Eildon’s Portfolio Write-Downs and Market Headwinds Cloud FY26 Outlook

FY25 Financial Performance and One-Off Impacts

Eildon Capital Group closed its 2025 financial year with a net loss after tax of $5.7 million, a result notably affected by $8 million in one-off adjustments. These included a $5.9 million provision against investment loans, a $1.7 million goodwill impairment, and $0.4 million in disposal costs related to the divestment of Trilogy. Despite these setbacks, the group managed to distribute 6.4 cents per stapled security, including a fully franked dividend of 3.375 cents, reflecting a commitment to returning value to securityholders.

Portfolio Simplification and Capital Management

The group undertook significant portfolio rationalisation during FY25, selling management rights and co-investment stakes in property income funds for $3.6 million and divesting its stake in the Officer South Joint Venture at book value. Several investments, including Bundalong, Harpley, Kilmore, Orchard Hills, and Cronulla, were repaid, streamlining the asset base. Notably, Eildon repurchased 3.66 million stapled securities at $0.90 each, aiming to optimise surplus cash use and enhance liquidity for securityholders. Cost reduction initiatives also contributed to a leaner operating model, with notable savings in employee and occupancy expenses.

Market Challenges and Asset Performance

The Melbourne residential real estate market, particularly apartments and townhouses, remained sluggish post-pandemic, impacting Eildon's asset valuations and sales velocity. The group’s exposure to this market led to material write-downs, despite the underlying assets being located in blue-chip areas. Efforts to accelerate sales at key projects like Malvern Road have yielded progress, with only four apartments remaining unsold and several settlements scheduled in the coming months. At Kings/Newport Village, a partial repayment of $9.8 million reduced mezzanine debt, with ongoing collaboration to resolve remaining balances.

New Strategic Direction – Burdekin Joint Venture

Looking ahead, Eildon has entered a joint venture with AAG Investment Management to acquire and convert a 1900-hectare sandalwood plantation in North Queensland into land suitable for sugarcane farming. The $20.8 million acquisition, funded through a mix of equity and bank debt, marks a strategic diversification into opportunistic and development assets outside Melbourne’s challenging market. This move signals Eildon’s intent to pursue investments targeting returns exceeding cash rate plus 10%, blending yield and capital growth opportunities.

Outlook and Guidance

Eildon Capital will not provide earnings or distribution guidance for FY26 but may continue semi-annual distributions and potentially resume its buyback program, contingent on earnings and cash availability. The group’s focus remains on actively managing a select portfolio of real estate investments, maintaining zero corporate debt, and controlling costs to optimise value for securityholders amid a cautious market environment.