Kyron Capital Group · ASX:KYN
Kyron Capital — Elanor Commercial Property Fund — Investor Presentation (October 2024)
38 slides from Kyron Capital's investor presentation, Oct 4, 2024
Slide 1: Important Note
IMPORTANT NOTE Due to legal restrictions, access to this document page is only available to residents of Australia and New Zealand. By proceeding you (i) represent that you are a resident of Australia or New Zealand and are accessing this document from within one of these countries and (ii) agree no
Slide 2: Equity Raising – Elanor Commercial Property Fund
Equity Raising Elanor Commercial Property Fund ASX: ECF 4 October 2024
Slide 3: Important Notice and Disclaimer
Important Notice and Disclaimer This presentation has been prepared by Elanor Funds Management Limited (ABN 39 125 903 031, AFSL 398196) Where logos and company names are used in the presentation, the logos and company names are trade marks of (“EFML”) as responsible entity of the Elanor Commercial
Slide 4: Important Notice and Disclaimer
Important Notice and Disclaimer All dollar values are in Australian dollars ($ or A$) unless stated otherwise. This presentation may not be distributed or released in the United States. This presentation does not constitute an offer to sell, or the solicitation of an offer to buy, any securities in
Slide 5: Contents
Contents Contents 1 Transaction Overview 5 2 Equity Raising 12 3 Guidance & Outlook 16 4 Appendices 18 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 Tr
Slide 6: Transaction Overview
1 Transaction Overview 200 Adelaide St, QLD
Slide 7: Overview of Transaction
Transaction overview Overview of Transaction Overview of ECF • Elanor Commercial Property Fund (ASX:ECF) (“ECF”) is an externally managed real estate investment trust that currently owns nine Australian commercial office assets with a portfolio valuation of $513 million1 • ECF’s investment portfolio
Slide 8: ECF Financial Impacts
Transaction overview ECF Financial Impacts1 Balance sheet gearing2 FY25 DPS Guidance4 FY25 FFO Guidance 32.4% – 35.1%3 at least 7.5 cents 9.0 – 9.3 cents vs. Jun-24 balance sheet gearing of 40.1% Unchanged Revised6 Hedged interest rate exposure Pro forma distribution yield5 NTA per security 80.6% –
Slide 9: Transaction Rationale
Transaction overview Transaction Rationale •1 Balance sheet gearing reduced to lower half of ECF’s target gearing range of 30 – 40%1 •2 Provides funding flexibility for near term value additive capex and leasing incentives • Stabilises ECF’s interest in the Harris Street Fund via participation in th
Slide 10: Reduces gearing and improves ECF funding capacity
Transaction overview Reduces gearing and improves ECF funding capacity Improved funding capacity ECF gearing impacts • The Entitlement Offer will reduce ECF gearing, providing Balance Sheet Gearing additional funding headroom to support growth and meet Gearing outcomes include impact of Entitlement
Slide 11: Compelling Investment in Harris Street Fund
Transaction overview Compelling Investment in Harris Street Fund Historical office rents5 Sydney Fringe vs. Pyrmont Positive leasing momentum offset by softening of cap rates • Seven level, prime grade office building located in CBD fringe suburb of Pyrmont, being 97.5% 1 occupied $800 Pyrmont Net F
Slide 12: Additional capital to support ECF re-leasing initiatives on key assets
Transaction overview Additional capital to support ECF re-leasing initiatives on key assets Funding for upcoming lease expiries Major ECF re-leasing initiatives • Additional capital to implement leasing strategies while preserving platform scale and ability to capitalise on improving market conditio
Slide 13: Equity Raising
2 Equity Raising 200 Adelaide St, QLD
Slide 14: Equity Raising Summary
Equity Raising Equity Raising Summary • Fully underwritten1 1-for-3.5 Entitlement Offer to raise approximately $52 million at an issue price of $0.58 per security • The Entitlement Offer represents approximately 90.4 million new ECF securities, or approximately 29% of total securities currently on i
Slide 15: Sources and Uses of Proceeds
Equity Raising Sources and Uses of Proceeds Sources ($m) Commentary Proceeds from Entitlement Offer 52.5 • The equity raising is a fully underwritten1 1-for-3.5 Entitlement Offer to Total sources 52.5 raise approximately $52 million • The proceeds will be used for underwriting up to 100% of the Harr
Slide 16: Indicative timetable
Equity Raising Indicative timetable Event Date1 Announcement of Equity Raising Friday, 4 Oct. 2024 Record date for Entitlement Offer at 7:00pm Wednesday, 9 Oct. 2024 Entitlement Offer opens Monday, 14 Oct. 2024 Entitlement Offer closes at 5:00pm Friday, 25 Oct. 2024 New Securities to be quoted on a
Slide 17: Guidance & Outlook
3 Guidance & Outlook WorkZone West, WA
Slide 18: Guidance and Outlook
FY25 Guidance Guidance and Outlook FY25 Guidance • ECF’s FY25 distribution guidance unchanged, being at least 7.5cps1 • ECF will continue to execute on asset management initiatives to maximise lease renewals and grow rents Outlook • ECF’s key strategic objective is to provide strong risk-adjusted re
Slide 19: Appendices
4 Appendices 34 Corporate Drive, QLD
Slide 20: Appendix A: ECF Balance Sheet & Pro-forma Adjustments
Appendices Appendix A: ECF Balance Sheet & Pro-forma Adjustments $20m Harris Street commitment from ECF $40m Harris Street commitment from ECF Stand alone Balance sheet ($’000)1 Equity Raising and Notes Pro-forma 30 June 2024 Equity Raising and Notes Pro-forma 30 June 2024 30 June 2024 Assets Cash 7
Slide 21: Appendix B: Key Risks
Appendices Appendix B: Key Risks Key risks Description Risks associated with the Capital Notes • As set out on pages 6 and 14 of this presentation, the proceeds of the Entitlement Offer will be partially used by ECF to fund the acquisition of its pro rata share (and potentially up to 100%) of the Ca
Slide 22: Appendix B: Key Risks (cont.)
