I would now like to hand the conference over to Mr. Glenn Willis, CEO. Please go ahead.
Thank you. Good afternoon. Welcome to this results presentation call for Elanor Investors Group. This afternoon, I, along with my senior leadership team colleagues, will be pleased to give you an overview of our results for the first half of this financial year and discuss the group's achievements over the half.
Talk a bit about our outlook for the group later in the presentation. On the call today, we'll be referring to the presentation pack that was released to the ASX this morning. If I can now refer you to page four of that presentation pack. Here we provide an overview of Elanor's funds management business. As you can see, we're approaching AUD 3 billion in funds under management. With this funds under management being made up of investments across our current four sectors of focus.
The investment sectors of focus we currently focus on are the retail real estate sector, the office real estate sector, the healthcare real estate sector, and the hotels, tourism, and leisure sector. I'd like to add here that we've now reached $3 billion in funds under management following our recent acquisition of Riverton Forum, a retail asset and two hotel investments.
Over the last half, we achieved another period of growth in funds under management, a period where we also returned a significant amount of capital to investors as a result of several highly successful realizations. Realizations that resulted in very strong investment returns for our capital partners, and realizations that directly reflect our primary focus on delivering investment outperformance for our fund investors.
We firmly believe that we'll continue to achieve strong growth in funds under management for the group if we continue to maintain what we call our performance-first approach to investment management rather than a fund-first approach. We've too often seen the folly of fund managers adopting a growth for growth's sake approach to managing funds, and we'll no doubt see it again. Having said that, our approach to investing has us well-positioned for strong growth in funds under management and strong scalable growth in earnings.
To that end, over the last half, we've made significant progress in building out our funds management platform to enable us to deliver on our robust growth ambitions. Made significant progress in investments in people, talent, and capability across the group, progress in our capital raising capacity, progress in developing new sectors, and progress in strategic opportunities.
With our balance sheet capacity, made good progress on a number of fronts. If I can now refer you to page five of the pack. Here we provide a snapshot of our results for the last half. Here is where we achieved, as I said, strong growth in funds management earnings, and a period where we made significant progress in the build-out of our funds management platform.
Over the half, we achieved core earnings of just over AUD 10.3 million or AUD 0.073 per security, slightly above the guidance we provided in December. We're pleased with the growth we achieved in funds management earnings over the half, with funds management EBITDA increasing by 74% on the prior corresponding period. Recurring funds management income increasing by 33% on the prior corresponding period, both being pleasing results.
This earnings growth was on the back of growth in sum of 18% over the prior corresponding period and 6% over the half. Importantly, this growth in funds under management was achieved in a half where we returned over AUD 220 million of capital. As I mentioned, this being the result of several very successful realizations for our fund investors.
To achieve this growth in funds under management, over the half, we raised over AUD 250 million of equity for our funds, relating to over AUD 450 million of funds under management for the half. Another pleasing result. The progress we achieved in our sustainability initiatives over the half was also pleasing. As you may be aware, our mission for Elanor is to be the leading real estate funds management group known for delivering exceptional investment returns.
We also strive to make impactful social and environmental contributions to the communities in which we operate and more broadly. To that end, we made significant progress in our environmental initiatives across the group over the period in progressing the significant solar energy initiatives across our portfolio of retail assets. We also made significant progress in our initiatives to improve energy performances and transitions to renewables at our office and healthcare assets.
Further progress was made in the numerous environmental initiatives at our hotel assets. Talk more about our sustainability endeavors, page 17 of the pack. Particularly pleasing, though, is our partnership with The Smith Family to support over 100 secondary school students across Australia. The other initiatives we engage in with The Smith Family for disadvantaged youth. The Smith Family is a wonderful organization doing fantastic work in helping so many disadvantaged kids across the country.
We believe that Elanor is well-positioned to help a lot more disadvantaged youth through our strategic partnership with The Smith Family. As I said, we talk more about our sustainability initiatives on page 17 of the pack. I'll now hand over to Paul Siviour, Elanor Investors Group's COO, to discuss the group's last half results in more detail. Paul.
