$105.9 million asset base supports Desane’s FY27 development push

Penrith and Petbarn projects become FY27 test

Desane Group Holdings is asking investors to look past a modest FY26 profit and towards two property projects that now carry much of the company’s near-term growth narrative. The ASX-listed group reported statutory profit of just $0.02 million for the year ended 30 June 2026, but says it enters FY27 with a substantial asset base, available liquidity and development work moving towards income-producing outcomes.

“Petbarn premises”

The immediate priorities are the 44-unit industrial project at 91 Thornton Drive, Penrith, and the redevelopment of 322 Norton Street, Leichhardt, for Petbarn. Desane has previously outlined the Penrith industrial project as a key driver of its next phase. At Penrith, works are scheduled to commence before Christmas 2026 under a fixed-price design and construction contract, with the presentation citing a targeted return on equity of 136.6%, excluding debt.

At Leichhardt, demolition, enabling works and environmental remediation have advanced, while structural and masonry work continued after year-end. The premises are being delivered on a cold-shell basis, leaving Petbarn responsible for its specialised internal fit-out. Desane is targeting completion of the works and lease commencement before December 2026 under a 10-year initial lease with two five-year options. The company’s presentation cites annual net rent of $295,000, rising by 3.5% each year.

Profit weakness contrasts with balance-sheet support

The FY26 result was sharply lower than the prior year because property revaluation gains fell while finance and operating costs increased. Desane recorded a net fair value uplift of about $2.1 million across its portfolio, with positive movements at 7 Sirius Road, Lane Cove, and 16 Industrial Avenue, Wacol. The year-end process also reduced the carrying value of 35 Norton Street to reflect more recent external evidence.

“13 Sirius Road, Lane Cove”

At 30 June, total assets stood at approximately $105.9 million, net assets at $69.1 million and net tangible assets at $1.69 per security. Cash and financial assets were approximately $10.9 million against borrowings of about $13.9 million. The group also paid a 2-cent-per-share special dividend during FY26, franked at 82%, after selling 13 Sirius Road, Lane Cove, for approximately $8.7 million excluding GST.

That sale is central to Desane’s capital-recycling argument: an asset held for more than two decades was monetised, releasing funds for existing developments and potential future acquisitions. The company says capital will be retained, redeployed or recycled according to the risk-adjusted returns available, rather than simply because an asset has been held for a long time.

Recurring income provides a buffer during development

“Signature Orthopaedics tenant”

Desane’s retained portfolio is intended to support the development pipeline while the projects move through construction and leasing. The Brisbane City Council tenancy at Wacol runs to June 2030 and carries annual net rent of about $800,000, while Signature Orthopaedics at 7 Sirius Road runs to November 2032 and generates about $632,000 a year. The group also retains fully leased or income-producing assets across Leichhardt, including the 46-apartment development approval at 159 Allen Street.

The board’s own assessment is that reported asset value has not yet translated fully into shareholder returns: Desane says its shares have traded below reported net tangible asset backing, with limited liquidity and the time required to realise property value cited among the structural reasons. That gap leaves execution particularly important. Development margins, project timing, recurring rent and any further asset sales will determine whether the portfolio’s accounting value becomes cash earnings and distributions.

Chairman succession adds a governance transition

“Professor John Sheehan AM”

Professor John Sheehan AM is retiring from the board after joining Desane in 1987 and serving as chairman since 1992. Peter Krejci is to succeed him, while Melissa Ashcroft, who joined as an independent non-executive director in March 2026, adds experience in commercial property finance, private credit and complex funding structures. The leadership change arrives as Desane moves from balance-sheet repositioning to a more execution-heavy phase.

For FY27, the measurable milestones are construction starting at Penrith, delivery of the Petbarn premises, stronger occupancy and rental income across the portfolio, and selective decisions on development, acquisitions and capital management. The company has not provided formal earnings guidance, leaving the timing and economics of those milestones as the next test of its strategy.