ENN - Elanor Investors Group

[System]

Elanor is an investment and funds management business focused on generating attractive returns for Securityholders via:

• Investment in assets and businesses that deliver sustainable cash flows and potential for capital growth; and
• Management of third party owned investment funds and syndicates.

Elanor will initially own a portfolio of high yielding real estate backed operating businesses and also manage a number of real estate investment syndicates on behalf of third party investors.

Elanor will also look to realise the real estate development and other capital improvement potential associated with its Investment Portfolio.

 

[Trav.]

ENN popped up in my scan today and I was having a look at the chart, and I noticed the volume bars had a bit of a pattern about them since April, plus my usual ascending triangle that shows a nice BO potential.

Any logic to the volume? not sure but it will be interesting to watch and see what happens next week.

 

[Dona Ferentes]

Sometimes (when cap rates are heading in the right direction, and Covid doesn't play havoc with occupancies) REITs can deliver income AND growth.

Listed on the ASX in 2014, Elanor Investors Group (ASX:ENN) is an investment and funds management business with over $1.9 billion in assets and funds under management across Australia and New Zealand.
Elanor’s key sectors of focus are commercial office, healthcare real estate, retail real estate and hotels, tourism and leisure. Elanor’s investment management objective is to acquire and unlock value in real estate assets that provide strong income and capital growth potential.

But essentially, these plays are tricky because investors looking for income tend to stay too long and ignore the cycle and, because it is a Trust, with all income paid out, growth can be patchy and at the vagaries of periodic valuations, until sold. I'm sure its a nice little earner for management.

 

[Trav.]

@Dona Ferentes thanks for your post. Can you clarify a couple of things for me.


I can see that ENN pays a nice dividend and the attraction for investors.

these plays are tricky because investors looking for income tend to stay too long and ignore the cycle

The cycle you mention is that a general thing for REIT's, 5 year / 7 Year etc ? Is there a indicator that is used to measure a cycle - excluding pandemics etc

because it is a Trust, with all income paid out, growth can be patchy and at the vagaries of periodic valuations

OK so if a trust cannot use it's income to generate more growth and hence the good dividend yield, how can the company grow? or maybe that is the point, they aren't really concerned about there own growth, they are just happy to reap the rewards of managing other businesses and of course lining their own pockets as you hinted on.

How does the periodic valuations affect the business? Is it by way of a performance management agreement with the other companies?

As you can tell I have no idea about this sort of business and any provided would be appreciated.

Cheers

Trav

 

[Dona Ferentes]

My observations with REITs is that they have to borrow, to gear, to provide an attractive distribution. This is fine if the LVR is less than about 30%. Anything higher, they tend to blow up, when interest rates change (as they did, historically)

Also, a lot of it is an elaborate game of 'pass the parcel', of buying an asset, instituting a new depreciation Schedule, then flicking it down the line. Maybe making a few improvements, some cosmetic changes. And attracting a new tenant so they can 'boast' good WALE (weighted average lease expiry) numbers.

But look at the 29 Sept notice, where ENN ..

...acquired Riverside Plaza, a Coles supermarket anchored shopping centre, located in Queanbeyan, NSW, for $60.0 million, below its replacement cost

. Why so cheap? The centre had just lost Target as anchor tenant, and so they will ...

... identify opportunities to unlock value through repurposing the real estate to deliver strong returns for our capital partners. ... “Riverside Plaza has significant value-add potential given its town centre location and the opportunity to reposition a former Target tenancy into essential service providers such as medical and health.

Yeah, maybe.

... And, periodic valuations! Do it once a year, but it is a bit of prestidigitation, a notional and usually optimistic number, until a transaction. by which time investors are just happy to get their (or at least some of) money back.

 

[Trav.]

@Dona Ferentes thanks mate, much appreciated for the reply.

 

[Dona Ferentes]

well well well .. 3 holes in the balance sheet.
....from around the traps:
.
Elanor Investors Group is in a trading halt and has requested its stock be suspended from trading as it looks to refinance its $125 million property funds management platform.

Led by Glenn Willis, Elanor said it is “exploring refinancing options for its debt” and has brought in MA Moelis Australia to help as its debt arranger. As well, it will look to sell off the hotels held in its unlisted Elanor Hotel Accommodation Fund. It will exit the hotels, tourism and leisure sectors and focus completely on the retail, office, healthcare and industrial sectors.

“Elanor is also considering the divestment of other assets from the balance sheet,” the company said. “Options may emerge in response to discussions with and approaches recently made by third parties, several of which are under active consideration.”

Elanor will not proceed with its previously announced distribution for the second half of 2024, and it will not release its FY2024 annual accounts until “there is greater certainty on the proposed course of action”, the company said.

Elanor’s financial results won’t be released before 30 August, and it hopes to update the market and lift its suspension by 06 September, it said.

High-profile property and pubs investor David Kingston said Elanor Investors is likely struggling as it took on too much debt.

“Eleanor has substantial debt and is facing headwinds as its office and hotel funds are challenged,” said Mr Kingston.
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.....and may I repeat the comment in post #5:

My observations with REITs is that they have to borrow, to gear, to provide an attractive distribution. This is fine if the LVR is less than about 30%. Anything higher, they tend to blow up, when interest rates change

!! too much debt.!!