Thank you, Glenn. Before we talk specifically about the strong performance of Elanor during the half and fund growth, we want to talk through very significant funds management achievements during the half. I refer those on the call to page six of the investor presentation. This page provides further detail on the two major categories of achievements during the half in respect of funds management.
They were, firstly, returning over AUD 220 million of invested capital to our investment partners as part of realization events that generated investment outperformance. Secondly, raising AUD 254 million of equity in respect of funds under management, totaling AUD 457 million. These two categories of activities reflect, firstly, our ability to generate outperformance for investors and provide realization events.
Secondly, in respect of the equity that we've raised, position the group strategically for future growth, and also reflect the demand from both institutional and wholesale investors for our investment offerings. Specifically, and we'll spend a little time on this page, and take you through each of the categories that reflect what I've just described.
Firstly, in respect of the Elanor Healthcare Real Estate Fund, during the half, we successfully raised AUD 165 million of equity from an Asian-based institutional investor who is going to be our partner to grow that portfolio of core healthcare assets. More specifically, this fund was established in March 2019 with wholesale capital, but over the last two years in particular, investors have recognized the defensive nature of cash flows and the strong risk-adjusted returns that healthcare real estate presents.
There was significant institutional interest in this fund and in partnering with us moving forward, and we're delighted to have executed on that recapitalization event during the half. As I said, this enabled us to provide a full liquidity event, AUD 145 million of capital returned to our wholesale investor partners within that fund, who generated a strong total return.
Equally importantly, it enables us, sets us up with a strategic institutional partner to grow that fund in respect of core healthcare assets. Secondly, Elanor Property Income Fund was launched during the half in November 2022. Those that have attended our calls in the past will recall that this launch results really particularly from the successful privatization of Elanor Retail Property Fund.
We announced the privatization of that fund back in June 2022. That was as a result of, frankly, notwithstanding the strong performance of the underlying portfolio of real estate assets, the fund, the securities continued to trade at a significant discount to NTA. We've been able to generate significant security holder value for the investors in ERF who have received, as a result of the privatization, a 15% premium over the trading price of Elanor Retail Property Fund prior to the announcement. In addition, we were delighted that, having provided a full liquidity event and offer to all Elanor Retail Property Fund investors, that 70% of those investors decided to remain as investors in the Elanor Property Income Fund.
The fund, the Elanor Property Income Fund, importantly, is an open-ended multi-sector property income fund that delivers reliable, monthly distributions from real estate that have strong and differentiated attributes and competitive advantages. The fund's been distributing, monthly distributions since launch that reflect a 6% distribution per annum.
Equally importantly is that the establishment of this fund strategically positions Elanor for retail capital inflows into what we plan, will be a significant flagship fund for the business. In respect of our retail managed funds, two major fund management successes in the half. Firstly, we established the Tweed Mall Mixed-Use Real Estate Fund in October. In respect of, that fund, we raised AUD 52 million of equity from our wholesale capital partners, and there was very strong support for that offering, given the strong total return, that that fund presents.
The establishment of the fund in turn enabled the distribution of a AUD 0.36 special distribution to investors in Elanor Retail Property Fund. That was a component part of the 15% accretion that investors enjoyed, in ERF investors enjoyed. Secondly, in respect of the Riverside Plaza Syndicate.
This is a fund that we established some years ago, back in 2020. We acquired the Riverside Plaza Shopping Center in Queanbeyan for AUD 60 million, which really represented deep value. The main reason for that was the purchase price did not include any consideration for a vacant DDS space. Our team had a number of plans in respect of the repositioning of that space, in terms of leasing to government or to medical or indeed a medical hub.
During the half, we successfully executed a five-year lease to the Australian Electoral Commission over that space, and the value of that asset was uplifted to AUD 115 million. This enabled us to refinance that asset at modest gearing of 47% and pay a capital return to our wholesale capital partners in that fund that was essentially a 50%, little over a 50% capital return to their original investment and generated an IRR since inception of the fund of 45%. In respect of our Elanor Hotel Accommodation Fund, we've acquired three assets during the half, two to be settled shortly, but all equity in respect of those acquisitions was raised during the half, AUD 37 million in total.
