per security
•
Distributions of $26.9 million or 8.50 cents per security, at a payout ratio of 81%, the low end of the
Fund's target payout ratio range (80% – 100%);
•
Successfully executed a range of new leases and renewals for over 26,000 m2, further enhancing the
Fund’s income security and tenant quality;
•
Reduced FY25 lease expiries to 8% of gross income;
•
Maintained strong occupancy levels at 98.4%, significantly above national office occupancy levels.
•
Key leasing initiatives during the period included:
o
Lease renewal executed with DXC Technology for the entire Campus DXC property in
Felixstow, South Australia (6,288m2)
o
Lease renewal executed with Sunshine Loans for 1,053m2 at 50 Cavill Avenue, Surfers
Paradise, Queensland
o
Lease renewal executed with Optus for 665m2 at 34 Corporate Drive, Cannon Hill,
Queensland
Elanor Commercial Property Fund
Annual Report 2024
10
ELANOR COMMERCIAL PROPERTY FUND
DIRECTORS' REPORT
4.
Operating and financial review (continued)
o
New lease signed with NIB Thrive for 509m2 at 34 Corporate Drive, Cannon Hill, Queensland.
o
New leases signed with CIP Construction, Bluepost Productions and Born Creators over a
combined 1,203m2 at 19 Harris St, Pyrmont, New South Wales
o
HOA signed with CPB Contractors for renewal of 4,887m2 at WorkZone West, Perth, Western
Australia
o
HOA signed with Vocus for new lease of 3,759m2 at the WorkZone West, Perth, Western
Australia
o
HOA signed with Bunnings for renewal of 1,992m2 at the NEXUS Centre, Mt Gravatt,
Queensland
o
HOA signed with Thomson-Reuters for renewal of 1,941m2 and a lease was executed with
L’Oreal for renewal of 554m2 at 19 Harris Street, Pyrmont, NSW.
The Fund’s portfolio of commercial office assets:
•
Comprises nine high investment quality properties located in established commercial office precincts
in Brisbane, Gold Coast, Perth, Canberra, Adelaide and Sydney, with a combined value of $462.4
million (including 19 Harris Street);
•
Generates approximately 72% of its income from Federal and State Governments (16%), Multinationals
(45%, including ITV, Abacus dx, Accor) and ASX-listed tenants (12%, including CIMIC, NAB, Coles
and Wesfarmers).
•
Had a gearing ratio of 40.1% at balance date (45.9% on a look through basis).
Subsequent to balance date, on 9 September 2024, the Fund announced a strategic partnership with Lederer
Group. The Lederer Group has acquired Elanor Investors Group’s (ASX: ENN) 12.6% interest in the Fund to
become the largest securityholder in the Fund.
As part of the strategic partnership, the Lederer Group has committed $50 million in equity capital to support
the Fund. The Lederer Group will have participation on a new investment committee (one of four positions
alongside representatives of the Responsible Entity and the Manager). The new investment committee will
oversee any material investment or divestment initiatives, including major capital expenditure, and will make
non-binding recommendations to the Responsible Entity in relation to those matters having regard to the best
interest of all ECF securityholders.
The Fund has committed to acquire at least its 49.9% pro-rata share of the Harris Street Fund Capital Notes,
subject to sourcing suitable funding. Citigroup Global Markets Australia Pty Limited and MA Moelis Australia
Advisory Pty Ltd are advising on a potential rights issue in ECF to fund both the commitment to the Harris
Street Fund and to provide further capital for near term capital expenditure and incentives.
The Lederer Group’s equity commitment of $50 million includes an offer to take up 100% of its entitlement and
sub-underwrite any potential rights issue at an indicative offer price of 60 cents per security. The Responsible
Entity will actively explore the rights issue, however, any equity raising is subject to market conditions, final
Responsible Entity Board approval, regulatory approvals and securing suitable underwriting support for the
rights issue.
Elanor Investor Group and the Responsible Entity
On 23 August 2024, Elanor Investors Group (ASX: ENN) requested, and the ASX granted, a voluntary
suspension of trading of ENN securities on the ASX to enable Elanor to consider a range of options to stabilise
and maintain its ongoing financial position. Elanor Funds Management Limited (EFML) is a wholly owned
subsidiary of Elanor Investors Group and is the Responsible Entity of ECF. If Elanor Investors Group is not
able to stabilise and maintain its ongoing financial position, it may cast uncertainty about EFML’s ability to act
as Responsible Entity of the Fund.
11
ELANOR COMMERCIAL PROPERTY FUND
DIRECTORS' REPORT
4.
Operating and financial review (continued)
INVESTMENT PORTFOLIO
The valuation of the Fund's portfolio of investment properties at 30 June 2024 has decreased by $31.9 million
(6.71%) since 30 June 2023 (a $18.8 million or 4.06% decrease since 31 December 2023). The valuation of
the equity accounted investment in the 19 Harris Street property at 30 June 2024 decreased by $14.3 million
(45.52%) since 30 June 2023.
This decrease in portfolio valuation is primarily due to rising capitalisation and discount rates driven by the
prevailing interest rate environment and broader market conditions. These impacts have been partially offset
by increasing portfolio rents for the Fund. The Fund’s portfolio valuation decrease is consistent with reduced
asset valuations across the Australian commercial office market. The Sydney City commercial office market
has been more severely impacted by rising capitalisation rates based on recent commercial property
transactions, and this is reflected in the value of the Fund’s 49.9% interest in the 19 Harris Street property.
The resilience of the Fund's property portfolio is a result of its tenant quality, occupancy of 98.4%, and WALE
of 4.0 years. Strong tenant demand has driven 9.1% positive leasing spreads and 4.7% like-for-like income
growth, reflecting the strength of the leasing outcomes achieved during the year. This is a direct result of the
Fund’s strategy to invest in commercial office properties with differentiated competitive market positions.
The following table shows a summary of ECF’s investment portfolio as at balance date:
Carrying
Carrying
Value
Value
30 June 2024
30 June 2023
Property
Location
$'m
$'m
50 Cavill Avenue
Surfers Paradise QLD
110.5
120.0
WorkZone West
Perth, WA
111.0
118.0
Garema Court
Canberra, ACT
57.7
66.0
200 Adelaide St
Brisbane, QLD
43.5
50.0
NEXUS Centre
Mount Gravatt, QLD
33.5
35.0
Limestone Centre
Ipswich, QLD
30.5
29.6
Campus DXC
Felixstow, SA
31.0
28.5
34 Corporate Drive
Cannon Hill, QLD
26.0
28.5
Total Investment Properties
443.7
475.6
Equity
Equity
Accounted
Accounted
Value
Value
30 June 2024
30 June 2023
Equity Investment
Location
Ownership %
$'m
$'m
19 Harris Street
Pyrmont, NSW
49.9
17.2
31.6
Total Equity Investment
17.2
31.6
Total Investment Portfolio
460.9
507.2
On 20 August 2024, Harris Property Trust executed a credit approved term sheet with its financier to extend
and vary the existing debt facility from 23 May 2025 to 30 June 2027. The revised terms include a requirement
to reduce the debt facility from $101.75 million to $77.0 million prior to 30 November 2024. The Harris Street
Fund intends to undertake a capital note raise to meet this requirement.
The ASX announcement made by Elanor Investors Group (which incorporates ECF’s Responsible Entity,
EFML, and the trustee of the Harris Property Trust) on 23 August 2024 may create a material uncertainty as
to the ability to complete ECF’s and Harris Street Fund capital note raise within the required timeframe.
Elanor Commercial Property Fund
Annual Report 2024
12
ELANOR COMMERCIAL PROPERTY FUND
DIRECTORS' REPORT
4.
Operating and financial review (continued)
To mitigate the risk of not completing the capital raising within the required timeframe, the trustee of the Harris
Property Trust can undertake alternative options including reducing the size of the raise, seeking further
accommodation from the financier, undertaking a refinancing of the existing debt or an orderly sale of the
Harris Street property asset.
FINANCIAL RESULTS
The Fund recorded a statutory loss after tax of $26.7 million for the year ended 30 June 2024 (2023: loss after
tax of $32.2 million).
Funds from Operations (FFO) was $33.1 million (2023: $34.9 million) or 10.47 cents (2023: 11.01 cents) per
weighted average security. FFO is the Directors' measure of the periodic amount available for distributions
and has been determined in accordance with the definition outlined in the Property Council of Australia’s white
paper “Voluntary best practice guidelines for disclosing FFO and AFFO” and adjusted for amortisation amounts
relating to borrowing costs and the manager contribution.
The Fund’s balance sheet remains strong at 30 June 2024, with net assets of $264.2 million, and cash on
hand of $7.7 million. The Fund also has $4.5 million in undrawn debt facilities.
A summary of the Fund's results for the year is set out below:
Consolidated
Group
ECPF II
30 June
30 June
Key financial results
2024
2024
Net statutory (loss)/profit ($'000)
(26,704)
648
Funds from Operations (FFO) ($'000)
33,143
2,060
Distributions payable to security holders ($'000)
6,727
389
FFO per stapled security (cents)
10.47
0.65
FFO per weighted average stapled security (cents)
10.47
0.65
Distributions (cents per stapled security)
8.50
0.52
Net tangible assets ($ per stapled security)
0.83
0.05
Gearing (net debt / total assets less cash) (%)
40.1%
44.5%
Gearing (look-through)1 (%)
45.9%
44.5%
1 Adjusted for equity accounted investment of 19 Harris Street, Pyrmont, NSW.
13
ELANOR COMMERCIAL PROPERTY FUND
DIRECTORS' REPORT
4.
Operating and financial review (continued)
The table below provides a reconciliation from statutory net loss to Funds from Operations:
Consolidated
Group
ECPF II
30 June
30 June
2024
2024
Funds from Operations (FFO)1
$'000
$'000
Statutory net (loss)/profit
(26,704)
648
Adjustments for items included in statutory loss:
Fair value (gain)/loss included in share of profit from equity accounted investment2
13,236
–
Fair value (gain)/loss on investment property
35,311
(98)
Fair value (gain)/loss on derivatives
2,598
134
Straight lining of rental income3
231
53
Amortisation expense4
6,246
1,198
Transaction costs
755
125
Adjustments for non profit / (loss) item:
Share of FFO from equity accounted investments
1,470
–
Funds from Operations (FFO)1
33,143
2,060
Note 1: Funds from Operations (FFO) has been determined in accordance with the Property Council Guidelines and adjusted for amortisation of borrowing cost and manager contribution
which is excluded from FFO and represents the Directors' view of underlying earnings from ongoing operating activities, being statutory profit / (loss) (under IFRS), adjusted for non-
cash and other items such as property revaluations, derivative mark-to-market impacts, amortisation of tenant incentives, gains/losses on sale of investment properties, straight-line
rental adjustments, non-FFO tax expenses/benefits and other unrealised one-off items. This includes the group’s proportional ownership of 19 Harris Street’s FFO, which is held as an
equity accounted investment.
Note 2: Includes amortisation of the manager contribution of $0.93 million.
Note 3: Straight lining of rental income is a non-cash accounting adjustment recognised in rental income in the Consolidated Statement of Profit or Loss.
Note 4: Amortisation expense includes the amortisation of capitalised leasing costs and rental abatements, and debt establishment costs recognised in the Consolidated Statement of
Profit or Loss
CLIMATE RELATED DISCLOSURES
Elanor Investors Group (‘Elanor’ or ‘Elanor Group’), as the Manager of a portfolio of commercial office
properties across Australia, recognises the impact that climate change is having on the environment and the
importance of its contribution to climate change mitigation initiatives.
Specifically, Elanor is advancing its understanding of climate-related risks and opportunities in line with leading
practice frameworks and standards being set by the Australian Accounting Standards Board to ensure it is
ready for climate-related financial disclosure.
As part of Elanor’s commitment to sustainability and responsible business practices, the Elanor Group
continues to progress disclosure on measuring, monitoring, and reporting of climate-related risks and
opportunities in line with the draft Australian Sustainability Reporting Standards (‘ASRS’).
The following sections outline the progress Elanor is making on climate change initiatives and climate-related
financial disclosure in line with the draft ASRS framework covering the areas of governance, strategy, risk
management, and targets and metrics.
Elanor Commercial Property Fund
Annual Report 2024
14
ELANOR COMMERCIAL PROPERTY FUND
DIRECTORS' REPORT
4.
Operating and financial review (continued)
CLIMATE-RELATED FINANCIAL DISCLOSURES
Elanor Investors Group (‘Elanor’ or ‘Elanor Group’), as the Manager of a portfolio of commercial office
properties across Australia, recognises the impact that climate change is having on the environment and the
importance of its contribution to climate change mitigation initiatives.
Specifically, Elanor is advancing its understanding of climate-related risks and opportunities in line with leading
practice frameworks and standards being set by the Australian Accounting Standards Board to ensure it is
ready for climate-related financial disclosure.
As part of Elanor’s commitment to sustainability and responsible business practices, the Elanor Group
continues to progress disclosure on measuring, monitoring, and reporting of climate-related risks and
opportunities in line with the draft Australian Sustainability Reporting Standards (‘ASRS’).
The following sections outline the progress Elanor is making on climate change initiatives and climate-related
financial disclosure in line with the draft ASRS framework covering the areas of governance, strategy, risk
management, and targets and metrics.
Governance
The Elanor Board takes responsibility for overseeing the Elanor’s sustainability strategy and policies, which
includes managing climate-related financial risks and opportunities. Elanor’s ESG Committee, operating under
a Charter, reports to the Board as a Management Committee. Chaired by the CEO and Managing Director,
the ESG Committee ensures the Group identifies, assesses, and manages material ESG risks, including
climate-related risks and opportunities.
Working closely with Elanor’s Executive Management Committee and key business unit managers, the ESG
Committee collaborates to achieve the successful formulation and implementation of Elanor's ESG initiatives.
The ESG Committee plays a pivotal role in developing an understanding of Elanor’s climate-related risks and
opportunities, and assessing the processes, controls, and procedures it uses to monitor, manage and oversee
these risks and opportunities.
Strategy
Elanor Investors Group’s second ESG Annual report, released last year, sets out the Elanor’s ESG strategy.
Short, medium and long-term goals have been identified against five material environment topics including
energy and carbon management, ecological impacts, water management, waste impacts and climate change
vulnerability. Currently, portfolio-wide identification of decarbonisation opportunities, including net zero
modelling are priorities.
Elanor is currently developing its strategy for managing its climate-related risks and opportunities as an integral
part of Elanor’s strategic considerations. Elanor is working with key internal and external expert stakeholders
to understand the current and anticipated effects of those climate-related risks and opportunities on the
business model and value chain and readying itself for climate-related financial disclosure.
Risk management
The Elanor Board and ESG Committee are responsible for monitoring and managing climate-related risks and
opportunities. To ensure that climate-related risks and opportunities are managed in a coordinated manner, a
process is underway to consider how to integrate climate-related risks and opportunities into Elanor’s Risk
Management Framework and Risk Appetite Statement along with broader ESG, business-related and macro-
economic matters.
15
ELANOR COMMERCIAL PROPERTY FUND
DIRECTORS' REPORT
4.
Operating and financial review (continued)
To ensure the Elanor Group addresses climate-related risks and opportunities more effectively, a climate
change vulnerability analysis process is being integrated into due diligence procedures for all new asset
acquisitions.
In the coming years, this analysis will be extended to cover Elanor’s long-term portfolio, evaluating climate-
related risks and opportunities thoroughly from both a physical risk and transition risk perspective.
Metrics and targets
Elanor is committed to reducing its environmental impact on the planet and understanding its climate-related
financial impact.
Energy usage data and scope 1 and 2 carbon emissions have been collected for all Elanor-managed assets
for financial years 2022, 2023 and 2024. This data will help to establish energy consumption and carbon
emission targets for Elanor’s managed fund real estate portfolio.
Elanor is currently evaluating the impact of its business operations on the environment and exploring ways to
minimise its carbon footprint. These efforts include:
•
Energy efficiency improvements;
•
On-site renewable energy generation; and
•
Long term generation credits procurement.
Elanor's 2024 ESG report, to be released later in 2024, will provide details on the Elanor Group’s energy and
carbon management initiatives, achievements, and plans across the portfolio to enhance its climate-related
financial disclosure.
By drawing on the draft ASRS requirements and enhancing the Elanor Group’s understanding of climate-
related risks and opportunities, Elanor aims to foster sustainable and responsible business practices that
benefit the Elanor Group’s shareholders, including ECF’s shareholders, key stakeholders and the environment.
