The Elanor Retail Property Fund (ASX: ERF) share price is shooting higher today, up 12.24% to $1.10 in late afternoon trading. This follows the company's ASX announcement this morning reporting a major asset sale and the launch of an on-market share buyback scheme.
Today's gains see the Elanor share price up more than 23% so far in November. Having taken a big wallop during the COVID-19-panic selling in February and March, shares remain down 10.7% year-to-date.
By comparison, the broader All Ordinaries Index (ASX: XAO) is down 1.3% so far in 2020.
What does Elanor Retail Property Fund do?
Elanor Retail Property Fund is a real estate investment trust (REIT). The company invests in Australian retail shopping centres that generate strong income. Elanor currently owns non-discretionary focused retail assets with a combined valuation of $317 million.
Shares of Elanor Retail Property first began trading on the ASX in 2016.
What's driving the Elanor share price higher?
Elanor advised it had exchanged contracts for the sale of its Auburn Central Shopping Centre to Shopping Centres Australasia Property Group (ASX: SCP).
The $129.5 million price tag represents a 4.9% premium to the book value of $123.5 million.
Located in New South Wales, Auburn Central is anchored by Woolworths Group Ltd (ASX: WOW), ALDI and Tong Li supermarkets.
Settlement is expected in mid-December 2020.
Elanor reports it will use the money to repay $94.1 million in debt, reinstate distributions suspended due to COVID-19's impact, and start an on-market buyback of up to 10% of its issued shares.
Management commentary
Commenting on the sale, fund manager Michael Baliva said:
Since ERF acquired the property in 2016, we have been focused on executing our strategy to unlock value through actively repositioning the asset. This has resulted in Auburn Central being converted from a large sub-regional asset to a triple-supermarket neighbourhood centre.
The sale of Auburn Central generates a 24.5% IRR to ERF investors and highlights our capability in unlocking the value of our assets through actively repositioning the retail mix to nondiscretionary focused offerings.
Elanor Investors Group CEO Glenn Willis added:
ERF is a "value-add retail real estate fund" with a focus on retail assets that provide opportunities for strong investment returns. We are pleased with the sale of Auburn Central following the successful execution of the fund's repositioning strategy at the asset. The fund is well-positioned to grow through the acquisition of further high-quality, value-add retail properties.
