Garda Property’s FY25 FFO Jumps to $15M with $113M North Lakes Sale Pending
Garda Property Group has upgraded its FY25 Funds from Operations guidance by 12%, maintaining distributions while preparing for the North Lakes sale settlement in August 2025. The sale proceeds will significantly reduce gearing, with capital gains tax implications deferred to FY26.
- FY25 Funds from Operations guidance increased to $15.0 million, up 12%
- Distributions maintained at 6.3 cents per security plus a fully franked special dividend
- North Lakes sale settlement expected in August 2025 with $113 million proceeds
- Pro-forma gearing to reduce to approximately 28% post-settlement
- Capital gains tax impact deferred to FY26; no special distribution planned for FY25
Funds from Operations Upgrade
Garda Property Group has revised its FY25 Funds from Operations (FFO) guidance upward to approximately $15.0 million, representing a 12% increase from its February 2025 forecast and a 17% rise from the initial guidance issued in August 2024. This upgrade is primarily driven by an expansion in the company’s lending activities, which have bolstered income streams beyond earlier expectations.
Distribution Stability Amid Growth
Despite the improved earnings outlook, Garda has elected to maintain its distribution guidance at 6.3 cents per security, complemented by a fully franked special dividend of 0.009 cents per security. These payments, totaling 7.2 cents per security annually, are scheduled for quarterly distribution, with the final payment expected on July 15, 2025. This steady yield equates to approximately 6.34% based on the company’s closing share price as of mid-May.
North Lakes Sale and Capital Structure Impact
The much-anticipated settlement of the North Lakes property sale is now expected in late August 2025, delayed by ongoing civil construction and wet weather conditions. The transaction is projected to generate net proceeds of around $113 million, which Garda plans to deploy towards reducing its borrowings. This deleveraging effort will lower the group’s gearing ratio to an estimated 28%, enhancing financial flexibility and potentially improving credit metrics.
Tax Implications and Special Distribution
While the North Lakes sale will yield a significant capital gain, estimated at 22.3 cents per security before discounts, Garda has clarified that this gain will be recognized in the FY26 tax year. Consequently, the company will not issue a one-off special distribution related to the capital gain in FY25, a decision made following consultation with securityholders. Tax statements will be provided in September 2025 to assist investors in managing their individual tax obligations.
Leasing Activity and Valuations
On the leasing front, Garda has secured a 19-month lease with KB Timber Tasman at its Acacia Ridge property, marking a substantial rent increase from $135 to $200 per square metre. Additionally, TLC Warehouse Solutions has renewed its lease at Berrinba with a 15% rent uplift, reflecting strong tenant demand. Independent valuations are underway for several key assets to support the upcoming financial reporting period.
Bottom Line?
Garda’s upgraded earnings and reduced gearing set the stage for a stronger FY26, but investors will watch closely for the tax impact and timing of the North Lakes settlement.
Questions in the middle?
- Will the North Lakes settlement face further delays impacting Garda’s capital structure?
- How will the deferred capital gains tax affect investor sentiment and security pricing?
- Can Garda sustain its distribution payout ratio amid evolving lending activities?
