This article is from the Australian Property Journal archive
GARDA Property Group has taken another hit on the sale of a Melbourne office building, offloading a Hawthorn East complex – which it acquired only last year – for $24.1 million, below the $25 million book value, as the ASX-listed company takes another step towards being a pure-play industrial portfolio.
ASX-listed Garda last month announced it would take a value hit of more than 27% on the sale of a pair of Melbourne city fringe office buildings which it sold for $80 million, as the office market faces an ongoing reckoning of asset values.
The Hawthorn East office building at 8-10 Cato Street is being sold to Minsmere. Garda acquired the property for $20.1 million plus costs in March of 2022, and undertook a substantial modernisation and refurbishment program. The property is 33% occupied and most recently independently valued at December 2022 on a capitalisation rate of 5.75%.
Settlement is expected to occur on or before 22nd December 2023 with net sale proceeds used to repay drawn variable debt facilities to approximately $247 million, providing $43 million of headroom.
Garda yesterday said it continues to work with the counterparty that has agreed to acquire Botanicca 7 and 9, the city fringe office buildings in Richmond that it is selling to Sentinel.
“A successful outcome would result in a total exit from Melbourne office and reposition Garda as a largely pure-play industrial portfolio, except for Cairns Corporate Tower,” it said.
Garda’s 30th June financial report listed the Botanicca properties as “assets held for sale” at $110.5 million. Garda put the building to the market in August last year with hopes of more than $120 million, and in May, it revealed the fully leased Botanicca 7’s capitalisation rate had lifted 1.13% to 6.13% – it has a 3.8-year weighted average lease expiry – while its value fell $13.2 million to $50.5 million, and Botanicca 9’s cap rate increased 0.88% to 5.88% and $9.4 million was wiped off its value, to $60.0 million That building is 73% occupied and has a WALE of 5.3 years.
Transaction volumes of commercial property in Australia sank to their lowest level for a September quarter in more than a decade, with a “fog” on pricing, economic and geopolitical continuing to hamper deal activity, according to MSCI.