That takes our portfolio of regional and luxury hotels to 18 hotels with a portfolio value of AUD 424 million, and provides the opportunity to further leverage our integrated hotel operating and funds management platform. I'd like to mention the Elanor Commercial Property Fund, and there's a call on that fund at 2:00 P.M.
Just briefly, this fund has performed exceptionally well in the half. It has a high-quality portfolio of assets that are located in markets with strong fundamentals, and the assets themselves are performing strongly as a result of their differentiated positions. Specifically, the portfolio is 96% occupied, with 84% physical occupation of the assets, so tenants in occupation physically day by day.
During the half, we achieved like for like income growth of 4.7% off the back of significant leases that were executed at a 16% positive leasing spread. We continue to reaffirm guidance for FY 2023 of AUD 0.094 distribution at an 81 payout ratio, reflecting a distribution yield of over 10%. Turning to page seven , which sets out a breakdown of our funds management EBITDA that those that have dialed in before would be familiar with.
Importantly, this sets out the makeup of our core earnings EBITDA, AUD 17.1 million for the half, and the reconciliation between that and core earnings is simply depreciation, interest, and tax. In respect of our funds management EBITDA, we generated funds management income of AUD 29.9 million, which was up very significantly on the prior comparative period.
More importantly, funds management EBITDA of AUD 13.3 million, that was up 74% on the prior comparative period. We'll talk specifically to some of the component income parts in a moment, but we can see opportunity for growth across the various income streams that comprise our funds management income.
The second key driver of our core earnings, co-investment income, which is the distributions that we have received in cash or are receivable in cash from our co-investments, has increased 60% to AUD 4.8 million. That's primarily due to a significant increase in distributions from our co-investment in our hotel fund, as it continues to improve and drive operating performance. We see further growth in our co-investment income moving forward.
Finally, in respect of transactional income, very significant contribution in the prior comparative period of AUD 7 million that related to the establishment of our Hotel Fund, only a modest contribution this half. Turning to page eight, we provide further breakdown of the growth in our recurring funds management income or fees. This has grown 33% to AUD 19.5 million for the half.
Our recurring fees relate to management fees, our hotel operator fees, and our leasing and development fees. Excluded from this analysis are our acquisition fees, which were down on the prior comparative period. We had good growth in some, but more modest, than the prior comparative period. It also excludes our performance fees, which were pleasingly AUD 6.4 million for the half.
I would point out in relation to the performance fees, that relates to the Healthcare Fund, but primarily the Riverside Plaza Fund, but the performance fee that we have reported only relates to 50% of the total performance fee, if indeed, there was to be a full realization event of that asset.
Back to our recurring management fees, our core management fees of AUD 14.1 million for the half will grow as a result of the full year flow on impact of the fund increase in the first half of 2023, AUD 152 million. They'll grow because of the fees we will earn on the $130 million of new assets that will settle within the next few weeks, that Glenn mentioned before, that take our total FUM to AUD 3 billion.
They will grow from further FUM that's added during the second half of FY 2023. In respect of hotel operator fees, AUD 2.6 million for the half. That will grow as we continue to see improvement in the performance of that portfolio, and indeed growth in the portfolio as a result of new investments.
Leasing fees, which are a central part of our asset management capability, particularly across retail and commercial, will continue to grow as we move forward. As will our development management fees, primarily for the moment, we'll touch on it later, related to our retail and hotels portfolio, where we conduct important value-accretive repositioning in respect of our assets.
I'll turn now to page 11 and 12, just very briefly, not to provide any real commentary, but it does outline our mission of being a leading real estate funds manager, delivering exceptional investment returns, and making positive and impactful social and environmental contributions. Also our key objectives, which folk are familiar with. We're very focused on a value for risk and sustainability lens when we originate.