Appendices Appendix B: Key Risks (cont.) Key risks Description • (Risks associated with Capital Note terms) Risks associated with • As set out in Appendix D, on a winding up of the Harris Street Fund, the Capital Notes rank for payment ahead of ordinary equity, and behind the senior secured particip
Slide 23: Appendix B: Key Risks (cont.)
Appendices Appendix B: Key Risks (cont.) Key risks Description Risks specific to your investment in Property • Valuations ascribed to each property will be influenced by a number of ongoing factors affecting the Australian property market generally, as well as ECF in particular, including: ‒ supply
Slide 24: Appendix B: Key Risks (cont.)
Appendices Appendix B: Key Risks (cont.) Key risks Description • ECF’s properties may require unforeseen capital expenditure from time to time, in order to maintain them in a condition appropriate for the purposes intend. This may arise Capital expenditure either due to property defects or in respon
Slide 25: Appendix B: Key Risks (cont.)
Appendices Appendix B: Key Risks (cont.) Key risks Description Risks specific to your investment in ECF • ECF’s portfolio is principally comprised of office properties. ECF’s performance depends on, in part, the performance of the office property sector in Australia and demand for commercial propert
Slide 26: Appendix B: Key Risks (cont.)
Appendices Appendix B: Key Risks (cont.) Key risks Description Conflicts of interest with • In addition to being the responsible entity of ECF, EFML is also the responsible entity of a number of managed funds in the Elanor Investors Group. Elanor was established in July 2014 and also has an asset-ba
Slide 27: Appendix B: Key Risks (cont.)
Appendices Appendix B: Key Risks (cont.) Key risks Description • A higher level of gearing will magnify the effect on ECF of any changes in interest rates or changes in value or performance measures. If the level of Gearing increases over the Gearing term of the debt facility this is a factor that m
Slide 28: Appendix B: Key Risks (cont.)
Appendices Appendix B: Key Risks (cont.) Key risks Description • ECF may be required to collect, handle and store confidential tenant information and commercially sensitive data in the course of its business operations. When possessing personal information or commercially sensitive data, there is a
Slide 29: Appendix B: Key Risks (cont.)
Appendices Appendix B: Key Risks (cont.) Key risks Description • Following the Entitlement Offer, it is possible that Lederer Group could hold a greater percentage of ECF securities than it currently holds approximately (14.76%) and potentially up to approximately 33.70%, (assuming that no other sec
Slide 30: Appendix B: Key Risks (cont.)
Appendices Appendix B: Key Risks (cont.) Key risks Description Legal and regulatory • There is the risk that changes in any law, regulation or government policy affecting ECF’s operations (which may or may not have a retrospective effect) will have an effect on changes the Portfolio and/or ECF’s per
Slide 31: Appendix C: Overview of Harris Street Fund
Appendices Appendix C: Overview of Harris Street Fund Strong 5.0% p.a. market rental growth at the asset 14,000,000 Market rental growth: The asset 5.0% p.a. CAGR 13,000,000 • Seven level, prime grade office building located in CBD fringe suburb of Pyrmont • Major infrastructure works in progress, i
Slide 32: Appendix D: Harris Street Capital Notes
Appendices Appendix D: Harris Street Capital Notes Investment details Introduction • Harris Street Fund is proposing to raise $40 million through the issuance of Capital Notes. The Capital Notes are a hybrid security ranking in priority to ordinary equity and will be structured with a 2.7-year term
Slide 33: Appendix E: Key Forecast Assumptions
Appendices Appendix E: Key Forecast Assumptions • For the last ~15 years of recorded data, Sydney Fringe and Pyrmont office face rents have grown steadily by an average 5.7% and 4.2% p.a. respectively Forecast Rental Growth • Effective rents, which incorporate incentives have been more cyclical, how
Slide 34: Appendix F: International Offer Jurisdictions
Appendices Appendix F: International Offer Jurisdictions This presentation does not constitute an offer of new fully paid stapled securities in ECF (“New Stapled Securities”) in any jurisdiction in which it would be unlawful. In particular, this presentation may not be distributed to any person, and
Slide 35: Appendix G: Summary of Underwriting Agreement
Appendices Appendix G: Summary of Underwriting Agreement EFML in its capacity as responsible entity of ECF (“Offeror”) has entered into an underwriting agreement (“Underwriting Agreement”) with Citigroup Global Markets Australia Pty Limited and MA Moelis Australia Advisory Pty Ltd (together, the “Un
Slide 36: Appendix G: Summary of Underwriting Agreement (cont.)
Appendices Appendix G: Summary of Underwriting Agreement (cont.) xvii. Subject to certain exceptions an ECF group member breaches, or defaults under (including any potential event of default or review event which gives a lender or financier the right to accelerate or require repayment of the debt or
Slide 37: Appendix G: Summary of Underwriting Agreement (cont.)
Appendices Appendix G: Summary of Underwriting Agreement (cont.) Underwriting Fees The Underwriters are entitled to certain fees under the Underwriting Agreement subject to the terms and conditions of the Underwriting Agreement. See the Appendix 3B released to ASX on 4 October 2024 for further infor
Slide 38: Appendix H: Lederer Group securityholder support
Appendices Appendix H: Lederer Group securityholder support Overview • Lederer Group is an Australian family business that comprises of property, manufacturers, financial investments and community-based developments. Lederer Group is an existing securityholder of ECF, having first joined the registe
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