RISK MANAGEMENT
Earnings variability and potential capital value impacts due to the prevailing interest rate environment and
economic conditions are the primary risk to the Fund in the coming period. Potential capital value movements
are related to higher return hurdles for real estate investments as interest rates rise, driven by volatility and
uncertainty in respect of short- and long-term interest rates.
Further, risks may also relate to increased operating expenses, a softening of rental growth, an increase in
required incentives or longer letting up periods and possible weather-related events. While general market
uncertainty may impact the availability of capital for acquisition opportunities, demand for quality assets is
expected to remain positive.
These risks to the Fund are mitigated through hedging of interest rates and active management of the Fund’s
portfolio. Regular and active engagement with tenants across the portfolio and ongoing assessments of tenant
rental risks contribute strongly to the performance of the Fund. Further risk mitigants include the broadening
of the Fund's tenant mix and actively managing the Fund's cash position and capital structure.
Elanor Commercial Property Fund
Annual Report 2024
16
ELANOR COMMERCIAL PROPERTY FUND
DIRECTORS' REPORT
4.
Operating and financial review (continued)
SUMMARY AND OUTLOOK
The Fund's core strategy will remain focused on actively managing and growing earnings from its investment
portfolio, realising value-add opportunities across the existing portfolio, and acquiring additional high
investment quality commercial office properties.
The resilience of the Fund's property portfolio in the current economic environment reflects its tenant quality,
occupancy of 98.4%, and WALE of 4.0 years. Strong tenant demand has driven positive leasing spreads of
9.1% and like-for-like income growth of 4.7%, reflecting the strength of the leasing outcomes achieved during
the year. This is a direct result of the Fund’s strategy to invest in commercial office properties with differentiated
competitive market positions.
Looking ahead, in addition to the disclosures included in the Overview and Strategy section above, risks to the
Fund in the coming year include demand variability associated with uncertain economic market conditions.
This has been mitigated by management by successfully renewing and extending leasing agreements with
existing tenants and actively marketing any remaining vacant space to secure the portfolio’s future income.
The active asset management of the Fund’s portfolio is generating improved operational performance, and
strategic initiatives to grow and realise the capital value of the Fund are being progressed.
5.
Interests in the Group
The movement in stapled securities of the Group during the year is set out below:
Consolidated
Consolidated
Group
Group
ECPF II
ECPF II
30 June
30 June
30 June
30 June
2024
2023
2024
2023
'000
'000
'000
'000
Stapled securities on issue at the beginning of the period
316,556
316,556
316,556
316,556
Stapled securities issued during the period
–
–
–
–
Stapled securities on issue at the end of the period
316,556
316,556
316,556
316,556
17
ELANOR COMMERCIAL PROPERTY FUND
DIRECTORS' REPORT
6.
Directors
Name
Particulars
Ian
Mackie
Independent Non-Executive Director (appointed as Chair on 1 January 2024, appointed as
Director on 25 August 2023)
Ian was appointed as a Director of Elanor Investors Limited (EIL) and Elanor Funds
Management Limited (the Responsible Entity of ECF) in August 2023. With more than 40 years
of experience in real estate investment and funds management in the Asia Pacific region, Ian
is currently the Lead Independent Director of Keppel REIT Management Limited (KRML),
manager of the Keppel REIT, listed on the Singapore Stock Exchange.
Ian served as Chair of the Urban Land Institute (ULI) Australia, and as a member for the Board
of ULI Asia Pacific, from June 2019 until June 2022. He remains a member of the Australian
National Council, and a ULI Global Trustee. Ian was previously the International Director and
Asia Pacific Head of Strategic Partnerships at LaSalle Investment Management Asia from
January 2000 to April 2018. Ian also served on LaSalle’s Asia Pacific Investment Committee
from 2006 and its Global Investment Strategy Committee from 2008. Ian holds a Bachelor of
Arts (Economics & Law) from the University of Canberra and an Associate Diploma in
Valuation from the University of Technology Sydney. He is a member of the Australian Institute
of Company Directors, and the Singapore Institute of Directors, and has been a director of
regulated entities in Singapore and South Korea.
Former listed directorships in the last three years: Nil
Interest in stapled securities: Nil
Qualifications: B. Arts (Econ & Law)
Paul
Bedbrook
Independent Non-Executive Chairman (resigned as Chair and Director on 31 December
2023)
Paul was appointed as a Director of both EIL and EFML (the Responsible Entity of ECF) in
June 2014. Paul has had a career of over 30 years in financial services, originally as an analyst,
fund manager and then the GM & Chief Investment Officer for Mercantile Mutual Investment
Management Ltd (ING owned) from 1987 to 1995.
Paul was an executive for 26 years with the Dutch global banking, insurance and investment
group, ING, retiring in 2010. Paul's career included the roles of: President and CEO of ING
Direct Bank, Canada (2000 – 2003), CEO of the ING Australia/ANZ Bank Wealth JV (2003 -
2008) and Regional CEO, ING Asia Pacific, Hong Kong (2008 – 2010). Paul was previously
the Chairman of Zurich Financial Services Australia and its Life, General and Investment
Companies.
Paul is currently a non-executive director of the National Blood Authority.
Former listed directorships in the last three years: Elanor Retail Property Fund (ERF)
Interest in stapled securities: 200,000
Qualifications: B.Sc, F FIN, FAICD
Elanor Commercial Property Fund
Annual Report 2024
18
ELANOR COMMERCIAL PROPERTY FUND
DIRECTORS' REPORT
6.
Directors (continued)
Name
Particulars
Glenn
Willis
Managing Director and Chief Executive Officer (resigned as Managing Director and Chief
Executive Officer on 9 September 2024)
Glenn has over 30 years' experience in the Australian and international capital markets. Glenn
was the co-founder and Chief Executive Officer of Moss Capital, prior to its ASX listing as
Elanor Investors Group in July 2014. Prior to Elanor, Glenn co-founded Grange Securities and
led the team in his role as Managing Director and CEO.
After 12 years of growth, Grange Securities was acquired by Lehman Brothers International
in 2007 as the platform for Lehman's Australian investment banking and funds management
operations. Glenn was appointed Managing Director and Country Head in March 2007. In
2008, Glenn was appointed executive Vice Chairman of Lehman Brothers Australia.
Glenn is a Director of FSHD Global Research Foundation.
Former listed directorships in the last three years: Elanor Retail Property Fund (ERF)
Interest in stapled securities: Nil
Qualifications: B.Bus (Econ & Fin)
Nigel
Ampherlaw
Independent Non-Executive Director (resigned on 23 September 2024)
Nigel was appointed as a Director of both EIL and EFML (the Responsible Entity of ECF) in
June 2014. Nigel was a Partner of PricewaterhouseCoopers for 22 years where he held a
number of leadership positions, including heading the financial services audit, business
advisory services and consulting businesses. He also held a number of senior client Lead
Partner roles. Nigel has extensive experience in risk management, technology, consulting and
auditing in Australia and the Asia-Pacific region.
Nigel is the chairman and independent Non-Executive Director of Great Southern Bank.
Former listed directorships in the last three years: Elanor Retail Property Fund (ERF)
Interest in stapled securities: Nil
Qualifications: B.Com, FCA, MAICD
19
ELANOR COMMERCIAL PROPERTY FUND
DIRECTORS' REPORT
6.
Directors (continued)
Name
Particulars
Anthony
(Tony)
Fehon
Independent Non-Executive Director (appointed as Managing Director on 9 September
2024)
Tony was appointed as a Director of both the EIL and EFML (the Responsible Entity of ECF)
in August 2019. Tony has more than 30 years' experience working in senior roles with some
of Australia's leading financial services and funds management businesses. He has broad
experience in operational and leadership roles across many industries.
Tony is a director of Elanor Hotel Accommodation Limited and Elanor Hotel Accommodation
II Limited, enlighten Australia Pty Limited, and numerous small companies. He was previously
an Executive Director of Macquarie Bank Limited where he held responsibilities for several of
Macquarie's listed property trusts as well as operational leadership for residential real estate
developments and real estate based operational businesses in the living and leisure sectors.
Former listed directorships in the last three years: Elanor Retail Property Fund (ERF)
Interest in stapled securities: 67,500
Qualifications: B. Com, FCA
Su Kiat Lim
Independent Non-Executive Director
Su Kiat was appointed as a Director of both EIL and EFML (the Responsible Entity of ECF)
in October 2021. Su Kiat is currently CEO of Firmus Capital Pte Ltd, a Singapore based
private equity real estate investment management firm founded in 2017.
Su Kiat has over 20 years’ experience in the real estate funds, investment and asset
management industry across the Asia Pacific region including Australia. In 2011 Su Kiat co-
founded Rockworth Capital Partners, a direct real estate investment management firm in
Singapore, successfully growing its AUM to $1bn by 2017. Prior to that, Su Kiat held key
roles in Investment Management at Frasers Property Limited, Frasers Commercial Trust and
ALLCO REIT.
Su Kiat was appointed as a non-executive Director of Aspen Group Holdings Limited, a SGX
main board listed developer since 2016.
Former listed directorships in the last three years: Elanor Retail Property Fund (ERF)
Interest in stapled securities: Nil
Qualifications: B.Bus, PhD (Econ)
Elanor Commercial Property Fund
Annual Report 2024
20
ELANOR COMMERCIAL PROPERTY FUND
DIRECTORS' REPORT
6.
Directors (continued)
Name
Particulars
Karyn
Baylis AM
Independent Non-Executive Director
Karyn was appointed as a Director of both the EIL and EFML (the Responsible Entity of ECF)
in November 2021.
Karyn has led a distinguished business career in Australia and internationally, having held a
range of senior management and C-suite executive roles in multinational businesses including
at Optus, Insurance Australia Group and Senior Vice President The Americas at Qantas
Airways. In 2009 she was appointed CEO of Jawun and spent 12 years working with some of
the leading indigenous reform voices in the country along with outstanding organisations. She
retired from Jawun in January 2022.
Karyn has received a number of awards, notably a Member in the General Division of the Order
of Australia (AM) for significant service to the Indigenous community in the 2018 Queen’s
Birthday Honours and The Australian Financial Review and Westpac 100 Women of Influence
Award in Diversity in 2015.
Karyn is a Non-Executive Director of Save the Children Australia. Karyn is also a current
member of Chief Executive Women (CEW), Australian Institute of Company Directors (AICD)
and National Leadership Group (NLG).
Previous Board positions include CARE Australia, Cure Cancer, Grocon Holdings Pty Ltd and
NRMA Financial Management and Life Nominees.
Former listed directorships in the last three years: Elanor Retail Property Fund (ERF)
Interest in stapled securities: 25,000
Victor
Rodriguez
Non-Executive Director (appointed on 7 July 2023 and resigned on 3 September 2024)
Victor was appointed a Director of both EIL and EFML (the Responsible Entity of ECF )on 7
July 2023. Victor is currently Chief Executive, Funds Management of Challenger Limited
(ASX:CFG) (Challenger), having been appointed to that role in August 2022, following five
years as Head of Fixed Income within the Challenger Investment Management business.
Victor has over 30 years’ investment management experience. Prior to joining Challenger,
Victor was head of Asia Pacific Fixed Income at Aberdeen Asset Management based in
Singapore between 2014 to 2017. There he led a team of more than 30 investment
professionals across the region. He was also a Regional Director overseeing the wider
Aberdeen business.
Prior to relocating to Singapore, Victor led Aberdeen’s Australian Fixed Income business.
Victor also held various investment roles over 13 years at Credit Suisse Asset Management in
Australia, including Deputy Head of Fixed Income for three years up to 2009.
Victor is a Non-Executive Director of Lennox Capital Partners Pty Limited, WaveStone Capital
Partners Pty Limited and Alphinity Investment Management Pty Limited.
Former listed directorships in the last three years: None
Interest in stapled securities: Nil
21
ELANOR COMMERCIAL PROPERTY FUND
DIRECTORS' REPORT
6.
Directors (continued)
Name
Particulars
Kathy
Ostin
Independent Non-Executive Director (appointed on 1 January 2024)
Kathy was appointed as a Director of both the EIL and EFML (the Responsible Entity of ECF)
in January 2024.
Kathy is an experienced Non-Executive Director and Chair of Audit and Risk Committees.
Kathy spent 24 years with KPMG in Australia, the United States, Asia and the United Kingdom
across the audit, risk consulting and advisory divisions providing global perspective. She was
previously Audit, Assurance & Risk Consulting Partner at KPMG for 12 years and retired from
the partnership in December 2017.
Kathy currently serves as a Non-Executive Director and Chair of the Audit and Risk Committee
of each of 3P Learning Limited (ASX: 3PL), dusk Group Limited (ASX: DSK), Capral Limited
(ASX: CAA), and Next Science Limited (ASX: NXS). Kathy holds a Bachelor of Commerce
(Accounting & Finance) from the University of New South Wales. She is a graduate and
member of the Australian Institute of Company Directors, Chartered Accountants Australia &
New Zealand and Fellow of the Financial Services Institute of Australasia.
Former listed directorships in the last three years: Swift Networks Group Ltd (ASX:SW1)
(resigned 19 November 2021)
Interest in stapled securities: Nil
Qualifications: B. Com, GAICD, CA ANZ, FINSIA
Elanor Commercial Property Fund
Annual Report 2024
22
ELANOR COMMERCIAL PROPERTY FUND
DIRECTORS' REPORT
7.
Directors' relevant interests
Stapled securities
at the date of this
report
Ian Mackie (appointed as Chair from 1 January 2024, appointed as Director on 25 August 2023)
–
Paul Bedbrook (resigned as Chair and Director on 31 December 2023)
200,000
Glenn Willis (resigned as Managing Director and Chief Executive Officer on 9 September 2024)
–
Nigel Ampherlaw (resigned on 23 September 2024)
–
Anthony (Tony) Fehon (Director, appointed as Managing Director on 9 September 2024)
67,500
Su Kiat Lim
–
Karyn Baylis AM
25,000
Victor Rodriguez (appointed on 7 July 2023, resigned on 3 September 2024)
–
Kathy Ostin (appointed on 1 Jan 2024)
–
Other than as disclosed in Note 13 of the financial statements, no contracts exist where a director is entitled
to a benefit.
8.
Directors' remuneration
The Directors of the Responsible Entity and other management personnel are paid by the Responsible Entity.
Payments made from the Fund to the Responsible Entity do not include any amounts attributable to the
compensation of key management personnel.
9.
Meetings of Directors
Board
Audit & Risk
(Responsible Entity)
Committee
Eligible to
attend1
Attended
Eligible to
attend
Attended
Ian Mackie (appointed as Chair from 1 January 2024, appointed as Director on 25
August 2023)
8
8
3
3
Paul Bedbrook (resigned as Chair and Director on 31 December 2023)
6
6
3
2
Glenn Willis (resigned as Managing Director and Chief Executive Officer on 9
September 2024)
11
11
-
-
Nigel Ampherlaw (resigned on 23 September 2024)
11
8
5
5
Anthony (Tony) Fehon (appointed as Managing Director on 9 September 2024)
11
11
5
5
Su Kiat Lim
11
9
-
-
Karyn Baylis
11
11
-
-
Victor Rodriguez (appointed on 7 July 2023 and resigned on 3 September 2024)
11
10
-
-
Kathy Ostin (appointed on 1 Jan 2024)
5
5
2
2
Note 1: During the year, the Board met 11 times including special purpose meetings for various funds management initiatives
throughout the year.
10.
Company Secretary
Symon Simmons held the position of Company Secretary of the Responsible Entity during the year. Symon is
the Chief Financial Officer of the Group and holds a Bachelor of Economics with majors in Economics and
Accounting, and has extensive experience as a company secretary, is a Justice of the Peace in NSW and is a
Responsible Manager on the Australian Financial Services Licence held by the Responsible Entity.
23
ELANOR COMMERCIAL PROPERTY FUND
DIRECTORS' REPORT
11.
Indemnification and insurance of officers and auditors
During the financial year, the Responsible Entity paid a premium in respect of a contract insuring the Directors
of the Responsible Entity (as named above), the Company Secretary, and all executive officers of the
Responsible Entity and of any related body corporate against a liability incurred in their capacity as Directors
and officers of the Responsible Entity to the extent permitted by the Corporations Act 2001 (Cth). The contract
of insurance prohibits disclosure of the nature of the liability and the amount of the premium.
The Responsible Entity has not otherwise, during or since the end of the financial year, except to the extent
permitted by law, indemnified or agreed to indemnify an officer of the Responsible Entity or of any related body
corporate against a liability incurred in their capacity as an officer.
