This article is from the Australian Property Journal archive
GARDA has sold its 25-hectare industrial development site in North Lakes, Queensland for $114 million to an ESR managed fund.
Garda initially purchased the North Lakes property in June 2021 for $16 million, with plans to develop an industrial precinct. Contracts have been exchanged for the fund to acquire the site, with settlement to occur not earlier than five months’ time.
Settlement is also dependent on FIRB approval, Garda’s completion of all remaining civil, intersection and road works, which is expected cost $11.2 million, Moreton Bay Regional Council issuing titles to the land and minor ground preparation works.
After the costs of the remaining works, the sale price is less than a 2.4% discount to the independent upon completion value of $116.8 million for the project and represents approximately 22% of Garda’s property portfolio.
“When fully developed, North Lakes will be one of Queensland’s leading industrial estates and we are disappointed not to be developing it out. The scale of this project is simply too large for Garda to deliver in the current environment,” said Matthew Madsen, executive chairman at Garda.
“This transaction places Garda into a strong financial position. Our owners should benefit from any improvement in property markets or broader economic conditions, and we also have scope to be opportunistic in the event of continued weakness.”
The sale will enable Garda to repay all of its variable rate debt and reduce its gearing from 36.5% to around 22%. Garda’s current established portfolio has a WACR of 6.06% and its securities are currently trading at $1.135, a 33.6% discount to NTA of $1.71, as at 30 June 2024. Back in August, Garda Property Group posted a $42.9 million net loss on the back of property devaluations, after a $4.93 million loss in FY23.
Phil Pearce, CEO of ESR Australia & New Zealand, said the North Lakes purchase aligns with ESR’s vision to grow its presence in the tightly held North Brisbane market.
“The acquisition of the industrial development site at North Lakes in Queensland will enable ESR to continue to expand its footprint in the supply constrained Brisbane market, which is being supported by strong population growth in South East Queensland. The site at North Lakes will be developed into a premium industrial estate, delivering jobs and economic growth to the region as well as supporting the needs of future customers.
“ESR Australia currently has approximately $417 million of development under construction and in the development pipeline in Queensland,” said Pearce.
This acquisition is ESR’s latest industrial and logistics play, coming just weeks after it partnered with Japanese giant Mitsubishi Estate Asia (MEA) to develop a $175 million industrial estate in Melbourne’s south-east.
Meanwhile ESR is currently on the radar of several large institutional investors. Qatar’s sovereign wealth fund, the Qatar Investment Authority, has joined consortium of major players to buyout ESR, in a deal which would give them the keys to some of Australia’s prized industrial and logistics assets.