Garda Property Group has upgraded its FY26 earnings guidance by 10%, reduced gearing to 20.8%, and outlined ambitious plans to expand its Brisbane industrial portfolio and lending operations.
- FY26 FFO guidance increased 10% to 10 cents per security
- Gearing reduced to 20.8% following $191 million debt repayment
- Industrial portfolio fully Brisbane-based, valued at $332 million with 85% occupancy
- Lending book grows to $69 million deployed, contributing 46% of forecast revenue
- Key projects include 6,000m² Morningside expansion and leasing of vacant Acacia Ridge asset
Upgraded Earnings and Strengthened Balance Sheet
Garda Property Group has delivered a confident operational update for the first half of FY26, announcing a 10% upgrade to its full-year funds from operations (FFO) guidance, now forecast at 10 cents per security. This positive revision is complemented by an increase in distribution guidance to 8.5 cents per security, reflecting an 85% payout ratio that balances shareholder returns with capital preservation.
Crucially, the group has reduced its gearing ratio to a more conservative 20.8%, down from 42.7% a year earlier. This deleveraging follows the strategic sale of non-core assets, including the North Lakes and Cairns office properties, which generated $191 million in net proceeds used to repay debt. The refinancing of its $166 million syndicated facility through to September 2029 provides Garda with debt capital certainty and $60 million in headroom for future investments.
Focused Industrial Property Portfolio in Brisbane
Garda’s property portfolio is now a pure-play Brisbane industrial portfolio, comprising nine assets valued at $332 million with an occupancy rate of 85%. The portfolio’s weighted average lease expiry (WALE) stands at four years, supported by a capitalisation rate of 5.83%. Notably, seven of the nine properties were independently valued in mid-2025, with the Richlands asset showing a valuation increase driven by a compression in cap rates.
Looking ahead, Garda is targeting revenue growth through two key initiatives, a 6,000 square metre expansion and refurbishment of its Morningside facility, and the leasing of a 14,772 square metre vacant property at Acacia Ridge. The Morningside expansion, scheduled for completion in early 2027, is expected to add approximately $1.9 million in net property income annually from FY28, while the Acacia Ridge leasing campaign aims to capture strong tenant demand in Brisbane’s industrial market.
Growing Lending Operations Drive Revenue Diversification
Garda’s lending business continues to gain momentum, with $69 million in loans deployed across residential and industrial development projects, predominantly in South-East Queensland. Lending activities are forecast to contribute 46% of group revenue in FY26, a significant increase reflecting the group’s strategic allocation of capital to higher-yielding debt instruments.
The loan book features a mix of senior and higher leverage facilities, with an average loan term of around 11 months and a weighted return rate near 19% per annum. Garda’s lending model includes fee structures and exit fees that enhance returns, as demonstrated by a recent Brisbane South industrial project delivering a 63.3% return on deployed capital over 15 months.
Capital Management and Hedging Strategy
Garda’s capital management approach remains disciplined, balancing asset sales, debt reduction, and facility headroom to support growth. The group’s hedging arrangements cover a significant portion of its long-term debt, locking in competitive fixed interest rates through to 2030 and mitigating exposure to rising market rates. This strategy aligns with the differing debt profiles of its property ownership and lending activities, the latter being shorter-term and self-liquidating.
Outlook, Earnings Growth on the Horizon
With FY26 guidance upgraded and a clear pipeline of earnings drivers for FY27 and FY28, Garda is positioning itself for sustainable growth. Embedded rent increases averaging 3.3% annually, combined with anticipated rental reversions and new income from property expansions and leasing, underpin this outlook. Meanwhile, continued growth in the lending portfolio and potential exit fees from higher leverage loans add further upside.
Overall, Garda Property Group’s HY26 update reflects a company sharpening its focus on Brisbane’s industrial market while leveraging its lending platform to diversify and enhance returns. Investors will be watching closely as leasing outcomes and loan deployments unfold in the coming months.
Bottom Line?
Garda’s strategic focus on Brisbane industrial assets and lending growth sets the stage for robust earnings momentum, but leasing execution and loan portfolio quality remain key to watch.
Questions in the middle?
- How will leasing progress at the vacant Acacia Ridge property impact FY27 income?
- What is the credit quality outlook for Garda’s expanding lending portfolio amid market uncertainties?
- Will the Morningside expansion achieve targeted rental reversion and yield on cost as planned?