The Group indemnifies the auditor (PricewaterhouseCoopers Australia) against any liability (including legal
costs) for third party claims arising from a breach by the Group of the auditor’s engagement terms, except
where prohibited by the Corporations Act 2001 (Cth).
12.
Environmental regulation
To the best of their knowledge and belief after making due enquiry, the Directors have determined that the
Group has complied with all significant environmental regulations applicable to its operations in the jurisdictions
in which it operates.
13.
Significant changes in state of affairs
There was no significant change in the state of affairs of the Fund during the year.
14.
Auditor's independence declaration
A copy of the auditor's independence declaration, as required under section 307C of the Corporations Act
2001 (Cth), is included on the page following the Directors' Report.
15.
Non audit services
Details of amounts paid or payable to the auditor for non-audit services provided during the year by the auditor
are outlined in Note 17 to the consolidated financial statements.
There were no non-audit services provided by the auditor during the year (2023:nil).
16.
Likely developments and expected results of operations
The consolidated financial statements have been prepared on the basis of the current known market
conditions. The extent of any potential deterioration in either the capital or physical property markets on the
future results of the Fund is unknown. Such results could include property market valuations, the ability of the
Fund to raise or refinance debt, and the cost of such debt and the ability to raise equity.
The economic and market uncertainty are difficult to forecast. The Fund will continue to engage regularly with
all tenants across the Fund's portfolio.
At the date of this report and to the best of the Directors' knowledge and belief, other than matters disclosed
under Events occurring after reporting date, there are no other anticipated changes in the operations of the
Fund which would have a material impact on the future results of the Fund.
Elanor Commercial Property Fund
Annual Report 2024
24
ELANOR COMMERCIAL PROPERTY FUND
DIRECTORS' REPORT
17.
Going concern
As at 30 June 2024, the Fund has a net current asset deficiency of $73.0 million and net assets of $264.2
million. ECPF II has a net current asset deficiency of $6.8 million and net assets of $16.6 million.
The net current asset deficiency of the Fund and ECFPII is attributable to a debt facility of $70.0 million (ECPF
II: $6.7 million) maturing on 28 February 2025 and a current payable of $6.7 million (ECPF II: $0.4 million) for
the Fund’s June Quarter distribution. On 28 June 2024, the Fund executed a credit approved term sheet for
the extension of the maturity date of the debt facility to 31 August 2026 with an additional increase of two debt
facilities by a total of $15.0 million. Subsequent to balance date, on 8 August 2024 the Fund executed an
Amendment and Restatement Deed for the extension and increase of the debt facilities.
Accordingly, as of the date of this report, the Directors believe the Fund and ECPFII, as standalone stapled
entity, will be able to realise its assets and discharge its liabilities in the ordinary course of business.
These consolidated financial statements have been prepared on a going concern basis.
18.
Events occurring after reporting date
On 28 June 2024, the Fund executed a credit approved term sheet for the extension of the maturity date of
the debt facility to 31 August 2026 with an additional increase of two debt facilities by a total of $15.0 million.
Subsequent to balance date, on 8 August 2024 the Fund executed an Amendment and Restatement Deed for
the extension and increase of the debt facilities.
On 9 September 2024, the Fund announced a strategic partnership with Lederer Group. The Lederer Group
has acquired Elanor Investors Group’s (ASX: ENN) 12.6% interest in the Fund to become the largest
securityholder in the Fund.
As part of the strategic partnership, the Lederer Group has committed $50 million in equity capital to support
the Fund. The Lederer Group will have participation on a new investment committee (one of four positions
alongside representatives of the Responsible Entity and the Manager). The new investment committee will
oversee any material investment or divestment initiatives, including major capital expenditure, and will make
non-binding recommendations to the Responsible Entity in relation to those matters having regard to the best
interest of all ECF securityholders.
The Fund has committed to acquire at least its 49.9% pro-rata share of the Harris Street Fund Capital Notes,
subject to sourcing suitable funding. Citigroup Global Markets Australia Pty Limited and MA Moelis Australia
Advisory Pty Ltd are advising on the potential rights issue in ECF to fund both the commitment to the Harris
Street Fund and to provide further capital for near term capital expenditure and incentives.
The Lederer Group’s equity commitment of $50 million includes an offer to take up 100% of its entitlement and
sub-underwrite any potential rights issue at an indicative offer price of 60 cents per security. The Responsible
Entity will actively explore the rights issue, however, any equity raising is subject to market conditions, final
Responsible Entity Board approval, regulatory approvals and securing suitable underwriting support for the
rights issue.
Elanor Investor Group and the Responsible Entity
On 23 August 2024, Elanor Investors Group (ASX: ENN) requested, and the ASX granted, a voluntary
suspension of trading of ENN securities on the ASX to enable Elanor to consider a range of options to stabilise
and maintain its ongoing financial position. Elanor Funds Management Limited (EFML) is a wholly owned
subsidiary of Elanor Investors Group and is the Responsible Entity of ECF. If Elanor Investors Group is not
able to stabilise and maintain its ongoing financial position, it may cast uncertainty about EFML’s ability to act
as Responsible Entity of the Fund.
25
ELANOR COMMERCIAL PROPERTY FUND
DIRECTORS' REPORT
18.
Events occurring after reporting date (continued)
The Directors of the Responsible Entity are not aware of any other matter since the end of the period that has
or may significantly affect the operations of the Fund, the result of those operations, or the state of the Fund's
affairs in future financial periods that are not otherwise referred to in this Directors' Report.
19.
Rounding of amounts to the nearest thousand dollars
In accordance with ASIC Corporations (Rounding in Financials/Directors' Reports) Instrument 2016/191,
amounts in the financial statements have been rounded to the nearest thousand dollar, unless otherwise
indicated.
This report is made in accordance with a resolution of the Board of Directors of the Responsible Entity. The
Financial Statements were authorised for issue by the Directors on 27 September 2024.
Signed in accordance with a resolution of the Directors pursuant to section 298(2) of the Corporations Act
2001 (Cth). The Directors have the power to amend and re-issue the Financial Statements.
Ian Mackie
Chairman
Tony Fehon
Managing Director
Sydney, 27 September 2024
Elanor Commercial Property Fund
Annual Report 2024
26
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Auditor’s Independence Declaration
As lead auditor for the audit of Elanor Commercial Property Fund I and Elanor Commercial Property
Fund II for the year ended 30 June 2024, I declare that to the best of my knowledge and belief, there
have been:
(a)
no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
(b)
no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Elanor Commercial Property Fund I and Elanor Commercial Property
Fund II and the entities they controlled during the period.
CJ Cummins
Sydney
Partner
PricewaterhouseCoopers
27 September 2024
27
ELANOR COMMERCIAL PROPERTY FUND
CONSOLIDATED STATEMENTS OF PROFIT OR LOSS
FOR THE YEAR ENDED 30 JUNE 2024
Consolidated Consolidated
Group
Group
ECPF II
ECPF II
30 June
30 June
30 June
30 June
2024
2023
2024
2023
Note
$'000
$'000
$'000
$'000
Income
Rental income
2
42,118
41,999
2,615
2,509
Outgoings reimbursements
8,560
8,245
460
161
Fair value gain on investment properties
6
–
–
98
–
Other income
142
70
37
61
Total income
50,820
50,314
3,210
2,731
Expenses
Rates, taxes and other outgoings
11,274
10,778
1,011
729
Share of loss from equity accounted investments
7
13,236
10,031
–
–
Borrowing costs
8,576
5,283
691
385
Other expenses
2,829
2,949
398
342
Investment management fees
2,945
3,405
203
233
Fair value loss on investment properties
6
35,311
48,202
–
7,993
Fair value loss on derivatives
2,598
1,842
134
151
Transaction costs
755
–
125
–
Total expenses
77,524
82,490
2,562
9,833
Net (loss) / profit for the period
(26,704)
(32,176)
648
(7,102)
Attributable to security holders of:
- Elanor Commercial Property Fund I
(27,352)
(25,074)
–
–
- Elanor Commercial Property Fund II (Non-controlling interest)
648
(7,102)
648
(7,102)
Net (loss) / profit attributable to security holders for the period
(26,704)
(32,176)
648
(7,102)
Basic (loss) / earnings per stapled security (cents)
4
(8.44)
(10.16)
0.20
(2.24)
Diluted (loss) / earnings per stapled security (cents)
4
(8.44)
(10.16)
0.20
(2.24)
The above Consolidated Statements of Profit or Loss should be read in conjunction with the accompanying notes
Elanor Commercial Property Fund
Annual Report 2024
28
ELANOR COMMERCIAL PROPERTY FUND
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2024
Consolidated Consolidated
Group
Group
ECPF II
ECPF II
30 June
30 June
30 June
30 June
2024
2023
2024
2023
$'000
$'000
$'000
$'000
Net (loss) / profit for the period
(26,704)
(32,176)
648
(7,102)
Other comprehensive income
Items that may be reclassified subsequently to profit and loss
Total comprehensive (loss) / income for the period
(26,704)
(32,176)
648
(7,102)
Attributable to security holders of:
- Elanor Commercial Property Fund I
(27,352)
(25,074)
–
–
- Elanor Commercial Property Fund II (Non-controlling interest)
648
(7,102)
648
(7,102)
Total comprehensive (loss) / income for the period
(26,704)
(32,176)
648
(7,102)
The above Consolidated Statements of Comprehensive Income should be read in conjunction with the accompanying notes
29
ELANOR COMMERCIAL PROPERTY FUND
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
AS AT 30 JUNE 2024
Consolidated Consolidated
Group
Group
ECPF II
ECPF II
30 June
30 June
30 June
30 June
2024
2023
2024
2023
Note
$'000
$'000
$'000
$'000
Current assets
Cash and cash equivalents
7,675
7,988
191
590
Receivables
809
647
352
68
Prepayments
276
306
17
19
Other current assets
6
39
6
5
Derivative financial instruments
10
3,061
3,984
154
257
Total current assets
11,827
12,964
720
939
Non-current assets
Investment property
6
443,700
475,617
30,500
29,595
Equity accounted investments
7
17,222
31,614
–
–
Interest bearing cross staple loan receivable
–
–
106
1,737
Derivative financial instruments
10
2,887
4,562
140
172
Total non-current assets
463,809
511,793
30,746
31,504
Total assets
475,636
524,757
31,466
32,443
Current liabilities
Trade and other payables
8
6,135
5,000
234
164
Interest bearing liabilities
9
70,000
80,159
6,727
7,402
Manager contribution
8
927
929
–
–
Rent received in advance
1,043
1,468
133
102
Distribution payable
3
6,727
7,439
389
453
Total current liabilities
84,832
94,995
7,483
8,121
Non-current liabilities
Interest bearing liabilities
9
124,855
109,274
7,395
6,710
Manager contribution
8
1,762
2,689
–
–
Total non-current liabilities
126,617
111,963
7,395
6,710
Total liabilities
211,449
206,958
14,878
14,831
Net assets
264,187
317,799
16,588
17,612
Equity
Equity Holders of Parent Entity
Contributed equity
11
343,515
343,515
25,978
25,978
Retained accumulated (losses) / profits
(95,916)
(43,328)
(9,390)
(8,366)
Parent entity interest
247,599
300,187
16,588
17,612
Equity Holders of Non-Controlling Interest
Contributed equity
11
25,978
25,978
–
–
Retained accumulated (losses) / profits
(9,390)
(8,366)
–
–
Non-controlling interest
16,588
17,612
–
–
Total equity attributable to stapled security holders:
- Elanor Commercial Property Fund I
247,599
300,187
–
–
- Elanor Commercial Property Fund II
16,588
17,612
16,588
17,612
Total equity attributable to stapled security holders
264,187
317,799
16,588
17,612
The above Consolidated Statements of Financial Position should be read in conjunction with the accompanying notes
Elanor Commercial Property Fund
Annual Report 2024
30
ELANOR COMMERCIAL PROPERTY FUND
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2024
.
Contributed
Retained
Parent Entity
Non-
Total Equity
.
equity
profits/
Total Equity
controlling
.
(accumulated
interest
.
losses)
.
Note
$'000
$'000
$'000
$'000
$'000
Consolidated Group
Balance as at 1 July 2023
343,515
(43,328)
300,187
17,612
317,799
Net (loss)/profit for the period
–
(27,352)
(27,352)
648
(26,704)
Total comprehensive (expense)/income for the period
–
(27,352)
(27,352)
648
(26,704)
.
Transactions with securityholders in their capacity as securityholders:
Distributions paid and payable
3
–
(25,236)
(25,236)
(1,672)
(26,908)
Total equity as at 30 June 2024
343,515
(95,916)
247,599
16,588
264,187
.
Contributed
Retained
Parent Entity
Non-
Total Equity
.
equity
profits/
Total Equity
controlling
.
(accumulated
interest
.
losses)
.
Note
$'000
$'000
$'000
$'000
$'000
Consolidated Group
Balance as at 1 July 2022
343,518
10,006
353,524
26,210
379,734
Net (loss) for the period
–
(25,074)
(25,074)
(7,102)
(32,176)
Total comprehensive (expense) for the period
–
(25,074)
(25,074)
(7,102)
(32,176)
.
Transactions with securityholders in their capacity as securityholders:
Contributions of equity, net of issue costs
(3)
–
(3)
–
(3)
Distributions paid and payable
3
–
(28,260)
(28,260)
(1,496)
(29,756)
Total equity as at 30 June 2023
343,515
(43,328)
300,187
17,612
317,799
The above Consolidated Statements of Changes in Equity should be read in conjunction with the accompanying notes
31
ELANOR COMMERCIAL PROPERTY FUND
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2024
.
Contributed
Retained
Total Equity
.
equity
profits/
.
(accumulated
.
losses)
.
Note
$'000
$'000
$'000
Elanor Commercial Property Fund II
Balance as at 1 July 2023
25,978
(8,366)
17,612
Net profit for the period
–
648
648
Total comprehensive income for the period
–
648
648
.
Transactions with securityholders in their capacity as securityholders:
Distributions paid and payable
3
–
(1,672)
(1,672)
Total equity as at 30 June 2024
25,978
(9,390)
16,588
.
Contributed
Retained
Total Equity
.
equity
profits/
.
(accumulated
.
losses)
.
Note
$'000
$'000
$'000
Elanor Commercial Property Fund II
Balance as at 1 July 2022
25,978
232
26,210
Net (loss) for the period
–
(7,102)
(7,102)
Total comprehensive (expense) for the period
–
(7,102)
(7,102)
.
Transactions with securityholders in their capacity as securityholders:
Distributions paid and payable
3
–
(1,496)
(1,496)
Total equity as at 30 June 2023
25,978
(8,366)
17,612
The above Consolidated Statements of Changes in Equity should be read in conjunction with the accompanying notes
Elanor Commercial Property Fund
Annual Report 2024
32
ELANOR COMMERCIAL PROPERTY FUND
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2024
Consolidated Consolidated
Group
Group
ECPF II
ECPF II
30 June
30 June
30 June
30 June
2024
2023
2024
2023
Note
$'000
$'000
$'000
$'000
Cash flows from operating activities
Rental and other property income received
55,007
55,257
3,077
3,049
Interest income received
114
–
37
–
Finance costs paid
(8,184)
(4,776)
(672)
(370)
Payments to suppliers and the Responsible Entity
(18,870)
(19,412)
(1,478)
(1,595)
Net cash flows from operating activities
5(a)
28,067
31,069
964
1,084
Cash flows from investing activities
Payments for capital expenditure and investment properties
(5,727)
(8,072)
(1,125)
(835)
Payments for transaction costs
(370)
–
(125)
–
Distributions received from equity accounted investments
228
1,669
–
–
Net cash flows from investing activities
(5,869)
(6,403)
(1,250)
(835)
Cash flows from financing activities
Proceeds from interest bearing liabilities
5(b)
5,329
4,891
–
661
Repayments of interest bearing liabilities and borrowing costs
5(b)
(221)
–
(8)
–
Transaction costs related to issue of shares
–
(3)
–
–
Distributions paid
(27,619)
(29,755)
(1,736)
(1,528)
Proceeds from interest bearing - cross staple loan
5(b)
–
–
1,631
774
Net cash flows from financing activities
(22,511)
(24,867)
(113)
(93)
Net (decrease) / increase in cash and cash equivalents
(313)
(201)
(399)
156
Cash and cash equivalents at the beginning of the period
7,988
8,189
590
434
Cash at the end of the period
7,675
7,988
191
590
The above Consolidated Statements of Cash Flows should be read in conjunction with the accompanying notes
33
ELANOR COMMERCIAL PROPERTY FUND
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
About this Report
Elanor Commercial Property Fund (the Fund, Group or Consolidated Group) is a 'stapled' entity comprising
Elanor Commercial Property Fund I (ECPF I) and its controlled entities, including Elanor Commercial Property
Fund II (ECPF II). The units in ECPF I are stapled to units in ECPF II. The stapled securities cannot be traded
or dealt with separately.