We have a differentiated multi-sector real estate funds management platform. We unlock value through a highly active approach to asset management. Turning to page 13, just to touch on our development pipeline. I referred to our development management fees before. In respect of retail, this pipeline is significant and relates to the repositioning of real estate for a higher and better use across our retail portfolio.
There's more detail in respect of each of those projects on page 14. In respect of hotels, we conduct with our fully integrated hotel operating platform capability and development capability, various upgrades and refurbishment to our hotels that drive rate and occupancy for improved performance and of course, development management fees for the manager.
In respect of commercial and healthcare, we see a pipeline, strong pipeline emerging in relation to a number of development opportunities, at three assets in particular. Perhaps to particularly mention Pacific Private at Southport, one of the key assets in the healthcare fund, and Bourke Street, with a significant development opportunity.
Essentially, these opportunities are to meet tenant demand. Turning now to page 22. I'd like to just highlight some key points in respect to the valuation of our managed fund portfolio at December 31 2023. In summary, the retail portfolio has seen an increase of 8%. That reflects valuation uplifts, across Riverside in particular. I've mentioned the significant uplift in value of that asset. Also at Warrawong, partly offset by an approximate decompression of a 10 basis points across the portfolio.
There's also increases in the value of our portfolio as a result of CapEx in relation to current development projects. In respect of hotels, we acquired a new hotel early in the year, Tamworth, in August, of AUD 16.5 million. That's a part of that increase. Essentially, the hotel portfolio has held valuations consistent with June 2022, and the portfolio balance at December 31 reflects approximately AUD 6 million of CapEx on current projects.
In respect of office, that portfolio has seen cap rate decompression of approximately 25 basis points across the portfolio. That has been offset by improved market rents. I mentioned the strength of the leasing performance at ECF earlier, that's a significant contributor to offsetting, if you will, the decompression of cap rate during the half.
Our healthcare portfolio is valued in line with the transaction that was completed towards the end of the half, and our wildlife parks value is essentially similar. Some reduction in the value of Mogo, but improved trading performance at Featherdale and Hunter Valley. Turning to page 23. We have a strong interest rate risk management focus in respect of the debt facilities of our managed funds and indeed the group as a whole.
This page sets out the nature of the hedging position across the portfolio by sector. I'd point out that in respect of retail, there, we do not put further hedges in place where we see realization events in the short term, and we typically also do not hedge development facilities as they're being drawn.
In respect of hotels, tourism, and leisure, the weighted average hedging profile of 49%, we see hotels as a natural hedge to interest rates and inflation, given the ability to reprice room rates on a daily basis, and we believe that is the appropriate level of hedging for that fund. Touching on our co-investments on page 25.
Co-investments on an equity accounted basis carried at AUD 206 million at December 31, those on the call with the presentation can see a bridge from the carrying value at June 30. We've invested alongside of our institutional capital partner in healthcare fund. We've invested 5% of the equity, they've invested 95%. There have been some disposals and recycling of certain co-investments.
We received that special distribution in respect of our holding in ERF for the year, which reduces the carrying value, and the other category really relates to fair value adjustments. We see the opportunity to recycle and realize AUD 50 million of capital from our co-investments in calendar year 2023.
This primarily relates to part realization of our co-investment in the Elanor Hotel Accommodation Fund, which we expect to realize AUD 50 million and have us retain an ongoing 10% co-investment level. Turning to page 28. This is the presentation of our core earnings. I won't take you through it other than to remind listeners that core earnings, EBITDA, of AUD 17.1 million About halfway down the page is what we analyzed further in earlier in the discussion.
You can then see the final adjustments to core earnings relate to depreciation, interest, and tax. On page 30, we set out our capital management for the group, which comprises AUD 40 million of unsecured notes. This is an attractive form of funding. In our view, it's essentially replacement equity, fully unsecured, and at an attractive rate in terms of the cost of that effective equity, replacement equity.
Importantly, we have a secured and fully revolving debt facility of AUD 65 million , which gives us significant flexibility with our capital management. Our gearing at December 31 is 27.2%, which is a reduction from the 30.2% at June 30. In respect to the balance sheet on page 29, we just make two points in particular.
