Good morning, everyone, and welcome to the ECF Investor Briefing for the half-year of 2025. Here are our results. By way of introduction, I'm Tony Fehon, Managing Director of Elanor Investors Group. Today I have with me David Burgess, who is Head of Investments for Elanor Investors Group, and the newly appointed Fund Manager for ECF, John D’Almeida, who is the Head of our Office Sector. The results today we will go through with both an introduction from David and also an overview from David, and then John will take us through the detailed results. The team has continued to focus on the management of the fund, delivering consistently solid operational results. These outcomes are a combination of the excellent asset selection to build a highly performing portfolio, and the active management of the leasing and capital expenditure profiles of that portfolio.
We're pleased with the results today, and I'll ask Dave to give you an overview of those results.
Thanks, Tony. For the first half of this financial year, the portfolio has continued to deliver strong operational performance. In addition, we have executed on capital management initiatives, and the fund is well positioned as we move through the trough of the cycle. The positive trend we are seeing is a slowing of investment property value declines, with eight out of our nine assets holding value for the period. This, amongst other things, suggests we are approaching or at the bottom of the valuation cycle. We've had significant leasing success, specifically at WorkZone West , where we've executed over 60% of leasing across the net leasable area of the building, well ahead of its August 2025 expiry. Our portfolio continues to maintain near full occupancy at close to 98%, significantly outperforming the national average, while still achieving very strong rental rates at strong levels now.
Our key focus is on many fronts, including continuing that leasing momentum, especially in assets like WorkZone West, Harris Street, and Pyrmont, and Garema Court in Canberra. We will continue to be proactive in regards to our capital management, including extending that duration and ensuring our gearing remains within our target range whilst we execute on these accretive leasing capital commitments. For the full year FY 2025, we are reaffirming our forecast distribution of 7.5% per security, which provides a 12% yield on a forecast payout ratio of around 80%. I'll now pass to John to find more detail on the results.
Thanks, David, and welcome, everyone. Looking at our results on slide five, our funds from operations came in at 4.92 cents and distribution at 3.75 cents per security, reflecting a payout ratio of 79%, both of which are in line with previous guidance.
Occupancy remains exceptionally strong at 97.7%, significantly outperforming the national average of 84.3%, a testament to the quality of our assets and our active management approach. Portfolio WALE is 3.7 years, with a slight decrease from 4.0 years at June 2024, which reflects the natural lease expiry progression. Portfolio market rental growth has been robust at 10.8% over the last two years to December 2024, showing the underlying strength of our assets and markets. Our weighted average capitalization rate increased slightly to 7.76%, up from 7.74%, reflecting some continued but moderating cap rate decompression pressure. Total portfolio value now stands at AUD 506.6 million on a consolidated basis, representing a decrease of just 1.2% from June 2024. Importantly, eight of our nine assets are holding their value. This is a clear sign of stabilization appearing in the market.
Our NTA per security is AUD 0.74, down from AUD 0.83 in June 2024, reflecting the impact of our capital raise and discounted NTA and the December half valuation lockdown. As mentioned, our balance sheet gearing has improved to 36.1%, down from 40.1% following our capital raise. Turning to our financials on slide seven, in terms of our income statement, despite some increases in expenses, some of which were one-offs, we've delivered solid results, with net property income increasing by 1.8% to AUD 24.9 million, contributing to an FFO of AUD 17.1 million, which was up 2.5% on the same period last year. The improvement in our statutory profits of AUD 2.8 million, up from the loss last year, shows we're moving in the right direction. This has resulted in an FFO of AUD 0.0492 per security and payout ratio of 79%.
Distribution per security is in line with guidance at AUD 0.7375 per security. On the next page, our balance sheet, represented on a consolidated basis, remains strong. We've got a healthy cash position of AUD 20.7 million, and our investment properties are valued at AUD 506.6 million on a consolidated basis, which is only down 1.2% from six months ago. We've also added the Harris Street Capital Notes at AUD 39.1 million, which is an important strategic investment for us. Turning to portfolio valuations on slide nine, where we're seeing some encouraging signs.
Over the last six months, our market rents increased by 1.5%, offsetting some minor cap rate expansion, resulting in just a 1.2% overall valuation decline. Looking at the bigger picture, our portfolio values have come down from AUD 609 million to AUD 507 million since the June 2022 peak, but importantly, the rate of decline is significantly moderated.