For the purposes of the consolidated financial report, ECPF I has been deemed the parent entity of ECPF II in
the stapled structure. The Directors applied judgement in the determination of the parent entity of the Fund
and considered various factors including asset size and capital structure. The financial report of the Fund
comprises the consolidated financial report of Elanor Commercial Property Fund I and its controlled entities,
including Elanor Commercial Property Fund II. As permitted by ASIC Corporations (Stapled Group Reports)
instrument 2015/838, this report is a combined report that presents the consolidated financial statements and
accompanying notes of both the Fund and ECPF II.
These general purpose financial statements have been prepared in accordance with the Corporations Act
2001, the Scheme Constitutions and Australian Accounting Standards. Compliance with Australian Accounting
Standards ensures compliance with International Financial Reporting Standards ('IFRS').
Comparative figures have been restated where appropriate to ensure consistency of presentation throughout
the financial report.
The accounting policies adopted in the preparation of the financial report are consistent with those of the
previous financial year, and the adoption of new and amended standards as set out below.
New accounting standards and interpretations
(a) New and amended standards adopted by the Fund
There are no standards, interpretations or amendments to existing standards that are effective for the first time
for the financial year beginning 1 July 2023 that have a material impact on the amounts recognised in prior
periods or will affect the current or future periods.
(b) New accounting standards and interpretations not yet adopted
A number of new standards, amendments to standards and interpretations are effective for annual periods
beginning after 1 July 2024 and have not been adopted early in preparing these financial statements. None of
these are expected to have a material effect on the financial statements to the Fund.
Basis of Consolidation
The consolidated financial report of the Fund incorporates the assets and liabilities of ECPF I (the Parent) and
all of its subsidiaries, including ECPF II as at 30 June 2024. ECPF I is the parent entity in relation to the
stapling. The results and equity of ECPF II (which is not directly owned by ECPF I) have been treated and
disclosed as a non-controlling interest. Whilst the results and equity of ECPF II are disclosed as a non-
controlling interest, the stapled securityholders of ECPF II are the same as the stapled securityholders of ECPF
I.
This consolidated financial report also includes a separate column representing the financial report of ECPF
II, incorporating the assets and liabilities of ECPF II as at 30 June 2024.
For the purpose of preparing the financial statements, the Fund is a for-profit entity. The financial report is
presented in Australian Dollars.
Elanor Commercial Property Fund
Annual Report 2024
34
ELANOR COMMERCIAL PROPERTY FUND
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
About this report (continued)
Going concern
As at 30 June 2024, the Fund has a net current asset deficiency of $73.0 million and net assets of $264.2
million. ECPF II has a net current asset deficiency of $6.8 million.
The net current asset deficiency of the Fund and ECFPII is attributable to a debt facility of $70.0 million (ECPF
II: $6.7 million) maturing on 28 February 2025 and a current payable of $6.7 million (ECPF II: $0.4 million) for
the Fund’s June Quarter distribution. On 28 June 2024, the Fund executed a credit approved term sheet for
the extension of the maturity date of the debt facility to 31 August 2026 with an additional increase of two debt
facilities by a total of $15.0 million. Subsequent to balance date, on 8 August 2024 the Fund executed an
Amendment and Restatement Deed for the extension and increase of the debt facilities.
Accordingly, as of the date of this report, the Directors believe the Fund will be able to continue to successfully
meet its covenant obligations and to refinance its facilities to ensure the Fund's ability to realise its assets and
discharge its liabilities in the ordinary course of business.
The Consolidated Financial Statements have been prepared on a going concern basis using historical cost
conventions, except for investment properties, investment properties within the equity accounted investments,
derivative financial instruments, and other financial assets or liabilities which are stated at their fair value.
On 23 August 2024, Elanor Investors Group (ASX: ENN) requested, and the ASX granted, a voluntary
suspension of trading of ENN securities on the ASX to enable Elanor to consider a range of options to stabilise
and maintain its ongoing financial position. Elanor Funds Management Limited (EFML) is a wholly owned
subsidiary of Elanor Investors Group and is the Responsible Entity of ECF. If Elanor Investors Group is not
able to stabilise and maintain its ongoing financial position, it may cast uncertainty about EFML’s ability to act
as Responsible Entity of the Fund.
Rounding of amounts to the nearest thousand dollars
In accordance with ASIC Corporations (Rounding in Financials/Directors' Reports) Instrument 2016/191,
amounts in the financial statements have been rounded to the nearest thousand dollars, unless otherwise
indicated.
Critical accounting judgements and key sources of estimation uncertainty
The preparation of financial statements requires management to make judgements, estimates and
assumptions that affect the application of accounting policies and the reported amount of assets, liabilities,
income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions
are reviewed on an ongoing basis. Revisions to accounting estimates are recognised prospectively.
In preparing the consolidated financial statements for the year ended 30 June 2024, significant areas of
estimation, uncertainty and critical judgements in applying accounting policies that have the most significant
effect on the amount recognised in the financial statements are consistent with those disclosed in the financial
report of the previous financial year.
The changing market conditions (high inflation pressure and increased cash rate by the Reserve Bank of
Australia) result in a higher than usual degree of uncertainty associated with the preparation of the financial
statements.
35
ELANOR COMMERCIAL PROPERTY FUND
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
About this report (continued)
Enhanced disclosures have been incorporated throughout the consolidated financial statements to enable
users to understand the basis for the estimates and judgments utilised. The estimates or assumptions which
are material to the financial statements are discussed in the following notes:
•
Investment properties - assumptions underlying fair value - Note 6
•
Equity Accounted Investments - assumptions underlying carrying value – Note 7
•
Derivative financial instruments - assumptions underlying fair value – Note 10
Elanor Commercial Property Fund
Annual Report 2024
36
ELANOR COMMERCIAL PROPERTY FUND
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
About this report (continued)
The notes to the consolidated Financial Statements have been organised into the following sections:
RESULTS
38
1.
Segment information
38
2.
Revenue
39
3.
Distributions
40
4.
Earnings per stapled security
41
5.
Cash flow information
42
OPERATING ASSETS AND LIABILITIES
44
6.
Investment properties
44
7.
Equity accounted investments
48
8.
Trade and other payables
52
FINANCE AND CAPITAL STRUCTURE
53
9.
Interest bearing liabilities
53
10.
Derivative financial instruments
54
11.
Contributed equity
55
12.
Financial Risk Management
55
OTHER ITEMS
63
13.
Related parties
63
14.
Non-cancellable operating lease receivables
65
15.
Unrecognised items
65
16.
Parent entity
66
17.
Auditor's remuneration
67
18.
Subsequent events
67
19.
Accounting policies
68
37
ELANOR COMMERCIAL PROPERTY FUND
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
1.
Segment information
OVERVIEW
The Fund only operates in one business segment, being the investment in commercial properties in Australia.
The table below provides a reconciliation from statutory net loss to Funds from Operations for the Consolidated
Group and ECPFII.
Consolidated
Group
ECPF II
30 June
30 June
2024
2024
Funds from Operations (FFO)1
$'000
$'000
Statutory net (loss)/profit
(26,704)
648
Adjustments for items included in statutory loss:
Fair value (gain)/loss included in share of profit from equity accounted investment2
13,236
–
Fair value (gain)/loss on investment property
35,311
(98)
Fair value (gain)/loss on derivatives
2,598
134
Straight lining of rental income3
231
53
Amortisation expense4
6,246
1,198
Transaction costs5
755
125
Adjustments for non profit / (loss) item:
Share of FFO from equity accounted investments
1,470
–
Funds from Operations (FFO)1
33,143
2,060
Consolidated
Group
ECPF II
30 June
30 June
2023
2023
Funds from Operations (FFO)1
$'000
$'000
Statutory net loss
(32,176)
(7,102)
Adjustments for items included in statutory profit:
Fair value (gain)/loss included in share of profit from equity accounted investment
10,031
–
Fair value (gain)/loss on investment property
48,202
7,993
Fair value (gain)/loss on derivatives
1,842
151
Straight lining of rental income3
(245)
31
Amortisation expense4
5,135
671
Share of FFO from equity accounted investments
2,069
–
Funds from Operations (FFO)1
34,858
1,744
1 Funds from Operations (FFO) has been determined in accordance with the Property Council Guidelines and adjusted for amortisation of borrowing
cost and contribution from manager which is excluded from FFO and represents the Directors' view of underlying earnings from ongoing operating
activities, being statutory profit / (loss) (under IFRS), adjusted for non-cash and other items such as property revaluations, derivative mark-to-
market impacts, amortisation of tenant incentives and contribution from manager, gains/losses on sale of investment properties, straight-line rental
adjustments, non-FFO tax expenses/benefits and other unrealised one-off items. This includes the group's proportional ownership of 19 Harris
Street's FFO, which is held as an equity accounted investment.
2 Fair value (gain)/loss included in share of profit from equity accounted investment includes amortisation of manager contribution of $0.93m.
3 Straight lining of rental income is a non-cash accounting adjustment recognised in rental income in the Consolidated Statement of Profit or Loss.
4 Amortisation expense includes the amortisation of capitalised leasing costs and rental abatements, and debt establishment costs recognised in
the Consolidated Statement of Profit or Loss.
5 Transaction costs incurred related to the proposed divestment of certain Fund assets.
Results
This section focuses on the operating results and financial performance of the Fund. It includes disclosures
of revenue and distributions.
Elanor Commercial Property Fund
Annual Report 2024
38
ELANOR COMMERCIAL PROPERTY FUND
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
2.
Revenue
OVERVIEW
The Fund's main source of revenue is rental income from its investment in commercial properties.
Consolidated
Consolidated
Group
Group
ECPF II
ECPF II
30 June
30 June
30 June
30 June
2024
2023
2024
2023
$'000
$'000
$'000
$'000
WorkZone West
13,704
13,734
–
–
50 Cavill Avenue
7,713
7,871
–
–
Garema Court
7,614
7,187
–
–
Campus DXC
3,177
3,161
–
–
NEXUS Centre
2,443
2,484
–
–
200 Adelaide St
3,295
3,276
–
–
Limestone Centre
2,615
2,509
2,615
2,509
34 Corporate Drive
1,557
1,777
–
–
Total revenue from operating activities
42,118
41,999
2,615
2,509
ACCOUNTING POLICY
Rental income
The Fund is the lessor of operating leases. Rental income arising from operating leases is recognised as
revenue on a straight-line basis over the lease term.
Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount
of the leased asset and recognised as an expense over the term of the lease on the same basis as the lease
income.
Rental abatements
Where a rental abatement is granted retrospectively on uncollected past due rent, the abatement is expensed
as an impairment of trade receivables. Where an agreement on past due receivables has not been reached
by 30 June 2024, an estimate of the expected abatement on the outstanding balance is made and incorporated
into the expected credit loss calculation.
Rental abatements or other lease modification accompanied by extensions of lease terms or other changes in
lease scope, are accounted for as a lease modification. The abated portion will be capitalised as a lease
incentive and amortised on a straight-line basis over the remaining life of the lease.
Lease incentives
Lease incentives (including rent free periods, fit out and other payments) are accounted for on a straight-line
basis over the lease term and offset against rental income in the consolidated statement of profit or loss. The
lease term is the non-cancellable period of the lease together with any further term for which the tenant has
the option to continue the lease, where, at the commencement date of the lease, it is reasonably certain that
the tenant will exercise that option.
39
ELANOR COMMERCIAL PROPERTY FUND
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
2.
Revenue (continued)
Outgoings
Outgoings recoveries are recognised in accordance with AASB 15 and are typically invoiced monthly based
on an annual estimate. Revenue related to outgoings recoveries is recognised over time as the estimated
costs are consumed by the tenant. Should any adjustment be required based on actual costs incurred, this is
accounting for on an monthly basis.
3.
Distributions
OVERVIEW
In accordance with the Fund's Constitutions, the Fund determines distributions based on a number of factors,
including forecast earnings and expected economic conditions.
The following distributions were declared and paid by the Consolidated Group during the year or post balance
date:
Distribution
Total
FY24
FY24
cents per
amount
Consolidated Group
stapled security
$'000
Distribution paid: 1 July - 30 September 2023
2.125
6,727
Distribution paid: 1 October - 31 December 2023
2.125
6,727
Distribution paid: 1 January - 31 March 2024
2.125
6,727
Distribution payable: 1 April - 30 June 20241
2.125
6,727
Total distribution relating to the year ended 30 June 2024
8.50
26,908
1 The distribution of 2.13 cents per stapled security for the quarter ended 30 June 2024 has been paid on 30 August 2024. Please refer to
the Director's Report for the calculation of FFO and the Distribution.
Distribution
Total
FY23
FY23
cents per
amount
Consolidated Group
stapled security
$'000
Distribution paid: 1 July - 30 September 2022
2.35
7,439
Distribution paid: 1 October - 31 December 2022
2.35
7,439
Distribution paid: 1 January - 31 March 2023
2.35
7,439
Distribution paid: 1 April - 30 June 2023
2.35
7,439
Total distribution relating to the year ended 30 June 2023
9.40
29,756
ECPF II
The following distributions were declared and paid by ECPF II during the year or post balance date:
Distribution
Total
FY24
FY24
cents per
amount
stapled security
$'000
Distribution paid: 1 July - 30 September 2023
0.15
486
Distribution paid: 1 October - 31 December 2023
0.14
439
Distribution paid: 1 January - 31 March 2024
0.11
358
Distribution payable: 1 April - 30 June 20241
0.12
389
Total distribution relating to the year ended 30 June 2024
0.52
1,672
1 The distribution of 0.12 cents per stapled security for the quarter ended 30 June 2024 has been paid on 30 August 2024. Please refer to
the Director's Report for the calculation of FFO and the Distribution.
Elanor Commercial Property Fund
Annual Report 2024
40
ELANOR COMMERCIAL PROPERTY FUND
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
3.
Distributions (continued)
Distribution
Total
FY23
FY23
cents per
amount
stapled security
$'000
Distribution paid: 1 July - 30 September 2022
0.10
330
Distribution paid: 1 October - 31 December 2022
0.12
386
Distribution paid: 1 January - 31 March 2023
0.10
327
Distribution paid: 1 April - 30 June 2023
0.14
453
Total distribution relating to the year ended 30 June 2023
0.46
1,496
ACCOUNTING POLICY
Distributions are recognised as a liability when declared or at the record date (if earlier). Distributions paid and
payable are recognised as distributions within equity. Distributions paid are included in cash flows from
financing activities in the consolidated statement of cash flows.
4.
Earnings per stapled security
OVERVIEW
Basic earnings per stapled security is calculated as net profit or loss attributable to securityholders divided by
the weighted average number of ordinary stapled securities issued.
Diluted earnings per stapled security is calculated as profit or loss attributable to securityholders adjusted for
any profit or loss recognised in the year in relation to dilutive potential stapled securities divided by the weighted
average number of stapled securities and dilutive stapled securities.
Earnings used in the calculation of basic and diluted earnings per stapled security reconciles to the net profit
or loss in the consolidated statements of comprehensive income as follows:
Consolidated
Consolidated
Group
Group
ECPF II
ECPF II
30 June
30 June
30 June
30 June
2024
2023
2024
2023
$'000
$'000
$'000
$'000
The earnings per stapled security measures shown below is based upon the profit / (loss) attributable
to securityholders:
Basic earnings per stapled security (cents)
(8.44)
(10.16)
0.20
(2.24)
Diluted earnings per stapled security (cents)
(8.44)
(10.16)
0.20
(2.24)
(Loss) / profit attributable to securityholders used in calculating
basic and diluted earnings per stapled security ($'000)
(26,704)
(32,176)
648
(7,102)
Weighted average number of stapled securities used as
denominator in calculating basic earnings per stapled security
316,556,353
316,556,353
316,556,353
316,556,353
Weighted average number of stapled securities used as
denominator in calculating diluted earnings per stapled security
316,556,353
316,556,353
316,556,353
316,556,353
41
ELANOR COMMERCIAL PROPERTY FUND
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
5.
Cash flow information
OVERVIEW
This note provides further information on the consolidated cash flow statements of the Group. It reconciles
(loss) / profit for the year to cash flows from operating activities, reconciles liabilities arising from financing
activities and provides information about non-cash transactions.