One is that in respect of cash and available debt, that is total cash available to the group at December of AUD 31.5 million to support our growth. As I mentioned earlier, our gearing has reduced during the half to 27.2%. I'll now hand back to Glenn, who'll make some remarks in respect of outlook and some closing remarks.
Thanks, Paul Siviour. Now refer to page 32 of the pack, where we briefly summarize our outlook. I'll add some more comments to that to the page. Like most market participants, I presume, we've seen the current economic environment, one that presents both challenges and opportunities.
The economic outlook seems somewhat more unclear than usual at present, as is the outlook for inflation and interest rates, which indeed underpins the pricing for all asset classes. Having said that, in my view, forecasting has always fraught with difficulty. For many years, I've observed forecasting failures, and in recent times, the forecasting failures at some of our central banks. Those are certainly good reminders of just how difficult it is to forecast, get it right.
Given this view about forecasting now and the inherent difficulty in forecasting, our investment approach has always been to acquire assets that we believe will perform across the cycle. Not to invest in assets where one has to rely upon the market to deliver value uplift with a free kick, so to speak, in the shape of cap rate compressions or multiple expansions. If we look across our sectors, the sectors that we invest in at present, our office portfolio across the group being 98% occupied and, as Paul said, you know, 84% in use, so to speak, positions those assets very well.
Look at our hotels portfolio, we're seeing it a strong rate, a strong rate story with average daily rates for the portfolio being up about 25% against the pre-COVID times. Whilst occupancy has been slower to return, we're very positive about the growth in the corporate sector, the inbound tourism, and also the conferences and events sector, which is proving to be growing strongly.
The healthcare portfolio, well, had almost nil impact across COVID and continues to perform very well. Our retail portfolio or retail assets across the group, in total at 90%-96% occupied. We're now seeing leasing spreads returning, positive leasing spreads returning, with almost all assets in that group performing well. The group's investments are well positioned.
Save for a couple of assets like, all portfolios, there's a couple of assets that we need to give additional focus to. Having said that, pretty much all the investments in the group are well positioned. Looking to the growth drivers and the outlook for the growth drivers for the group, we think about the growth drivers as being in our existing sectors, in new sectors and also in strategic opportunities.
Regard to originating high investment value opportunities in our existing sectors of focus, we continue to be able to acquire properties at prices that we believe reflect deep value. Our latest investment, Brisbane Forum, was acquired at a price that in our view more than reflects prevailing changes to the interest rate structure and risk-free rates.
We're still seeing somewhat wide bid offer spreads, so to speak, with vendors, often or maybe generally yet to reprice or cap rates reflect the recent interest rate increases and increases in risk-free rates. Whilst we're planning for it to be challenging to get assets, we call deep value prices in the short term, that's indeed what we do, and we are indeed borrowing assets in that regard.
I'm pleased to report that we have an active pipeline of opportunities across all of our sectors of focus, so we're expecting some good funds under management growth over the period. In regard to new investment sectors, we continue to build out our funds management platform into new sectors. That is our objective. Indeed, we're looking to establish funds in both the industrial and ag sectors in the short term.
Finally, we continue to actively pursue strategic acquisition opportunities for the group. Opportunities to achieve our growth ambitions, to deliver strong growth in both funds under management, and more importantly, security holder value. See this environment as one where such opportunities are more likely to eventuate. I'd like to close by saying that we're acutely focused on delivering strong earnings and distributions for security holders.
Focused on just that, but also focused on continuing to invest in building out our funds management platform. Our ongoing investments in the group's funds management platform will, in our view, not only deliver scalable growth in funds under management going forward, but more importantly, deliver scalable growth in earnings and security holder value. Pleased now to take questions.
Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Mike Pyke from Moelis Australia. Please go ahead.
Good afternoon. The corporate cost line, a 33% jump there. I'm assuming that has a performance component included in that. If so, could you just articulate to what extent that is the case? Thank you.
Mike, in respect of corporate costs, when you say a performance component, I'm not sure if you're referring to bonuses?
