This article is from the Australian Property Journal archive
AMONG the first of the ASX-listed real estate companies to report their full-year results, sunshine state industrial and office buildings landlord Garda Property Group posted a $42.9 million net loss on the back of property devaluations, but says it will well positioned as a develop-to-own industrial REIT.
The annual loss after tax followed a $4.93 million loss in FY23.
Funds from operations (FFO) came down from $14.93 million in the prior corresponding period to $13.28 million. FFO and distributions on a per security basis both fell from 7.2c to 6.3c.
Garda copped a $39.3 million loss on the value of its investment properties. It has shed its Melbourne assets, completing the $80 million sale in October of a pair of city fringe office buildings at a 27% discount as values dropped across the sector, and also took a hit on the $24.1 million sale of suburban building.
“The sobering cost of this exit has been felt by all of us, however, the cost of retaining ownership was expected to have been far worse,” said chairman Matthew Madsen, adding that it will be a “decision that can only be measured with the passage of time”.
Those divestments left it with 10 Brisbane industrial assets and Cairns’ major office building, the $82 million Cairns Corporate Tower at 7-19 Lake Street that is home to state and federal government agencies and national and international corporates.
Garda went on to offload a warehouse development site in south-west Brisbane’s Wacol for $13.5 million, deciding to sharpen its focus instead on its North Lakes industrial estate.
Madsen said Garda expects the valuation cycle for industrial is nearing the bottom, “although the difference of value from one asset to another has never been more acute” with widely varying ranges of passing to market rents and the ability or timing to access rental reversion.
Garda’s industrial portfolio weighted average capitalisation rate has expanded from 4.27% to 5.58% since December 2022 and some further expansion is likely, as is continued offsetting rental growth.
“Looking to the future, Garda is very well positioned as a develop-to-own industrial REIT, endowed with a substantial development pipeline (100,000 sqm-plus) underpinned by approved land and proven in-house skills to deliver.
“Low vacancy rates continue to underpin tenant demand and rents for our existing and future industrial buildings.”
Throughout the year the Garda kicked off construction on a 14,777 sqm Acacia Ridge facility that is expected to complete in December, and it pre-leased its 12,912 sqm Richland facility.
Net tangible assets per security fell 12.8%, from $1.96 to $1.71.
Gearing was at 36.5%.
