Strategic Partnership and Rights Issue Announcement

Elanor Commercial Property Fund (ASX:ECF) has announced a strategic partnership with Lederer Group, which includes the acquisition of a 12.6% interest in ECF, increasing its holding to 14.0%. The partnership involves Lederer Group committing an additional $50 million in capital to support the Fund. ECF has also committed to acquiring at least its 49.9% pro-rata share of the Harris Street Fund Capital Notes, subject to securing suitable funding. Furthermore, ECF is exploring a potential rights issue to fund the subscription for the Capital Notes, with Citigroup Global Markets Australia Pty Limited and MA Moelis Australia Advisory Pty Ltd advising on the matter. The Fund has maintained its FY25 Distribution guidance of at least 7.5 cents and aims to reduce gearing to the lower end of the target range.

Executive Commentary

Elanor Managing Director, Tony Fehon, expressed satisfaction with the strategic partnership, stating, 'We are very pleased to have facilitated the Lederer Group strategic partnership through the sale of Elanor's interest in ECF. This partnership is a strong endorsement in the ECF team and the long-term outlook for the Fund. Elanor and the Lederer Group have an aligned vision for ECF and we look forward to developing the strategic partnership to grow unitholder value.' Lederer Group Chairman, Paul Lederer, also shared his perspective, saying, 'We acknowledge that quick wins in office are in short supply. But, as long-term portfolio investors, we are a big believer in the Australian office market because we are a big believer in the future of Australian cities. Over time, we expect to see good returns for patient capital invested with great teams. We have the patience and ECF has the great team. We are delighted to expand our portfolio position and enter this arrangement with ECF.'

Summary and Outlook

The strategic partnership with Lederer Group marks a significant development for ECF, with the commitment of additional capital and the potential rights issue indicating a strong focus on growth and value creation. The Fund's objective to reduce gearing to the lower end of the target range demonstrates a prudent approach to financial management. ECF's commitment to acquiring its pro-rata share of the Harris Street Fund Capital Notes and the exploration of a potential rights issue reflect a proactive stance in pursuing investment opportunities and ensuring adequate funding. The leadership changes within Elanor Investors Group will likely bring new perspectives and strategies to the management of ECF. Looking ahead, ECF aims to provide strong risk-adjusted returns by investing in commercial office properties with sustainable competitive advantages. The Fund's focus on maintaining high occupancy and growing rental income, along with the exploration of a potential rights issue, underlines its commitment to delivering value to unitholders and sustaining its distribution guidance of at least 7.5 cents for FY25.