Yeah, something like that. I mean, there's a big performance fee number in the in the income line. I'm assuming it's matched by some incentivization expense in the cost line.
Yes. Well, we have a short-term incentive scheme, and the costs of that are separately identified within the P&L outside of those corporate costs. That's an important feature of the way we motivate, remunerate, and retain our key people. In respect of our corporate overheads, yes, there's been a growth there of about AUD 4 million period on period. The vast majority of that, 90% of that relates to salaries, our people cost, as we continue to invest in the capability and scalability of our platform.
Okay.
Mike, we don't
Sorry.
We don't have performance or a reward structure that's related to a specific investment. A group-wide reward structure.
All right. I understand. For all intents and purpose, I could say that that is, that forms the new cost base of the company going forward, give or take a bit.
Yes. The STI is paid when certain hurdles of performance are met in respect to security on return.
Okay. All right. Thank you.
Your next question comes from Edward Day from MA Financial. Please go ahead.
Afternoon, Glenn and Paul. Maybe, it's an extension of the last question, just wondering if you've got a feel for the EBITDA contribution out of the hotel operating platform, because I know you call out the revenue, but, you know, possibly some of that increase in costs relates to the operation platform.
Well, the increase is the increased cost as I failed to call out during the presentation. We continue to make significant investments in the platform. Paul Siviour said, predominantly in people, talent and capability to enable us to continue to build our funds under management and indeed build into new sectors to grow the group's funds.
The growth or the increased investment in our people is directly targeted to growing our funds under management. We're very confident about getting a strong return on those investments in the near term. It's been the approach we've taken since we've established the business to invest in the platform while seeking to deliver good investment returns, good distributions along the way.
Perhaps just to add to that, Ed, I'd refer you to the hotel operator fees of AUD 2.6 million earned during the half. That relates to our position as the hotel operator in the fund, and excludes our fund's management income from managing the fund. Our fees as we've shared before, are referable primarily to the hotel operating EBITDA within the fund, and therefore we're aligned with investors. If I just take that number, and we would expect it to grow in the second half, but if one just says, "What is it on an annualized basis?" AUD 5.2 million.
You can see that when you add our fund's management income from the hotel fund, which has GAV of AUD 424 million now, that part of our business is making a strong contribution to the performance of the overall business. Yes, part of the salary increase we mentioned costs increasing on a prior comparative period basis of AUD 4 million. Part of that is building out the hotel platform. As I mentioned, it makes a strong contribution.
Thank you. Just one more. Just on your co-investment income, if you annualize the income during the period, it's about a 4.5% yield on your AUD 260 million stake. What's your, I guess, outlook for that near term? If there's any weakness in that number, where is that coming through?
No, I wouldn't expect so, Ed. The hotel fund continues, you know, of that AUD 4.82 million is from the hotel fund. We would expect the underlying distributions to show some improvement in the second half. My only comment further to that would be, of course, as we realize some of our co-investments in certain funds to release growth capital for new funds management initiatives, that obviously, you know, reduces the distributions we're currently receiving, and it's replaced by the distributions we would then receive on further investments we make. It, you know, it's going to be impacted as that plays out in respect of our, you know, what we've described as our capital light strategy, where we have significant capital at our disposable for growth.
Thank you.
Your next question comes from Gerard Ahhot from Holt Asia Investment. Please go ahead.
Yes. Hi, good afternoon. Can you hear me?
Yes.
Yes. Yeah, thanks for taking my questions, calling you from Singapore. First, just a general question. Given the higher interest rates, have you seen some investors postponing or delaying some investment projects into our funds? Maybe because they have some alternative investments, maybe in the fixed income space. Have you seen that?
I think your question, Gerard, is that given high interest rates, the returns provided in the broader fixed income asset class are presenting alternatives that perhaps are more favorable than the real estate asset class.
Yeah.
Is that it?
Yeah. Yeah. That's my question. Yeah. Yeah. Thanks.