Our weighted average cap rate of 7.76% remains attractive compared to peers, and the cap rate decompression has slowed to just 12 basis points over this period. Eight of our nine assets are now holding their value. When considering the overall portfolio valuation rate of AUD 6,000 per square meter, it's very attractive to peers and significantly below replacement cost. Looking at the market cycle data on slide ten, we can see some really encouraging signs that support our view that we are near the bottom of the cycle. If you look at Sydney CBD cap rates, they've stabilized over the last two quarters, which is significant. What's particularly interesting is this current cycle has followed a very similar pattern to historical cycles, about 150 basis points of decompression over roughly two years. When we compare this to market capital values, we're seeing a similar story.
Values have declined about 20% from the peak, which mirrors what we saw during the GFC. However, this decline appears to have pulsed over the last two quarters, giving us confidence that we're approaching the bottom of the cycle. Turning now to slide eleven, in October, we completed an AUD 52.5 million equity raising with strong support from our security holders, achieving a 65% take-up rate. This has strengthened our balance sheet while maintaining our FY25 distribution guidance of AUD 0.075 per security. We then invested a significant portion of Harris Street Notes, giving us 5% annual coupon, 7.5% peak on maturity, and 10% of the asset valuation upside through June 2027. This helped us stabilize Harris Street interest and has brought our gearing down to 36.1%, well within our target range.
Looking at our debt profile on slide twelve, we've maintained a weighted average cost of debt at 4.5%, gearing at 36.1%, sitting nicely within our target range. We've kept a prudent hedging position with 77% of our interest rate exposure hedged, increasing to 81% on a look-through basis. Our debt facility has 1.7 years to maturity, and the key initiative for the fund is to optimize the duration and interest rate hedging. With AUD 20 million in undrawn CapEx facility and AUD 6.7 million in cash, we've got good capacity to manage our upcoming expenses. Looking at our portfolio performance on slide fourteen, we're maintaining exceptional occupancy at 97.7%, which is significantly above the national average of 84.3%. Particularly impressive is that six of our nine assets have an occupancy rate above 98%, really demonstrating the quality and appeal of our properties.
The rental growth story is also compelling, with five assets achieving double-digit growth over the last two years. WorkZone West , 200 Adelaide Street, Mount Gravatt, 50 Cavill, and Garema Court, all have seen rental growth of 10% or more, highlighting the strength of our assets in key markets. Let me take you through our portfolio, starting with Queensland, Southeast Queensland on slide fifteen. Brisbane market showing real strength with CBD fringe growth of 11.9% and 15.1% per annum respectively. Our heritage building at 200 Adelaide is achieving 11% market rental growth over two years, while 50 Cavill continues to dominate the Gold Coast market, leasing well and with 13% growth in market rents over the same period. We've secured Bunnings at Nexus Centre until 2029, successfully leased Corporate Drive to last remaining tenants, and we're repositioning Limestone Street with our health services focus.
In our southern markets on slide sixteen, we've had some good wins. At 19 Harris Street Pyrmont, we've retained Thomson Reuters in the building until 2030. The Garema Court remains a prime Canberra asset with full government tenancy, with which we were having encouraging active engagement ahead of their June 2026 expiry. At 196 O.G. Road in Adelaide, we successfully retained a whole building tenant, and the asset now has a strong WALE shy of seven years. Turning to slide seventeen, one of our biggest successes at WorkZone West is a prime grade carbon neutral building with excellent environmental credentials. We've already secured 61% of NLA of expiry, and including active negotiations, it takes a total of 77%. Furthermore, rents are a 6% above valuation expectation twelve months ago.
This asset has enjoyed strong cash-on-cash returns since acquisition several years ago, and the reversion to market rents has fully factored into the valuation. Looking at our leasing program on slide eighteen, we've got 50% of the expiries to FY 2026 under active negotiations. We're primarily focused on Harris Street, WorkZone West , and Garema Court. Each asset has a level of capital initiatives currently being undertaken in order to assist with leasing campaigns and negotiations.
Thank you, and I'll now hand back to Dave for his concluding remarks.
Thanks, John. In summary, our portfolio has maintained market-leading occupancy and is experiencing positive rental growth, which we expect will continue. There is strong leasing momentum across many of our key assets. Capital values are stabilizing, and importantly, are priced well below replacement cost.
Looking forward, we've got many key focuses, including to continue on these leasing initiatives that John has mentioned, specifically at WorkZone West , Harris Street, and Garema Court. We'll continue to be proactive on our capital management, and that includes maintaining gearing within our target range and extending and diversifying debt duration and managing our interest rate risk exposure. Importantly, we will focus on positioning the fund to grow FFO and NTA and close the NTA gap. We reaffirm our FFO guidance of AUD 0.093 per security for the full year, supported by a high portfolio occupancy and interest rate hedging position. We also reaffirm our distribution guidance for the year of AUD 0.075 per security, which provides a very strong distribution yield of over 12%, which is well above our peak growth. On that, I'll now open up.