Garda’s 29% NTA Discount Raises Questions Despite Strong Asset Sale

North Lakes Sale Marks Strategic Portfolio Shift

Garda Property Group has successfully settled the sale of its North Lakes industrial site for $113.6 million, a transaction that underscores the group's disciplined approach to capital management and portfolio optimisation. Originally acquired in mid-2021 for $16 million, the site saw significant investment in development and holding costs, culminating in an impressive 99% unlevered return for investors. This sale not only crystallises substantial value from a non-income producing asset but also significantly strengthens Garda's balance sheet.

Focused Portfolio and Enhanced Financial Flexibility

Following the sale, Garda's real estate holdings are now exclusively composed of nine industrial properties located in Brisbane, collectively valued at $330 million. These assets benefit from a weighted average capitalisation rate of 5.86% and a solid leasing profile with an average expiry of 4.5 years, providing a stable income base. The proceeds from the North Lakes sale have been used to reduce drawn debt to $95 million, lowering gearing to a conservative 17.9%, and unlocking $71 million in additional debt capacity.

Complementing its real estate portfolio, Garda continues to expand its private lending activities, focusing on residential and industrial developments primarily in South-East Queensland. This diversification aims to drive earnings growth through selective, higher-return opportunities.

Debt Facility Extension and Cost Improvements

In a move that reflects confidence from its banking partners, Garda has extended its syndicated debt facility with ANZ and Westpac by three years to September 2029. The refinancing includes a reduced facility limit of $166 million, following recent asset sales and debt repayments, and delivers a 25 basis point reduction in average bank costs. This improved pricing and extended tenor provide Garda with enhanced financial flexibility to pursue its strategic objectives.

Investor Returns and Market Valuation

Garda maintains its distribution guidance at 8 cents per security, representing a yield of 7.1% based on the recent closing price. However, the group's securities are trading at a notable 29% discount to net tangible assets of $1.60 per security. This discount implies a portfolio capitalisation rate of 7.95%, higher than the portfolio's weighted average of 5.86%, suggesting potential market skepticism or opportunity depending on investor perspective.

Executive Chairman Matthew Madsen highlighted that the recent transactions and refinancing demonstrate Garda's active capital management and prudent financial stewardship, positioning the group well for future growth in both real estate and private lending sectors.