Yeah. Look, that's definitely the case. We are obviously seeing the, you know, investments in the broader fixed income space as competing with investments in property. Having said that, you know, we're very clear about, you know, what sort of returns our investors need in total returns, but, well, you know, income returns and capital growth, therefore total returns. What our investors need relative to the broader interest rate structure and the fixed income alternatives.
You know, oftentimes your investors don't perhaps don't fully appreciate the difference in the risk, plentiful risk for, you know, a specific fixed income investment versus say another specific fixed income investment or even a real estate investment. Therefore, you know, I made the comment before that, you know, the rising increased interest rate environment, you know, We are finding fantastic investments, notwithstanding the rising, the increased interest rate environment. We are forecasting for it to be, you know, more challenging to originate great investments that give total returns that are outstanding value, full stop, even outstanding value comparable to fixed income alternatives.
Yeah, we certainly are cognizant of the fact that, you know, we are in a rising interest rate environment, and it's, you know, investors or vendors I should say, at this juncture anyway, generally speaking, haven't adjusted prices to reflect the new rate environment. Again, I made the point that that's what we have been doing. That's what we do, and we have a, as I said, an active pipeline of opportunities that we believe present investment returns that are outsized investment returns for the risk end, and very good investment returns, relative to, you know, the fixed income alternatives more generally.
Yeah. Thanks for sharing that. I have another question on the operations. Could you share with us the level of occupancy for the hotels currently?
Occupancy at the moment is about 60, around?
Yes, about 60.
Just over 60% across the portfolio. As I mentioned, the rate story is very good for hotel owners, hotel investors. Being up about 25% on free cover levels. We're very positive about the occupancy improving. There's no doubt that, you know, during the December quarter, the interest rate announcements by the Reserve Bank in Australia took a bit of the wind out of the sail for the leisure tourists.
Again, we're seeing good growth in the corporate traveler market, inbound traveler market and also the conference and events market. We are positive and we see growth in occupancy. Indeed at this juncture, it's the occupancy for the portfolio higher than it was last quarter, continues to grow.
Okay, thanks. Another question on the office assets. You mentioned a high physical occupancy, more than 80%. This is above the average, I think, in the market. Are there some specific elements that you could share with us that explain this high physical occupancy for our properties?
For our office properties?
Yeah, office properties, yeah. Physical occupancy.
I'll let Paul answer that, but it I'll preface it by saying that it's a direct result of investing in assets that and investing in office markets, but particularly assets in their respective markets that have clear competitive advantages. As Paul said, the ECF office stone is a fantastic fund delivering fantastic performance. Paul, you should add to it.
In addition-- Thanks, Gerard. In addition to that, it's really the nature of the tenant base we have in our portfolio as well, which is a really high caliber tenant base in industries which are performing pretty well in this environment. It's not only the locations we're in are in generally supplies to trade markets. We've got a good tenant base.
As a result, you know, we've got very good physical occupancy in our portfolio. The other point to make, there's a real bifurcation in office markets at the moment, where good assets are performing well and, you know, secondary assets are underperforming. There's benefit from being good assets in what are markets which are performing well.
Okay, thank you. Just the last one for me. In terms of capital management, when will we have the next significant refinancing exercise in terms of loans or credit facilities in the coming years?
Gerard, if your question is in respect of the group?
Yeah, the group. Yeah. Sorry. The group. Yeah.
The first maturity that we have upcoming is 2.6 years away. It's in August of 2025. Quite some time away. All of the corporate debt facilities were refinanced in June of 2022 for either three or four years tenure.
Okay. We have nothing significant until 2026, right?
2025.
2022, yeah. Post June 30 2025.
2025. Okay. Okay, thanks. Thanks. That's all for me. Thank you.
There are no further questions at this time. I'll now hand back to Mr. Willis for closing remarks.
Thank you very much. Thank you all on the call today for your interest in the group. We very much appreciate your time. I'd like to take this opportunity to thank the broader team of Elanor Investors Group for another terrific contribution over the last half. Look forward to providing further updates on the progress of the group in the short term. Thank you, and have a good afternoon.
That does conclude our conference for today. Thank you for participating. You may now disconnect.