LDR Capital Property Fund Reports $4.8M Profit and 3.25c Distribution

Financial Performance and Portfolio Overview

LDR Capital Property Fund (ASX: LED) has reported a statutory profit after tax of $4.8 million for the six months ended 31 December 2025, marking a significant improvement from the $2.8 million profit in the previous corresponding period. Funds from Operations (FFO), a key measure of underlying earnings, stood at $14.6 million, translating to 3.6 cents per security. The fund declared distributions totaling $13.2 million, or 3.25 cents per security, reflecting a payout ratio of 91% of FFO.

The fund's portfolio comprises eight commercial office properties located in major Australian metropolitan areas including Brisbane, Gold Coast, Perth, Canberra, Adelaide, and Sydney, with a combined valuation of $425 million. Notably, the portfolio's occupancy rate remains robust at 92.5%, well above the national office average of 85.4%, despite a lease expiry at WorkZone West in August 2025.

Strategic Management Transition

A pivotal development during the period was the transition of the responsible entity from Elanor Funds Management Limited to Evolution Trustees Limited, effective 4 February 2026. This followed a member resolution in late January 2026 and was accompanied by the appointment of LDR Capital Pty Ltd, a subsidiary of the Lederer Group, as the new investment and property manager. The Lederer Group, which now holds a 42.7% stake in the fund, is expected to play a significant role in shaping the fund's strategic direction.

The transition included a compensation payment of $8.5 million (exclusive of GST) to Elanor Asset Services Pty Ltd for the termination of management agreements. This change aims to streamline operations and enhance the fund’s focus on delivering sustainable cash flows and distributions.

Leasing and Asset Management Highlights

During the half-year, the fund successfully executed twelve new leases or renewals covering approximately 6,400 square metres, securing tenant quality and income stability. Key leasing achievements included a major renewal with Altcom Real Estate in Brisbane, a new lease with NBN at WorkZone West in Perth, and a renewal with Life Without Barriers in Ipswich.

Post-period, the fund extended a significant lease with the Commonwealth Government at Garema Court in Canberra, pushing the expiry to May 2030 and substantially reducing near-term leasing risk amid a challenging office market environment.

Financial Position and Outlook

The fund’s net tangible asset backing per security slightly declined to $0.67 from $0.69 in June 2025, while gearing remained moderate at 40.7%. The balance sheet remains strong with net assets of $271.3 million and cash reserves of $3.8 million. The fund has access to $14.3 million in undrawn debt facilities, with plans to draw $6.6 million to fund the December quarter distribution.

LDR Capital Pty Ltd has outlined five priority areas to enhance performance, including immediate expense reductions, detailed asset reviews, contractor evaluations, exploring asset recycling opportunities, and reviewing debt and hedging arrangements. While asset disposals are under consideration, there is no certainty on timing or scale.

Overall, the fund appears well-positioned to navigate current market challenges, leveraging its strong occupancy, diversified portfolio, and new management team to pursue sustainable growth and income generation.