(a)
Reconciliation of (loss) / profit for the year to net cash flows from operating activities
Consolidated
Consolidated
Group
Group
ECPF II
ECPF II
30 June
30 June
30 June
30 June
2024
2023
2024
2023
$'000
$'000
$'000
$'000
(Loss) / Profit for the year
(26,704)
(32,176)
648
(7,102)
Fair value adjustment on revaluation of derivatives
2,598
1,842
134
151
Fair value adjustment on revaluation of investment property
35,311
48,202
(98)
7,993
Share of loss / (profit) from equity accounted investment
13,236
10,031
–
–
Amortisation
6,983
5,722
1,276
758
Lease incentive
(4,567)
(4,306)
(992)
(528)
Transaction costs through profit and loss
370
–
125
–
Straight-lining of rental income and rental guarantee
231
(245)
53
31
Net cash provided by operating activities before changes in
working capital
27,458
29,070
1,146
1,303
Movement in working capital:
Decrease / (increase) in trade and other receivables
(161)
(220)
(283)
(11)
Decrease / (increase) in other current assets
33
21
(1)
34
Decrease / (increase) in prepayments
30
19
2
(1)
Increase / (decrease) in trade and other payables
1,132
1,214
70
(192)
Increase / (decrease) in amounts received in advance
(425)
965
31
(49)
Net cash from operating activities
28,067
31,069
965
1,084
Elanor Commercial Property Fund
Annual Report 2024
42
Cash flows
Non-cash items
ELANOR COMMERCIAL PROPERTY FUND
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
5.
Cash flow information (continued)
(b)
Reconciliation of liabilities arising from financing activities
Consolidated Group
.
.
Debt
Amortisation
.
30 June
drawdowns/
of borrowing
30 June
.
2023 (borrowing costs paid)
costs
2024
.
$'000
$'000
$'000
$'000
Interest bearing loans
189,433
5,108
314
194,855
Total liabilities from financing activities
189,433
5,108
314
194,855
.
Cash flows
Non-cash items
.
Debt
Amortisation
.
30 June
drawdowns/
of borrowing
30 June
.
2022 (borrowing costs paid)
costs
2023
.
$'000
$'000
$'000
$'000
Interest bearing loans
184,324
4,891
218
189,433
Total liabilities from financing activities
184,324
4,891
218
189,433
ECPF II
.
Cash flows
Non-cash items
.
Debt
Amortisation
.
30 June
drawdowns/
of borrowing
30 June
.
2023 (borrowing costs paid)
costs
2024
.
$'000
$'000
$'000
$'000
Interest bearing loans
14,112
(8)
19
14,123
Cross-staple loan / (receivable)
(1,737)
1,631
–
(106)
Total liabilities from financing activities
12,375
1,623
19
14,017
.
Cash flows
Non-cash items
.
Debt
Amortisation
.
30 June
drawdowns/
of borrowing
30 June
.
2022 (borrowing costs paid)
costs
2023
.
$'000
$'000
$'000
$'000
Interest bearing loans
13,436
661
15
14,112
Cross-staple loan / (receivable)
(2,511)
774
–
(1,737)
Total liabilities from financing activities
10,925
1,435
15
12,375
ACCOUNTING POLICY
For the purpose of presentation in the statement of cash flows, cash and cash equivalents comprise cash
balances.
43
ELANOR COMMERCIAL PROPERTY FUND
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
6.
Investment properties
OVERVIEW
Investment Properties are held solely for the purpose of earning rental income and/or for capital appreciation.
At balance date, the Fund's investment property portfolio comprised eight commercial properties in Australia.
A range of independent and internal valuations were performed as at 30 June 2024.
(a)
Carrying values of investment properties
Consolidated
Consolidated
Group
Group
ECPFII
ECPFII
30 June
30 June
30 June
30 June
2024
2023
2024
2023
Property
Valuation
$'000
$'000
$'000
$'000
50 Cavill Avenue
External
110,500
120,000
–
–
WorkZone West
External
111,000
118,000
–
–
Garema Court
External
57,700
66,000
–
–
200 Adelaide St
Internal
43,500
50,000
–
–
NEXUS Centre
External
33,500
35,022
–
–
Limestone Centre
External
30,500
29,595
30,500
29,595
Campus DXC
External
31,000
28,500
–
–
34 Corporate Drive
Internal
26,000
28,500
–
–
Total
443,700
475,617
30,500
29,595
All property investments are categorised as level 3 in the fair value hierarchy. There were no transfers between
the hierarchies during the year.
(b)
Movement in investment properties
Consolidated
Consolidated
Group
Group
ECPFII
ECPFII
30 June
30 June
30 June
30 June
2024
2023
2024
2023
$'000
$'000
$'000
$'000
Opening Balance
475,617
516,700
29,596
37,000
Acquisitions
–
3
–
–
Capital expenditure
5,727
8,069
1,125
835
Straightlining of rental income
(231)
245
(53)
(31)
Amortisation
(6,669)
(5,504)
(1,258)
(744)
Movement in lease incentives and rental guarantee
4,567
4,306
992
528
Net fair value adjustments
(35,311)
(48,202)
98
(7,993)
Total investment properties
443,700
475,617
30,500
29,595
Highest and best use
For all investment properties, the current use equates to the highest and best use.
Fair value hierarchy and valuation techniques
The fair value measurement for investment properties has been categorised as Level 3 fair value based on
the key inputs to the valuation techniques used below:
Operating Assets and Liabilities
This section includes information about the assets used by the Fund to generate profits and revenue,
specifically information relating to its investment properties and liabilities.
Elanor Commercial Property Fund
Annual Report 2024
44
ELANOR COMMERCIAL PROPERTY FUND
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
6.
Investment properties (continued)
Valuation Techniques
Significant
unobservable
inputs
Range
FY24
Range
FY23
Weighted
average
FY24
Weighted
average
FY23
Discounted cash flows – involves the
projection of a series of inflows and
outflows to which a market-derived
discount rate is applied to establish an
indication of the present value of the
income stream associated with the
property.
Adopted discount
rate1
7.50% - 8.25%
6.25% - 8.25%
7.89%
7.23%
Adopted terminal
yield2
7.25% - 9.00%
6.50% - 8.00%
8.00%
7.22%
Net property
income (per sqm)3
$418 - $936
$434 - $860
$651
$629
Capitalisation method – involves
determining the net market income of
the investment property. This net
market income is then capitalised at the
adopted capitalisation rate to derive a
core value.
Adopted
capitalisation rate4
7.25% - 8.75%
5.75% - 7.75%
7.78%
6.90%
1 Adopted discount rate: The rate of return used to convert cash flows, payable or receivable in the future, into present value. It reflects
the opportunity cost of capital, that is the rate of return the cash can earn if put to other uses having similar risk. The rate is determined
with regard to market evidence.
2 Adopted terminal yield: The capitalisation rate used to convert the future net market rental revenue into an indication of the anticipated
value of the property at the end of the holding period when carrying out a discounted cash flow calculation. The rate is determined with
regard to market evidence.
3 Net property income (per sqm): The forecast annual net rental income per sqm reflecting leased occupancy and likely to be leased space
based on commitments and estimates. Resulting WALE and occupancy rate from existing tenancies will impact the forecast cash flow
from net property income. The rate is determined with regard to existing lease terms and other market evidence.
4 Adopted capitalisation rate: The rate at which net market rental revenue is capitalised to determine the value of a property. The rate is
determined with regard to market evidence.
ACCOUNTING POLICY
Recognition and measurement
Investment properties are measured initially at cost, including transaction costs. Subsequent to initial
recognition, investment properties are measured at fair value. Gains and losses arising from changes in the
fair value of investment properties are included in the consolidated statement of profit or loss in the year in
which they arise.
Fair value is defined as the price at which an asset or liability could be exchanged in an arm's length transaction
between knowledgeable, willing parties, other than in a forced or liquidation sale.
An investment property is derecognised upon disposal or when the investment property is permanently
withdrawn from use and no future economic benefits are expected from the asset. Any gain or loss arising on
derecognition of the property (calculated as the difference between the net disposal proceeds and the carrying
amount of the asset) is included in the consolidated statement of profit or loss in the year in which the property
is derecognised.
Valuation process
In reaching estimates of fair value, management judgment needs to be exercised. The aim of the valuation
process is to ensure that assets are held at fair value and that the Fund is compliant with applicable Australian
Accounting Standards, regulations, and the Fund's Constitutions. All properties are required to be internally
valued every six months with the exception of those independently valued during that six-month period.
45
ELANOR COMMERCIAL PROPERTY FUND
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
6.
Investment properties (continued)
The internal valuations are performed by utilising the information from a combination of asset plans and
forecasting tools prepared by the asset management team. Appropriate capitalisation rate, terminal yield and
discount rates based on comparable market evidence and recent external valuation parameters are used to
produce a capitalisation-based valuation and a discounted cash flow valuation. Both valuations are considered
to determine the final valuation.
The Fund's valuation policy requires that each property in the portfolio is valued by an independent valuer at
least every three years. In practice, properties may be valued more frequently than every three years primarily
where there may have been a material movement in the market and where there is a significant variation
between the carrying value and the internal valuation.
Independent valuations are performed by independent and external valuers who hold a recognised relevant
professional qualification and have specialised expertise and experience in the location and types of
investment properties valued.
Valuation technique
Capitalisation method
Capitalisation rate is an approximation of the ratio between the net operating income produced by an
investment property and its fair value. This excludes consideration of costs of acquisition or disposal. The net
income is capitalised in perpetuity from the valuation date at an appropriate investment yield. The adopted
percentage rate investment yield reflects the capitalisation rate and includes consideration of the property type,
location and comparable sales.
Discounted cash flows (DCF)
Under the DCF method, a property's fair value is estimated using explicit assumptions regarding the benefits
and liabilities of ownership over the asset's life including an exit or terminal value. The DCF method involves
the projection of a series of cash flows on a real property interest. The cash flow projections reflect tenants
currently in occupation or are contracted to meet lease commitments or are likely to be in occupation based
on the market's general perception and relevant available market evidence. To this projected cash flow series,
an appropriate discount rate is applied to establish the present value of the income stream associated with the
property. The discount rate is the rate of return used to convert a monetary sum, payable or receivable in the
future, into present value. The rate is determined based on market evidence.
All property investments are categorized as level 3 in the fair value hierarchy. There were no transfers between
the hierarchies during the year.
Sensitivity Information
The key unobservable inputs to measure the fair value of investment properties are disclosed below along with
sensitivity to a significant increase or decrease set out in the following table:
Fair value measurement
Fair value measurement
sensitivity to increase
sensitivity to decrease
in input
in input
Discount rate (%)
Decrease
Increase
Terminal yield (%)
Decrease
Increase
Capitalisation rate (%)
Decrease
Increase
Elanor Commercial Property Fund
Annual Report 2024
46
ELANOR COMMERCIAL PROPERTY FUND
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
6.
Investment properties (continued)
Sensitivity Analysis
When calculating the income capitalisation approach, the net property income has a strong inter-relationship
with the adopted capitalisation rate given the methodology involves assessing the total income receivable from
the property and capitalising this in perpetuity to derive a capital value. In theory, an increase in the income
and an increase (softening) in the adopted capitalisation rate could potentially offset the impact to the fair
value. The same can be said for a decrease in the income and a decrease (tightening) in the adopted
capitalisation rate. A directionally opposite change in the income and the adopted capitalisation rate could
potentially magnify the impact to the fair value.
When assessing a discounted cash flow, the adopted discount rate and adopted terminal yield have a strong
interrelationship in deriving a fair value given the discount rate will determine the rate at which the terminal
value is discounted to the present value. The impact on the fair value of an increase (softening) in the adopted
discount rate could potentially offset the impact of a decrease (tightening) in the adopted terminal yield. The
same can be said for a decrease (tightening) in the adopted discount rate and an increase (softening) in the
adopted terminal yield. A directionally similar change in the adopted discount rate and adopted terminal yield
could potentially magnify the impact to the fair value.
The adopted forecast net property income in the discounted cash flow is reflective of existing lease terms and
other market data. Assets with higher WALE and occupancy rates improve net property income resulting in
higher cash flow forecasts. The increased forecasted cash flow increases the fair value of the property.
Fair value measurement sensitivity
Increase by
Decrease by
Increase by
Decrease by
0.25%
0.25%
0.25%
0.25%
$'000
$'000
%
%
Discount rate (%)
(7,960)
8,135
(1.8)
1.8
Terminal yield (%)
(7,710)
8,152
(1.7)
1.8
Capitalisation rate (%)
(15,326)
16,402
(3.5)
3.7
47
ELANOR COMMERCIAL PROPERTY FUND
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
7.
Equity accounted investments
OVERVIEW
This note provides an overview and detailed financial information of the Group's investments that are
accounted for using the equity method of accounting.
(a)
Interest in associate
Principal activity
Percentage
Consolidated
Ownership
Group
30 June
2024
$'000
Harris Property Trust
Commercial office building
49.90%
17,222
Total equity accounted investment
17,222
Principal activity
Percentage
Consolidated
Ownership
Group
30 June
2023
$'000
Harris Property Trust
Commercial office building
49.90%
31,614
Total equity accounted investment
31,614
The carrying amount of equity investments at the beginning and end of the current year is set out below:
Consolidated
Consolidated
Group
Group
30 June
30 June
2024
2023
$'000
$'000
Carrying amount at the beginning of the period
31,614
44,014
Share of (loss) / profit from equity accounted investment1
(14,164)
(10,958)
Distribution received
(228)
(1,442)
Total carrying value at the end of the period
17,222
31,614
1 Share of loss from equity accounted investment of $13.2 million ($10.0 million in 2023) on the face of the Consolidated Statement of
Profit or Loss includes amortisation from the Manager Contribution of $0.93 million in addition to the figure above.
Elanor Commercial Property Fund
Annual Report 2024
48
ELANOR COMMERCIAL PROPERTY FUND
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED 30 JUNE 2024
7.
Equity accounted investments (continued)
(b)
Summarised financial information for individually material associate
Harris Property Trust
30 June
30 June
2024
2023
Financial position
$'000
$'000
Current assets
4,170
6,634
Non-current assets
138,000
165,606
Total Assets
142,170
172,240
Current liabilities
107,658
4,824
Non-current liabilities
–
104,060
Total Liabilities
107,658
108,884
Contributed equity
87,100
87,100
(Accumulated losses) / Retained profits
(52,588)
(23,744)
Total Equity
34,512
63,356
Harris Property Trust
30 June
30 June
2024
2023
Financial performance
$'000
$'000
Revenue
10,010
9,924
(Loss) / Profit for the period
(28,388)
(21,959)
Other comprehensive income for the period
–
–
Total comprehensive (loss) / income for the period
(28,388)
(21,959)
There are no capital commitments (30 June 2023: nil) at 30 June 2024 for Harris Property Trust.
There are no contingent liabilities (30 June 2023: nil) at 30 June 2024 for Harris Property Trust.
Reconciliation of the above summarised financial information to carrying amount of the interest in the material
associate recognised in the consolidated financial statements:
Harris Property Trust
30 June
30 June
2024
2023
$'000
$'000
Net assets of the associate
34,512
63,356
Proportion of the Group's ownership interest
49.90%
49.90%
Group's share of net assets of the associates
17,222
31,614
Carrying amount of the Group's interest
17,222
31,614
The Harris Property Trust asset was independently valued 30 June 2024 at a value of $141.0 million.
Subsequently, in September 2024, the asset was independently valued again at a value of $138.0 million as
part of the proposed capital note raise process, which is considered to be an indicator of the carrying value of
the equity accounted investment.
The net assets of the Harris Property Trust and ECF’s carrying amount of the net assets as shown above,
reflects the September 2024 independent valuation.
At reporting date, if the valuation of Harris Property Trust asset were to be 5% or 10% lower, the impact on the
carrying amount of the equity accounted investment would be $3.4 million (-20%) lower or $6.9 million (-39%)
lower respectively.
49
ELANOR COMMERCIAL PROPERTY FUND
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
7.
Equity accounted investments (continued)
On 20 August 2024, Harris Property Trust executed a credit approved term sheet with its financier to extend
and vary the existing debt facility from 23 May 2025 to 30 June 2027. The revised terms include a requirement
to reduce the debt facility from $101.75 million to $77.0 million prior to 30 November 2024. The Harris Street
Trust intends to undertake a capital note raise to meet this requirement.
On 9 September 2024, the Fund announced a strategic partnership with Lederer Group including:
•
ECF commitment to acquire at least its 49.9% pro-rata share of the Harris Street Fund Capital Notes,
subject to sourcing suitable funding.
