If you look at the cash flow for H1 the borrowings went up $2.8m, that covered the shortfall in distributions vs cash from operating activities plus the capex investment.
This increased the gearing, on the back of modest devaluations, from just over 35% to just under 37%.
Another half year like that & they'll be around 39% vs target range 30-40%.
Which suggests that a cap raise or asset sale may be necessary.
That's what IMO is weighing on the unit price.
To bring the cashflow inline with distributions & capex the distributions would need to be cut approx 20% (rent increases & all other things being equal.
That would still be a yield of approx 9.8%
NTA is 94c vs 69.5c is a 26% discount which with the state of their Balance Sheet is a little light to me.
To get gearing down 3% they'd have to raise approx $27.5m, at 60c (14% discount) raise price that's an approx 15% dilution.
If you add together the 15% dilution & the 20% distribution cut to stop the gearing increases that's a 35% distribution reduction which still gives you a 0.0525c distribution or 7.95% on 69.5c.
Although of course the unit price would likely drop to 60c.
So although with the cap rates they are using, devaluations going forward should be minimal I think the risk of a cap raising or asset sale with the likely impact on distributions is too high a risk.
COF with lower gearing all be it lower cap rates is IMO a safer bet.
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Last
61.5¢ |
Change
-0.005(0.81%) |
Mkt cap ! $194.6M |
Open | High | Low | Value | Volume |
61.0¢ | 62.0¢ | 60.5¢ | $111.6K | 182.8K |
Buyers (Bids)
No. | Vol. | Price($) |
---|---|---|
2 | 64461 | 61.5¢ |
Sellers (Offers)
Price($) | Vol. | No. |
---|---|---|
62.0¢ | 13755 | 1 |
View Market Depth
No. | Vol. | Price($) |
---|---|---|
3 | 170925 | 0.610 |
1 | 40188 | 0.605 |
2 | 30001 | 0.600 |
1 | 30000 | 0.595 |
1 | 1500 | 0.590 |
Price($) | Vol. | No. |
---|---|---|
0.620 | 13755 | 1 |
0.650 | 5000 | 1 |
0.660 | 12566 | 2 |
0.685 | 11239 | 1 |
0.715 | 26 | 1 |
Last trade - 16.10pm 27/09/2024 (20 minute delay) ? |
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