•
Citigroup Global Markets Australia Pty Limited and MA Moelis Australia Advisory Pty Ltd are advising
on the potential rights issue in ECF to fund both ECF’s commitment to the Harris Street Fund and to
provide further capital to fund near term capex and incentives.
•
Lederer Group’s equity commitment of $50 million includes an offer to take up 100% of its entitlement
and sub-underwrite any potential rights issue at an indicative offer price of 60 cents per ECF security.
The ASX announcement made by Elanor Investors Group (which incorporates the trustee of the Harris
Property Trust) on 23 August 2024 may create a material uncertainty as to the ability to complete the Harris
Street Fund capital note raise within the required timeframe. To mitigate the risk of not completing the capital
raising within the required timeframe, the trustee of the Harris Property Trust can undertake alternative options
including reducing the size of the raise, seeking further accommodation from the financier, undertaking a
refinancing of the existing debt or an orderly sale of the Harris Street property asset.
ACCOUNTING POLICY
Investment in associates and joint ventures
An associate is an entity over which the Group has significant influence. Significant influence is the power to
participate in the financial and operating policy decisions of the investee but is not control or joint control over
those policy decisions.
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights
to the net assets of the joint arrangement. Joint control is the contractually agreed sharing of control of an
arrangement, which exists only when decisions about the relevant activities require unanimous consent of the
parties sharing control.
Management of the Group reviewed and assessed the classification of the Group's investment in the
associated entities in accordance with AASB 128 on the basis that the Group has significant influence over
the financial and operating policy decisions of the investee.
The results, and assets and liabilities of associates or joint ventures are incorporated in these financial
statements using the equity method of accounting, except when the investment, or a portion thereof, is
classified as held for sale, in which case it is accounted for in accordance with AASB 5. Under the equity
method, an investment in an associate or a joint venture is initially recognised in the statement of financial
position at cost and adjusted thereafter to recognise the Group's share of the profit or loss and other
comprehensive income of the associate or joint venture. When the Group's share of losses of an associate or
a joint venture exceeds the Group's interest in that associate or joint venture (which includes any long-term
interests that, in substance, form part of the Group's net investment in the associate or joint venture), the Group
discontinues recognising its share of further losses. Additional losses are recognised only to the extent that
the Group has incurred legal or constructive obligations or made payments on behalf of the associate or joint
venture.
Elanor Commercial Property Fund
Annual Report 2024
50
ELANOR COMMERCIAL PROPERTY FUND
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
7.
Equity accounted investments (continued)
Investments in associates and joint ventures are assessed for impairment when indicators of impairment are
present. When necessary, the entire carrying amount of the investment (including goodwill) is tested for
impairment in accordance with AASB 136 Impairment of Assets as a single asset by comparing its recoverable
amount (higher of value in use and fair value less costs to sell) with its carrying amount. Any impairment loss
recognised forms part of the carrying amount of the investment. Any reversal of that impairment loss is
recognised in accordance with AASB 136 to the extent that the recoverable amount of the investment
subsequently increases.
An assessment has been performed for Harris Property Trust to ensure the underlying property asset has
been recognised at fair value, in accordance with the Group’s accounting policy and methodology for fair value
measurement of Investment Properties as described in Note 6 above.
Furthermore, the forecast cash flows of the underlying asset have been assessed. The recoverability risks
have been assessed through detailed tenant specific reviews of the financial position of certain tenants in
addition to maintaining active tenant engagement and observation of relevant market conditions and factored
into the cash flow forecast of this associate.
At balance date, no impairment loss has been recognised with respect to the Group’s associate.
When an entity transacts with an associate or a joint venture of the Group, profits and losses resulting from
the transactions with the associate or joint venture are recognised in the Group's financial statements only to
the extent of interests in the associate or joint venture that are not related to the Group.
51
ELANOR COMMERCIAL PROPERTY FUND
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
8.
Trade and other payables
OVERVIEW
This note provides further information about assets and liabilities that are incidental to the Fund’s trading
activities, being trade and other payables.
(a)
Trade and other payables
Consolidated
Consolidated
Group
Group
ECPF II
ECPF II
30 June
30 June
30 June
30 June
2024
2023
2024
2023
$'000
$'000
$'000
$'000
Trade creditors
744
601
5
67
Accrued expenses
4,514
3,727
222
61
GST payable
877
672
7
36
Total payables
6,135
5,000
234
164
(b)
Non-current other liabilities
Consolidated
Consolidated
Group
Group
ECPF II
ECPF II
30 June
30 June
30 June
30 June
2024
2023
2024
2023
$'000
$'000
$'000
$'000
Current liabilities
Contribution from manager1
927
929
–
–
Total other current liability
927
929
–
–
Non-current liabilities
Contribution from manager1
1,762
2,689
–
–
Total other non-current liability
1,762
2,689
–
–
1 On 24 May 2022, the Elanor Investors Group made an $8.4m contribution to the Fund as part of the 19 Harris Street acquisition. Under
the Australian Accounting Standards, this contribution was recognised as a contract liability upon initial recognition and $3.8m of the
liability was utilised to offset transaction costs. The remaining balance is released to Consolidated Statement of Profit or Loss over a 5-
year period.
ACCOUNTING POLICY
Trade and other payables represent liabilities and accrued expenses owing by the Fund at year end which are
unpaid. The amounts are unsecured and usually paid within 30 days of recognition. Trade and other payables
are recognised at amortised cost and normal commercial terms and conditions apply to payables.
Elanor Commercial Property Fund
Annual Report 2024
52
ELANOR COMMERCIAL PROPERTY FUND
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
9.
Interest bearing liabilities
OVERVIEW
The Fund has access to debt facilities totalling $199.7 million, which comprise of two secured debt facilities
($80.0 million and $39.7 million), and a $10.0 million capex facility, which will all mature on 31 August 2026.The
Fund has also a secured debt facility of $70.0 million which will mature on 28 February 2025.
The total drawn amount at 30 June 2024 is $195.2 million. The weighted average debt facility maturity at year
end is 2.17 years with an average all-in cost of debt of 4.44% p.a. At 30 June 2024, the interest rate risk of
drawn facilities is hedged to 76.7%. The fair value of the debt facilities is $196.0 million which is calculated by
discounted cash flows using each facility's current borrowing rate.
Consolidated
Consolidated
Group
Group
ECPF II
ECPF II
30 June
30 June
30 June
30 June
2024
2023
2024
2023
$'000
$'000
$'000
$'000
Current
Bank loan - term debt
70,000
80,159
6,727
7,402
Total current
70,000
80,159
6,727
7,402
Non-current
Bank loan - term debt
125,214
109,725
7,403
6,729
Bank loan - borrowing costs less amortisation
(359)
(451)
(8)
(19)
Total non-current
124,855
109,274
7,395
6,710
Total interest bearing liabilities
194,855
189,433
14,122
14,112
During the year, the Fund has complied with all debt covenants as required by its loan agreements.
ACCOUNTING POLICY
Interest bearing liabilities are recognised initially at cost, being the fair value of the consideration received net
of transaction costs associated with the borrowing. Subsequent to initial recognition, interest bearing liabilities
are recognised at amortised cost using the effective interest method. Under the effective interest method, any
transaction fees, costs, discounts and premiums directly related to the borrowings are recognised in the
consolidated statement of profit or loss over the expected life of the borrowings.
Interest bearing liabilities are classified as current liabilities where the liability has been drawn under a financing
facility which expires within one year. Amounts drawn under financial facilities which expire after one year are
classified as non-current where the Fund has an unconditional right to defer settlement of the liability for at
least 12 months after the balance sheet date.
Finance and Capital Structure
This section provides further information on the Fund’s debt structure and financial risk management in
respect of its exposure to credit, liquidity and market risks.
53
ELANOR COMMERCIAL PROPERTY FUND
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
10.
Derivative financial instruments
OVERVIEW
The Fund’s derivative financial instruments consist of interest rate swap contracts to hedge its exposure to
movements in variable interest rates. The interest rate swap agreements allow the Fund to raise long term
borrowings at a floating rate and effectively swap them into a fixed rate.
Consolidated
Consolidated
Group
Group
ECPF II
ECPF II
30 June
30 June
30 June
30 June
2024
2023
2024
2023
$'000
$'000
$'000
$'000
Current assets
Interest rate swaps
3,061
3,984
154
257
Non-current assets
Interest rate swaps
2,887
4,562
140
172
Total derivative financial instruments
5,948
8,546
294
429
(a)
Valuation
The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows based
on observable yield curves (level 2). The interest rate swap hedges interest rate risk on the Fund’s debt
facilities.
All of the resulting fair value estimates are included in Level 2. The fair value of financial instruments that are
not traded in an active market is determined using valuation techniques. These valuation techniques maximise
the use of observable market data where it is available and rely as little as possible on entity specific estimates.
If all significant inputs required to fair value an instrument are observable, the instrument is included in Level
2.
The fair value of derivatives has been determined with reference to market observable inputs for contracts with
similar maturity profiles. The valuation is a present value calculation which incorporates fixed rate and forward
interest rate curves.
(b)
Hedging
Instruments used by the Group
Interest rate swaps are currently in place to hedge 76.7% of the variable loan principal outstanding. The fixed
interest rate of the swaps range between 0.76% to 3.04% (2023: 0.76% to 0.87%) and variable rates of the
loans range between 4.00% to 4.42% (2023: 4.00% to 4.01%) in addition to a fixed line fee of 1.45%.
The swaps contracts require settlement of net interest receivable or payable every 90 days. The settlement
dates coincide with the dates on which interest is payable on the underlying debt.
As result any fair value movement of the interest rate swaps are recognised in the profit and loss.
ACCOUNTING POLICY
Derivatives are initially recognised at fair value at the date the derivative contract is entered into and are
subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss is
recognised in profit or loss immediately.
Elanor Commercial Property Fund
Annual Report 2024
54
ELANOR COMMERCIAL PROPERTY FUND
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
11.
Contributed equity
OVERVIEW
The Fund is a 'stapled' entity comprising of ECPF I and its controlled entities, including ECPF II. The units in
ECPF II are stapled to units in ECPF I. The stapled securities cannot be traded or dealt with separately.
(a)
Parent entity
No. of
No. of
Parent
Parent
securities
securities
Entity
Entity
30 June
30 June
30 June
30 June
2024
2023
2024
2023
'000
'000
$'000
$'000
Opening balance
316,556
316,556
343,515
343,518
Capital raising cost
–
–
–
(3)
Total contributed equity
316,556
316,556
343,515
343,515
(b)
ECPF II
No. of
No. of
securities
securities
ECPF II
ECPF II
30 June
30 June
30 June
30 June
2024
2023
2024
2023
'000
'000
$'000
$'000
Opening balance
316,556
316,556
25,978
25,978
Total contributed equity
316,556
316,556
25,978
25,978
12.
Financial Risk Management
OVERVIEW
The Fund's principal financial instruments comprise cash, receivables, interest bearing loans, derivatives,
payables and distribution payables. The Fund's activities are exposed to a variety of financial risks: market risk
(including interest rate risk); credit risk; and liquidity risk.
This note presents information about the Fund's exposure to each of the above risks, the Fund's objectives,
policies and processes for measuring and managing risk and the Fund's management of capital. Further
quantitative disclosures are included through these consolidated financial statements.
The Board of Directors (Board) of the Responsible Entity of the Fund has overall responsibility for the
establishment and oversight of the Fund's risk management framework. The Board is responsible for
monitoring the identification and management of key risks to the business.
The Board has established a Risk Management Framework outlining principles for overall risk management
covering specific areas, such as mitigating foreign exchange, interest rate and liquidity risks. The Risk
Management Framework provides a framework to identify and manage financial risks with a key philosophy of
risk mitigation. Derivatives are exclusively used for hedging purposes, not as trading or other speculative
instruments. The Fund uses derivative financial instruments such as interest rate swaps where possible to
hedge certain risk exposures.
55
ELANOR COMMERCIAL PROPERTY FUND
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
12.
Financial Risk Management (continued)
The Fund uses different methods to measure different types of risk to which it is exposed. These methods
include sensitivity analysis in the case of interest rate risk, ageing analysis for credit risk and cash flow
forecasting for liquidity risk.
There have been no other significant changes in the types of financial risks or the Fund's risk management
program (including methods used to measure the risks).
(a)
Market risk
Market risk refers to the potential for changes in the value of the Group’s financial instruments ore revenue
streams from changes in market prices. There are various types of market risks to which the Group is exposed
including those associated with interest rates, currency rates and equity market price.
(b)
Interest rate risk
Interest rate risk refers to the potential fluctuations in the fair value or future cash flows of a financial instrument
because of changes in market interest rates.
As at reporting date, the Fund had the following undiscounted (including future interest payable) interest
bearing assets and liabilities:
Elanor Commercial Property Fund
Annual Report 2024
56
ELANOR COMMERCIAL PROPERTY FUND
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
12.
Financial Risk Management (continued)
(b)
Interest rate risk (continued)
Maturity
Maturity
Maturity
Consolidated Group
< 1 yr
1 - 5 yrs
> 5 yrs
Total
30 June 2024
$'000
$'000
$'000
$'000
Assets
Cash and cash equivalents
7,675
–
–
7,675
Derivative financial instruments
3,061
2,887
–
5,948
Total assets
10,736
2,887
–
13,623
Weighted average interest rate
1.94%
Liabilities
Interest bearing loans
78,745
135,444
–
214,189
Derivative financial instruments
–
–
–
–
Total liabilities
78,745
135,444
–
214,189
Weighted average interest rate
5.93%
Maturity
Maturity
Maturity
Consolidated Group
< 1 yr
1 - 5 yrs
> 5 yrs
Total
30 June 2023
$'000
$'000
$'000
$'000
Assets
Cash and cash equivalents
7,988
–
–
7,988
Derivative financial instruments
3,984
4,562
–
8,546
Total assets
11,972
4,562
–
16,534
Weighted average interest rate
3.21%
Liabilities
Interest bearing loans
85,565
112,748
–
198,313
Derivative financial instruments
–
–
–
–
Total liabilities
85,565
112,748
–
198,313
Weighted average interest rate
5.49%
57
ELANOR COMMERCIAL PROPERTY FUND
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
12.
Financial Risk Management (continued)
(b)
Interest rate risk (continued)
Maturity
Maturity
Maturity
ECPF II
< 1 yr
1 - 5 yrs
> 5 yrs
Total
30 June 2024
$'000
$'000
$'000
$'000
Assets
Cash and cash equivalents
191
–
–
191
Derivative financial instruments
154
140
–
294
Total assets
345
140
–
485
Weighted average interest rate
1.36%
Liabilities
Interest bearing loans
7,435
8,230
–
15,665
Derivative financial instruments
–
–
–
–
Total liabilities
7,435
8,230
–
15,665
Weighted average interest rate
5.95%
Maturity
Maturity
Maturity
ECPF II
< 1 yr
1 - 5 yrs
> 5 yrs
Total
30 June 2023
$'000
$'000
$'000
$'000
Assets
Cash and cash equivalents
590
–
–
590
Derivative financial instruments
257
172
–
429
Total assets
847
172
–
1,019
Weighted average interest rate
3.24%
Liabilities
Interest bearing loans
7,821
6,826
–
14,647
Derivative financial instruments
–
–
–
–
Total liabilities
7,821
6,826
–
14,647
Weighted average interest rate
5.46%
Elanor Commercial Property Fund
Annual Report 2024
58
ELANOR COMMERCIAL PROPERTY FUND
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
12.
Financial Risk Management (continued)
(c)
Interest rate sensitivity
At reporting date, if Australian interest rates had been 1% higher / lower and all other variables were held
constant, the impact on the Group in relation to cash and cash equivalents, derivatives, interest bearing loans
and the Fund's profit and equity would be:
Increase by 1%
Decrease by 1%
Consolidated Group
Amount
Profit/ (loss)
Equity
Profit/ (loss)
Equity
30 June 2024
$'000
$'000
$'000
$'000
$'000
Cash and cash equivalents
7,675
77
–
(77)
–
Derivative financial instruments
5,948
1,497
–
(1,497)
–
Interest bearing loans
194,855
(1,949)
–
1,949
–
Total increase / (decrease)
(375)
–
375
–
Increase by 1%
Decrease by 1%
Consolidated Group
Amount
Profit/ (loss)
Equity
Profit/ (loss)
Equity
30 June 2023
$'000
$'000
$'000
$'000
$'000
Cash and cash equivalents
7,988
80
–
(80)
–
Derivative financial instruments
8,546
1,097
–
(1,097)
–
Interest bearing loans
189,433
(1,898)
–
1,898
–
Total increase / (decrease)
(721)
–
721
–
Of the $195.2 million floating rate interest bearing loans, $149.7 million or 76.7% of this amount was hedged
using interest rate swap agreements. These agreements are in place to swap the floating interest rate payable
to a fixed rate to minimise the interest rate risk.
Increase by 1%
Decrease by 1%
ECPF II
Amount
Profit/ (loss)
Equity
Profit/ (loss)
Equity
30 June 2024
$'000
$'000
$'000
$'000
$'000
Cash and cash equivalents
191
2
–
(2)
–
Derivative financial instruments
294
106
–
(106)
–
Interest bearing loans
14,123
(141)
–
141
–
Total increase / (decrease)
(33)
–
33
–
Increase by 1%
Decrease by 1%
ECPF II
Amount
Profit/ (loss)
Equity
Profit/ (loss)
Equity
30 June 2023
$'000
$'000
$'000
$'000
$'000
Cash and cash equivalents
590
6
–
(6)
–
Derivative financial instruments
429
67
–
(67)
–
Interest bearing loans
14,112
(141)
–
141
–
Total increase / (decrease)
(68)
–
68
–
Of the $14.1 million floating rate interest bearing loans, $10.6 million or 75.0% of this amount was hedged
using interest rate swap agreements. These agreements are in place to swap the floating interest rate payable
to a fixed rate to minimise the interest rate risk.
59
ELANOR COMMERCIAL PROPERTY FUND
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
12.
Financial Risk Management (continued)
(d)
Credit risk
Credit risk represents the loss that would be recognised if counterparties failed to perform as contracted. The
Fund manages credit risk on receivables by performing credit reviews of prospective debtors, obtaining
collateral where appropriate and performing detailed reviews on any debtor arrears. Credit risk on derivatives
is managed through limiting transactions to investment grade counterparties.
The group applied the AASB9 Financial Instruments simplified approach using the provision matrix for
measuring the expected credit losses (ECL) which uses a lifetime expected loss allowance. The ECL
calculation is based on assumptions about risk of default and expected loss rates. The group has considered
the following in assessing the expected credit loss: ageing of the debtor's balances, tenant payment history,
assessment of the tenant's financial position, existing market conditions and forward-looking estimates.
At balance date, the Fund has recognised a provision for expected credit losses of $0.13 million. This provision
reflects the amount of tenant rental arrears at balance date that is likely to be waived in respect of past
occupancy and also includes any additional amount relating to arrears at balance date that has been assessed
to have credit risk in respect of the financial position of the tenant.
Exposure to credit risk
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to
credit risk at the reporting date was:
Consolidated
Consolidated
Group
Group
ECPF II
ECPF II
30 June
30 June
30 June
30 June
2024
2023
2024
2023
$'000
$'000
$'000
$'000
Cash and cash equivalents
7,675
7,988
191
590
Receivables
808
647
352
68
Total
8,483
8,635
543
658
Where entities have a right of set-off and intend to settle on a net basis under netting arrangements, this set-
off has been recognised in the consolidated financial statements on a net basis. Details of the Fund's
contingent liabilities are disclosed in Note 15.
Elanor Commercial Property Fund
Annual Report 2024
60
ELANOR COMMERCIAL PROPERTY FUND
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
12.
Financial Risk Management (continued)
(d)
Credit risk (continued)
At balance date there were no other significant concentrations of credit risk. No allowance has been recognised
for the GST from the taxation authorities. Based on historical experience, there is no evidence of default from
these counterparties which would indicate that an allowance was necessary.
Impairment losses
The ageing profile of the receivables balance as at 30 June 2024 is as follows:
Consolidated
Consolidated
Group
Group
ECPF II
ECPF II
30 June
30 June
30 June
30 June
2024
2023
2024
2023
$'000
$'000
$'000
$'000
Current
592
512
76
60
Past due 31-61 days
229
108
51
7
Past due 61+ days
116
149
138
1
Total
937
769
265
68
Provision for expected credit losses
(128)
(122)
–
–
Net trade and other receivables
809
647
265
68
(e)
Capital risk management
The Fund maintains its capital structure with the objective to safeguard its ability to continue as a going
concern, to increase the returns for securityholders and to maintain an optimal capital structure. The capital
structure of the Fund consists of equity as listed in Note 11.
The Fund assesses its capital management approach as a key part of the Fund's overall strategy and it is
continuously reviewed by management and the Directors of the Responsible Entity.
To achieve the optimal capital structure, the Board may use the following strategies: amend the distribution
policy of the Fund; issue new units through a private placement; conduct a buyback of units; acquire debt; or
dispose of investment properties.
(f)
Liquidity risk
The Group manages liquidity risk by maintaining sufficient cash including working capital and other reserves,
as well as through securing appropriate committed credit facilities.
The following are the undiscounted contractual cash flows of derivatives and non-derivative financial liabilities
shown at their nominal amount (including future interest payable).
61
ELANOR COMMERCIAL PROPERTY FUND
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
12.
Financial Risk Management (continued)
(f)
Liquidity risk (continued)
Less than
1 to 2
2 to 5
More than Contractual
Carrying
Consolidated Group
1 year
years
years
5 years
cash flows
amount
30 June 2024
$'000
$'000
$'000
$'000
$'000
$'000
Non derivative financial liabilities
Payables
6,135
–
–
–
6,135
6,135
Distribution payable
6,727
–
–
–
6,727
6,727
Interest bearing loans
78,745
8,745
126,699
–
214,189
214,189
Total
91,607
8,745
126,699
–
227,051
227,051
Less than
1 to 2
2 to 5
More than Contractual
Carrying
Consolidated Group
1 year
years
years
5 years
cash flows
amount
30 June 2023
$'000
$'000
$'000
$'000
$'000
$'000
Non derivative financial liabilities
Payables
5,000
–
–
–
5,000
5,000
Distribution payable
7,439
–
–
–
7,439
7,439
Interest bearing loans
85,565
71,947
40,801
–
198,313
198,313
Total
98,004
71,947
40,801
–
210,752
210,752
Less than
1 to 2
2 to 5
More than Contractual
Carrying
ECPF II
1 year
years
years
5 years
cash flows
amount
30 June 2024
$'000
$'000
$'000
$'000
$'000
$'000
Non derivative financial liabilities
Payables
234
–
–
–
234
234
Distribution payable
389
–
–
–
389
389
Interest bearing loans
7,435
707
7,523
–
15,665
15,665
Total
8,058
707
7,523
–
16,288
16,288
Less than
1 to 2
2 to 5
More than Contractual
Carrying
ECPF II
1 year
years
years
5 years
cash flows
amount
30 June 2023
$'000
$'000
$'000
$'000
$'000
$'000
Non derivative financial liabilities
Payables
164
–
–
–
164
164
Distribution payable
453
–
–
–
453
453
Interest bearing loans
7,821
6,826
–
–
14,647
14,647
Total
8,438
6,826
–
–
15,264
15,264
Elanor Commercial Property Fund
Annual Report 2024
62
ELANOR COMMERCIAL PROPERTY FUND
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
13.
Related parties
OVERVIEW
Related parties are persons or entities that are related to the Fund as defined by AASB 124 Related Party
Disclosures. This note provides information about transactions with related parties during the year.
(a)
Key management personnel
Responsible Entity
Elanor Funds Management Limited is the Responsible Entity of the Fund and is the Key Management
Personnel (KMP) of the Fund.
Directors of the Responsible Entity
The Directors of Elanor Funds Management Limited during the year were:
•
Ian Mackie (appointed as Chair from 1 January 2024, appointed as Director on 25 August 2023)
•
Paul Bedbrook (resigned as Chair and Director on 31 December 2023)
•
Anthony (Tony) Fehon (Director, and appointed as Managing Director on 9 September 2024)
•
Glenn Willis (resigned as Managing Director and Chief Executive Officer of Elanor Investors Group on
9 September 2024)
•
Nigel Ampherlaw (resigned on 23 September 2024)
•
Su Kiat Lim
•
Karyn Baylis
•
Victor Rodriguez (appointed on 7 July 2023 and resigned as 3 September 2024)
•
Kathy Ostin (appointed on 1 January 2024)
Key Management Personnel
In addition to the Directors, the following persons were Key Management Personnel of the Responsible Entity
with the authority for the strategic direction of the Fund:
•
David Burgess – Fund Manager
•
Symon Simmons – Chief Financial Officer
•
Paul Siviour – Chief Operating Officer (resigned 9 September 2024)
Remuneration of Management Personnel
Compensation is paid to the Responsible Entity in the form of fees and is disclosed below. No other amounts
are paid by the Fund directly or indirectly to the Management Personnel for services provided to the Fund.
The Directors of the Responsible Entity and other management personnel are paid by the Responsible Entity.
Payments made from the Fund to the Responsible Entity do not include any amounts attributable to the
compensation of key management personnel.
Other Items
This section provides information that is not directly related to the specific line items in the consolidated
financial statements, including information about contingent liabilities, related parties, events after the end
of the reporting year, remuneration of auditors and changes in accounting policies and disclosures.
63
ELANOR COMMERCIAL PROPERTY FUND
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
Consequently, no compensation as defined in AASB 124 Related Party Disclosures, is paid by the Fund to its
Management Personnel, other than that paid to the Responsible Entity.
Related party disclosure
During the year, fees were incurred by the Fund to Elanor Investors Group and its controlled entities, in
accordance with the Constitution of each Scheme, including management fees and cost recoveries.
Consolidated
Consolidated
Group
Group
ECPF II
ECPF II
30 June
30 June
30 June
30 June
2024
2023
2024
2023
Fees paid to Elanor Investors Group and its controlled entities:
$
$
$
$
Group management fees
3,344,277
3,899,203
202,502
233,195
Cost recoveries1
1,366,974
977,000
102,122
97,125
Other
620,789
472,530
134,457
48,464
Total
5,332,040
5,348,733
439,081
378,784
Outstanding balances arising from Fees paid to Elanor Investors Group and its controlled entities:
Accounts payable
1,312,124
303,158
27,947
8,936
Total
1,312,124
303,158
27,947
8,936
1 Includes cost recoveries for the management of debt facility renewals and the management of transaction related activities.
Related party holdings
Directors and other Key Management Personnel of the Responsible Entity and of its related entities may hold
investments in the Fund. Such investments were purchased on normal commercial terms and were at arm's
length. The number of securities held by Directors and other Key Management Personnel are as follows:
30 June
2024
No. of fully paid units
Investment held by Elanor Investment Trust
39,755,650
Investment held by Directors and Other Management Personnel
405,711
Total
40,161,361
30 June
2023
No. of fully paid units
Investment held by Elanor Investment Trust
39,755,650
Investment held by Directors and Other Management Personnel
605,711
Total
40,361,361
Cross-Staple Loan
The Fund has applied the ECL model under AASB 9 Financial Instruments to its unsecured intercompany loan
receivable with ECPF II. An impairment provision as the 12-month ECL has been assessed at balance date.
Despite the current economic environment, there has been no history of defaults and management has
determined that there has not been a significant increase in credit risk on the intercompany loan since its
inception as ECPF I. ECPF I maintains a strong capital position and forecasts sufficient cash flows to repay
the loan to ECPF II on expiry. There is no impact on the Fund as this loan eliminates on consolidation.
Elanor Commercial Property Fund
Annual Report 2024
64
ELANOR COMMERCIAL PROPERTY FUND
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
14.
Non-cancellable operating lease receivables
OVERVIEW
This note sets out the non-cancellable operating lease receivables of the Fund and the ECPF II.
Consolidated
Consolidated
Group
Group
ECPF II
ECPF II
30 June
30 June
30 June
30 June
2024
2023
2024
2023
$'000
$'000
$'000
$'000
Within 1 year
44,613
40,152
2,884
2,834
Between 1 and 2 years
26,788
36,917
2,132
1,764
Between 2 and 3 years
13,405
20,146
1,947
1,232
Between 3 and 4 years
11,648
8,766
1,577
1,107
Later than 5 years
21,684
26,662
558
1,362
Total
118,138
132,643
9,098
8,299
15.
Unrecognised items
OVERVIEW
Items that have not been recognised on the Fund's balance sheet, including contractual commitments for future
expenditure and contingent liabilities which are not sufficiently certain to qualify for recognition as a liability on
the balance sheet, are defined as unrecognised items. This note provides details of any such items.
(a)
Contingent liabilities
The Directors are not aware of any material contingent liabilities of the Fund as at 30 June 2024 (30 June
2023: nil).
(b)
Commitments
The Fund has commitments of $2.24 million as at 30 June 2024 (30 June 2023: nil) in respect of capital
expenditures contracted as of 30 June 2024.
65
ELANOR COMMERCIAL PROPERTY FUND
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
16.
Parent entity
OVERVIEW
The financial information below reflects Elanor Commercial Property Fund's parent entity, ECPF I, as a stand-
alone entity.
(a)
Summarised financial information
ECPF I
ECPF I
30 June
30 June
2024
2023
Financial position
$'000
$'000
Current assets
13,139
43,679
Non-current assets
365,234
367,712
Total Assets
378,373
411,391
Current liabilities
74,725
81,540
Non-current liabilities
120,149
105,253
Total Liabilities
194,874
186,793
Contributed equity
344,195
344,195
Retained profits / (accumulated losses)
(160,696)
(119,597)
Total Equity
183,499
224,598
ECPF I
ECPF I
30 June
30 June
2024
2023
Financial performance
$'000
$'000
(Loss) / profit for the period
(15,864)
(10,217)
Total comprehensive (loss) / income for the period
(15,864)
(10,217)
(b)
Commitments
ECPF I has commitments of $1.91 million as at 30 June 2024 (2023: nil) in relation to capital expenditure
contracted for but not recognised as liabilities.
(c)
Guarantees provided
ECPF I has no outstanding guarantees as at 30 June 2024 (2023: nil).
(d)
Contingent liabilities
ECPF I has no contingent liabilities as at 30 June 2024 (2023: nil).
ACCOUNTING POLICY
With the exception of consolidation, the financial information of the parent entities of Elanor Commercial
Property Fund has been prepared on the same basis as the consolidated financial statements.
Elanor Commercial Property Fund
Annual Report 2024
66
ELANOR COMMERCIAL PROPERTY FUND
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
17.
Auditor's remuneration
OVERVIEW
PricewaterhouseCoopers are the independent auditors of the Fund and have provided audit and other
assurance related services as well as other non-assurance related services to the Group and the Trust during
the year.
During the year, the following fees were paid or payable for services provided by the auditor of the Fund:
Consolidated
Consolidated
Group
Group
30 June
30 June
2024
2023
$
$
Audit services
Audit and review of financial reports
231,196
226,800
Total services provided by PwC
231,196
226,800
18.
Subsequent events
On 28 June 2024, the Fund executed a credit approved term sheet for the extension of the maturity date of
the debt facility to 31 August 2026 with an additional increase of two debt facilities by a total of $15.0 million.
Subsequent to balance date, on 8 August 2024 the Fund executed an Amendment and Restatement Deed for
the extension and increase of the debt facilities.
On 9 September 2024, the Fund announced a strategic partnership with Lederer Group. The Lederer Group
has acquired Elanor Investors Group’s (ASX: ENN) 12.6% interest in the Fund to become the largest
securityholder in the Fund.
As part of the strategic partnership, the Lederer Group has committed $50 million in equity capital to support
the Fund. The Lederer Group will have participation on a new investment committee (one of four positions
alongside representatives of the Responsible Entity and the Manager). The new investment committee will
oversee any material investment or divestment initiatives, including major capital expenditure, and will make
non-binding recommendations to the Responsible Entity in relation to those matters having regard to the best
interest of all ECF securityholders.
The Fund has committed to acquire at least its 49.9% pro-rata share of the Harris Street Fund Capital Notes,
subject to sourcing suitable funding. Citigroup Global Markets Australia Pty Limited and MA Moelis Australia
Advisory Pty Ltd are advising on the potential rights issue in ECF to fund both the commitment to the Harris
Street Fund and to provide further capital for near term capital expenditure and incentives.
The Lederer Group’s equity commitment of $50 million includes an offer to take up 100% of its entitlement and
sub-underwrite any potential rights issue at an indicative offer price of 60 cents per security. The Responsible
Entity will actively explore the rights issue, however, any equity raising is subject to market conditions, final
Responsible Entity Board approval, regulatory approvals and securing suitable underwriting support for the
rights issue.
67
ELANOR COMMERCIAL PROPERTY FUND
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
18.
Subsequent events (continued)
Elanor Investor Group and the Responsible Entity
On 23 August 2024, Elanor Investors Group (ASX: ENN) requested, and the ASX granted, a voluntary
suspension of trading of ENN securities on the ASX to enable Elanor to consider a range of options to stabilise
and maintain its ongoing financial position. Elanor Funds Management Limited (EFML) is a wholly owned
subsidiary of Elanor Investors Group and is the Responsible Entity of ECF. If Elanor Investors Group is not
able to stabilise and maintain its ongoing financial position, it may cast uncertainty about EFML’s ability to act
as Responsible Entity of the Fund.
Other than the events disclosed above, the directors are not aware of any other matters or circumstances not
otherwise dealt with in the financial reports or the Directors’ Report that has significantly affected or may
significantly affect the operations of the Fund, the results of those operations or the state of affairs of the Fund
in the financial year subsequent to the year ended 30 June 2024.
19.
Accounting policies
OVERVIEW
This note provides an overview of the Fund's accounting policies that relate to the preparation of the financial
report as a whole and do not relate to specific items. Accounting policies for specific items in the balance sheet
or statement of comprehensive income have been included in the respective note.
(a)
Interest Income
Interest income is recognised as it accrues using the effective interest rate method.
(b)
Expenses
All expenses, including the responsible entity's fees and custodian fees, are recognised in profit or loss on an
accruals basis.
(c)
Income Taxation
Under current legislation, the Fund is not subject to income tax as securityholders are presently entitled to the
income of the Fund.
Elanor Commercial Property Fund
Annual Report 2024
68
ELANOR COMMERCIAL PROPERTY FUND
DIRECTORS' DECLARATION TO STAPLED SECURITYHOLDERS
In accordance with a resolution of the Directors of Elanor Funds Management Limited, the responsible entity
for Elanor Commercial Property Fund, we declare that in the opinion of the Directors:
a)
the financial statements and notes set out on pages 28 to 68 are in accordance with the Corporations
Act 2001 (Cth) including:
i.
complying with Australian Accounting Standards, the Corporations Regulations 2001 and
other mandatory professional reporting requirements; and
ii.
giving a true and fair view of the entity's financial position as at 30 June 2024 and of its
performance, for the year ended 30 June 2024; and
b)
there are reasonable grounds to believe that the Consolidated Group and the ECPF II will be able to
pay their debts as and when they become due and payable.
c)
the financial statements also comply with International Financial Reporting Standards as issued by the
International Accounting Standards Board; and
d)
The Directors have been given the declarations by the Chief Executive Officer and Chief Financial
Officer required by Section 295A of the Corporations Act 2001 (Cth).
This declaration is made in accordance with a resolution of the Boards of Directors in accordance with Section
295(5) of the Corporations Act 2001 (Cth).
Tony Fehon
Managing Director
Sydney
27 September 2024
69
PricewaterhouseCoopers, ABN 52 780 433 757
One International Towers Sydney, Watermans Quay, Barangaroo, GPO BOX 2650, SYDNEY NSW 2001
T: +61 2 8266 0000, F: +61 2 8266 9999
Liability limited by a scheme approved under Professional Standards Legislation.
Independent auditor’s report
To the stapled securityholders of Elanor Commercial Property Fund
Report on the audit of the financial report
Our opinion
In our opinion:
The accompanying financial report of Elanor Commercial Property Fund I and its controlled entities
(together the Consolidated Group, ECF or the Fund) and Elanor Commercial Property Fund II and its
controlled entities (together ECPF II) is in accordance with the Corporations Act 2001, including:
(a)
giving a true and fair view of the Consolidated Group's and ECPF II’s financial position as at 30
June 2024 and of their financial performance for the year then ended
(b)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
What we have audited
The Consolidated Group’s and ECPF II’s financial report comprises:
•
the consolidated statement of financial position as at 30 June 2024
•
the consolidated statement of comprehensive income for the year then ended
•
the consolidated statement of profit or loss for the year then ended
•
the consolidated statement of changes in equity for the year then ended
•
the consolidated statement of cash flows for the year then ended
•
the notes to the consolidated financial statements, including material accounting policy
information and other explanatory information
•
the directors’ declaration to stapled securityholders.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial
report section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Independence
We are independent of the Consolidated Group and ECPF II in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional & Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (including Independence Standards) (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
the Code.
Elanor Commercial Property Fund
Annual Report 2024
70
Emphasis of matter - subsequent event regarding the Responsible Entity
We draw attention to Note 18 in the financial report which outlines an event subsequent to balance
date that may cast uncertainty about the ability of the Responsible Entity of ECF to continue to act as
the Responsible Entity of the Fund. Our opinion is not modified in respect of this matter.
Our audit approach
An audit is designed to provide reasonable assurance about whether the financial report is free from
material misstatement. Misstatements may arise due to fraud or error. They are considered material if
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the financial report.
We tailored the scope of our audit to ensure that we performed enough work to be able to give an
opinion on the financial report as a whole, taking into account the geographic and management
structure of the Consolidated Group, its accounting processes and controls and the industry in which it
operates.
Audit scope
Key audit matters
•
The principal activity of the Consolidated Group
and ECPF II is the investment in Australian
commercial properties, located in major
metropolitan areas of established commercial
precincts.
•
Our audit focused on where the Consolidated
Group and ECPF II made subjective judgements;
for example, significant accounting estimates
involving assumptions and inherently uncertain
future events.
•
Amongst other relevant topics, we communicated
the following key audit matters to the Audit and
Risk Committee:
−
Valuation of investment properties
−
Carrying value of equity accounted investments
−
Net current asset deficiency
•
These are further described in the Key audit
matters section of our report.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report for the current period. The key audit matters were addressed in the
context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters. Further, any commentary on the outcomes of a
particular audit procedure is made in that context.
Key audit matter
How our audit addressed the key audit matter
Valuation of investment properties
(Refer to note 6)
Consolidated Group: $443,700,000
ECPF II: $30,500,000
The Consolidated Group’s and ECPF II’s property
portfolio consisted of commercial office investment
properties at 30 June 2024.
We assessed the design and implementation of
relevant controls over the investment property valuation
process.
We evaluated the appropriateness of the valuation
methodologies used against the requirements of
Australian Accounting Standards.
71
Key audit matter
How our audit addressed the key audit matter
This was a key audit matter because of the:
•
relative size of the investment property
portfolio to net assets and related valuation
movements, and
•
inherent subjectivity of the key assumptions
that underpin the valuations.
We agreed the adopted fair values of properties to the
independent valuation report or internal valuation
model (together the ‘valuations’) and assessed the
competency, capability and objectivity of the relevant
independent or internal valuer.
We met with management to discuss the specifics of
the property portfolio including, amongst other things,
any significant leasing activity, capital expenditure and
vacancies impacting the portfolio.
We assessed the appropriateness of significant
assumptions used in the valuations with reference to
evidence in independent valuation reports and external
market data where available.
For a sample of valuations, we traced the rental income
used in the valuation to the tenancy schedule and in
turn agreed the tenancy schedule to the underlying
lease agreements.
We considered the reasonableness of the disclosures
made in relation to the significant assumptions in light
of the requirements of Australian Accounting
Standards.
Carrying value of equity accounted investments
(Refer to note 7)
Consolidated Group: $17,222,000
ECPF II: n/a
The Consolidated Group accounts for its investment in
the Harris Property Trust using the equity method of
accounting.
The Consolidated Group identified indicators of
impairment as the Harris Property Trust was in a net
current asset deficiency as at 30 June 2024.
Management performed an impairment assessment
and concluded there was no impairment during the
period.
This was a key audit matter because of the uncertainty
regarding the financial position of the Harris Property
Trust which could materially impact the recoverable
amount of the Consolidated Group’s equity accounted
We evaluated the Consolidated Group’s assessment
that there were indicators of impairment at 30 June
2024.
We evaluated the Consolidated Group’s methodologies
and the basis for significant assumptions used in its
impairment assessment, including assumptions
regarding Harris Property Trust’s plans to meet the
requirements of the credit approved term sheet
executed subsequent to balance date as detailed in
Note 8.
We examined the credit approved term sheet to obtain
an understanding of the revised terms and conditions
associated with the debt facility.
We inquired with management and management of the
Harris Property Trust regarding their plans to meet the
requirements of the credit approved term sheet.
We evaluated whether the disclosures were consistent
with the requirements of Australian Accounting
Elanor Commercial Property Fund
Annual Report 2024
72
Key audit matter
How our audit addressed the key audit matter
Standards.
investment.
Net current asset deficiency
(Refer to the ‘Going Concern’ paragraph of the ‘About
this report’ section in the financial report)
Consolidated Group: $73,005,000
ECPF II: $6,763,000
The Consolidated Group had a net current asset
deficiency of $73,005,000 (ECPF II: $6,763,000) as at
30 June 2024. The net current asset deficiency was
attributable to a debt facility of $70,000,000 (ECPF II:
$6,727,000) maturing on 28 February 2025 (ECPF II:
28 February 2025) and a distribution payable of
$6,727,000 (ECPF II: $389,000).
Subsequently, the Consolidated Group and ECPF II
executed an Amendment and Restatement Deed which
extended the maturity date of the debt facility to 31
August 2026 and increased the Consolidated Group’s
and ECPF II’s total debt facilities by $15,000,000.
The consolidated financial statements have been
prepared on a going concern basis as the Directors
believe the Consolidated Group and ECPF II will each
be able to realise their assets and discharge their
liabilities in the ordinary course of business.
This was a key audit matter due to the significant of the
basis of preparation to the consolidated financial
statements.
We inquired with management regarding their plans for
realising the assets and discharging the liabilities of the
Consolidated Group and ECPF II in the ordinary course
of business and the feasibility of these plans, which
included executing the Amendment and Restatement
Deed to extend and increase the debt facilities.
We examined the Amended and Restated Deed to
obtain an understanding of the revised terms and
conditions associated with the Consolidated Group’s
and ECPF II’s debt facilities.
We evaluated managements going concern
assessment.
We evaluated whether the disclosures were consistent
with the requirements of Australian Accounting
Standards.
Other information
The directors of the Responsible Entity are responsible for the other information. The other information
comprises the information included in the annual report for the year ended 30 June 2024, but does not
include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon through our opinion on the financial report.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information that we obtained prior to the date of
this auditor’s report, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
73
Responsibilities of the directors of the Responsible Entity for the financial report
The directors of the Responsible Entity are responsible for the preparation of the financial report in
accordance with Australian Accounting Standards and the Corporations Act 2001, including giving a
true and fair view, and for such internal control as the directors of the Responsible Entity determine is
necessary to enable the preparation of the financial report that is free from material misstatement,
whether due to fraud or error.
In preparing the financial report, the directors of the Responsible Entity are responsible for assessing
the ability of the Consolidated Group and ECPF II to continue as going concerns, disclosing, as
applicable, matters related to going concern and using the going concern basis of accounting unless
the directors of the Responsible Entity either intend to liquidate the Consolidated Group and ECPF II
or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of the financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing
and Assurance Standards Board website at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of our
auditor's report.
PricewaterhouseCoopers
CJ Cummins
Sydney
Partner
27 September 2024
Elanor Commercial Property Fund
Annual Report 2024
74
The Board of Directors of Elanor Funds Management Limited as responsible entity of the Elanor
Commercial Property Fund I and Elanor Commercial Property Fund II (Fund) have approved the
Fund’s Corporate Governance Statement as at 30 June 2024. In accordance with ASX Listing
Rule 4.10.3, the Fund’s Corporate Governance Statement can be found on its website at
www.elanorinvestors.com/ECF
The Board of Directors is responsible for the overall corporate governance of the Fund,
including establishing and monitoring key strategy and performance goals. The Board monitors
the operational and financial position and performance of the Fund, and oversees its business
strategy, including approving the Fund’s strategic goals.
The Board seeks to ensure that the Fund is properly managed to protect and enhance
securityholder interests and that the Fund, its Directors, officers and personnel operate in an
appropriate environment of corporate governance.
Accordingly, the Board has created a framework for managing the Fund, including Board and
Committee Charters and various corporate governance policies designed to promote the
responsible management and conduct of the Fund.
Corporate Governance
WorkZone West, Perth
75
Number
Securityholder
No. of
Securities
%
1
HSBC Custody Nominees (Australia) Limited
62,109,546
19.62
2
Rockworth Investment Holdings Pte Ltd
19,230,769
6.07
3
Kenxue Pty Ltd
17,000,000
5.37
4
Perpetual Corporate Trust Ltd
14,720,000
4.65
5
J P Morgan Nominees Australia Pty Limited
14,356,479
4.54
6
Kenxue Pty Ltd
11,150,875
3.52
7
Perpetual Corporate Trust Ltd
10,194,717
3.22
8
Netwealth Investments Limited
9,345,199
2.95
9
Citicorp Nominees Pty Limited
8,646,318
2.73
10
BNP Paribas Noms Pty Ltd
5,321,797
1.68
11
BNP Paribas Nominees Pty Ltd
4,042,688
1.28
12
Park Hill Management Limited
2,809,531
0.89
13
Mr Jarrod Dean Marshall + Mrs Joanne Margaret Marshall
2,552,000
0.81
14
Ms Wenyan Zhuang
1,471,846
0.46
15
Netwealth Investments Limited
1,318,501
0.42
16
Warbont Nominees Pty Ltd
1,250,723
0.40
17
Mrs Chunying Xiao
1,124,978
0.36
18
Aloron Pty Ltd
1,107,196
0.35
19
John Edward Duruz
1,040,000
0.33
20
Billnted Pty Ltd
1,025,656
0.32
Total
189,818,819
59.96
Balance of register
126,737,534
40.04
Grand Total
316,556,353
100.00
Top 20 Securityholders
Securityholder Analysis
(as at 12 September 2024)
The units of the Trusts are combined and issued as stapled securities in the Fund. The Fund’s securities are traded on
the Australian Securities Exchange (ASX: ECF), having listed on 6 December 2019. The units of the Trusts cannot be
traded separately and can only be traded as stapled securities.
In accordance with the ASX’s requirements for stapled securities, the ASX reserves the right (but without limiting its
absolute discretion) to remove a Trust from the ASX Official List if any of the units cease to be stapled together or
any equity securities issued by the Trusts which are not stapled to equivalent securities in the other entity.
Stapled Securities
Elanor Commercial Property Fund
Annual Report 2024
76
Securityholder
No. of Securities
%
PEJR Investments Pty Ltd (“PEJR”)
46,722,706
14.76%
Kenxue Pty Ltd and Aloron Pty Ltd
(Ken Campbell)
28,448,016
8.99%
Rockworth Investment Holdings Holding PTE Ltd
19,230,769
6.07%
Substantial Securityholders
Voting Rights
On a poll, each Securityholder has, in relation to
resolutions of the Trusts, one vote for each unit
held in the Trust.
On-Market Buy-back
There is no current on-market buy-back program
in place.
Range
No. of Securities
%
No. of Holders
%
100,001 and over
260,915,761
82.42
304
10.22
10,001 - 100,000
50,073,016
15.82
1,472
49.48
5,001 - 10,000
3,741,533
1.18
498
16.74
1,001 - 5,000
1,782,223
0.56
603
20.27
1 - 1,000
43,820
0.01
98
3.29
Total
316,556,353
100.00
2,975
100.00
The total number of securityholders with an unmarketable parcel of securities was 69.
Range Report
Securityholder Analysis
(as at 12 September 2024)
77
Elanor Commercial Property Fund (ASX Code: ECF)
Elanor Funds Management Limited (ACN 125 903 031)
is the Responsible Entity of
Elanor Commercial Property Fund I (ARSN 636 623
099) (ECPF I) and Elanor Commercial Property Fund II
(ARSN 636 623 517) (ECPF II) each a Trust and
together, the Elanor Commercial Property Fund
Level 38
259 George Street
Sydney NSW 2000
T: +61 2 9239 8400
Directors of the Responsible Entity
Ian Mackie (Chair)
Tony Fehon (Managing Director)
Lim Su Kiat
Karyn Baylis
Kathy Ostin
Company Secretary of the Responsible Entity
Symon Simmons
Security Registry
Computershare Investor Services Pty Limited
6 Hope Street
Ermington NSW 2115
Auditors
PricewaterhouseCoopers
One International Towers
Watermans Quay
Barangaroo NSW 2000
Custodian
The Trust Company (Australia) Limited
Level 18
123 Pitt Street
Sydney NSW 2000
Website
www.elanorinvestors.com/ECF
Corporate Directory
50 Cavill Avenue, Surfers Paradise
Elanor Commercial Property Fund
Annual Report 2024