Garda’s Shift to Industrials

13 August 2021

Garda’s shift to industrial has delivered investors a total securityholder return of 35% in FY21 and a return on equity of 29%.

The group recorded statutory net profit after tax for the year of $35,689,000, up from $5,567,000 in the prior corresponding period (pcp), due predominantly to increases in valuations of its assets. The Groups earnings, expressed in Funds from Operations was $16.167m, up 3.1% on the pcp.

In the six years since the IPO of Grada Diversified Property Fund, the funds has more than trebled in value to $496 million. Over this period the focus has shifted further towards the industrial sector. At 30 June 2021 approximately half of Garda’s investment portfolio (by value) was represented by industrial properties, (up from only 6% at IPO), with 11% comprising sites earmarked for industrial development. Garda calls it “Build to Own” taking the phrase from the emerging “Built to Rent” residential asset class. Garda see better value in building as opposed to acquiring established assets which are are valued up at more than the land and replacement cost.

The Group’s industrial properties are primarily located in Brisbane’s south west industrial corridor, in proximity to Brisbane airport and port or in high growth regions such as North Lakes, Brisbane. Garda has three office buildings located in fringe CBD locations in Melbourne and owns the premier office building in Cairns, the Cairns Corporate Tower.

COVID-19 did not have a material impact on Garda’s revenue in the financial year. Total rent deferrals of $329,000 at 30 June 2020 decreased to $162,000 at 31 December 2020 following payments by the affected tenants.

During FY21 Garda announced the acquisition of three industrial development properties in Brisbane for a total cost of $30.0 million (plus costs). The acquisitions included 109-135 Boundary Rd, North Lakes for $16m, 56-72 Bandara St, Richlands for $6.8m and 372 Progress Rd, Waol for $7.2m. The acquisitions were funded by $19.6 million released from the disposals of two non-core properties in Brisbane and on the Gold Coast.

Garda achieved practical completion on two industrial development projects during FY21, a 5,683m2 industrial building at Berrinba, leased to USG Boral and TLC Warehouse Solutions; and a 6,000m2 industrial building at 498 Progress Road Wacol that has been leased to YHI
Corporation. Development activity will continue in FY22 with Garda’s industrial development pipeline almost quadrupling in FY21 to approximately 160,000m2 of possible built form gross floor area.

In the 12 months to 30 June 2021, 26,160m2 of space has been leased. As at the date of this report, only 5,109m2 of space remains vacant in our established industrial and office buildings resulting in an occupancy rate of 90.9%. In the next 12 months, an additional 5,587m2 of space, or 5% of portfolio gross income, will expire. 4,465m² of this expiry is Austrans’ current tenancy at 38 Peterkin St, Acacia Ridge which will be placed into redevelopment at that time. Completion of Austran’s new 6,214m2 building at 69 Peterkin Street, Acacia Ridge, and the associated commencement date of its new lease, is anticipated by November 2021. Austrans has pre-committed to this new space for seven years.

Garda Group are not on our Top Picks List.

The REIT commenced the year with a security price of $1.00 against a NAV of $1.18 (18% discount to NAV) and closed the year at $1.29 with a NAV of $1.45 (11% discount to NAV). The REIT provided a 7.2cpu distribution for FY21, equating to a 7.2% yield, which together with a 28% lift in unit price would provide investors with a total return of 35.7%.

Key financial and operational highlights for the period are:

Financial highlights:

  • Funds from Operations of $16.17 million, up 3% on the prior corresponding period (pcp)
  • Statutory profit of $35.69 million, up 541% from pcp
  • Distributions of 7.2cpu, down -16.3% from 8.6cpu in pcp
  • NTA of $1.45, up 22.9% from $1.18 at 30 June 2020
  • Balance sheet gearing of 38%, up from 36.7%

Operating highlights:

  • Three industrial development properties acquired
  • Two Disposals
  • Two Development projects completed
  • 26,160sqm of leasing
  • 10.9% increase in portfolio occupancy to 90.9%
  • 15.8% increase in portfolio value5
  • 65 basis point compression in cap rate to 5.78


As noted above, Garda acquired of three industrial development properties in Brisbane for a total cost of $30.0 million (plus costs). The acquisitions included;

  • 109-135 Boundary Rd, North Lakes for $16m,
  • 56-72 Bandara St, Richlands for $6.8m and
  • 372 Progress Rd, Waol for $7.2m.

Garda disposed of two assets;

  • 839 Beaudesert Road, Archerfield for $7.0m, and
  • 154 Varsity Parade, Varsity Lakes for $12.6m

Garda also achieved practical completion of two assets;

  • Berrinba – a 5,683m2 industrial building that has been leased to USG Boral and TLC Warehouse Solutions; and
  • Wacol – a 6,000m2 industrial building (Building C) at 498 Progress Road that has been leased to YHI Corporation.


The independent valuation program included nine of Garda’s 16 investment properties. A total gain across the portfolio of $56m was recorded due mostly to a 65bps compression in the weighted average capitalisation rate (WACR) to 5.78%.


On 15 June 2021, Garda secured a $28,000,000 increase in its existing debt facilities with ANZ Banking Group and St. George Bank to $228,000,000. At 30 June 2021, Garda had $18,000,000 of borrowing capacity available, a weighted average cost of debt (fully drawn) of approximately 2.2% (2020: 2.4%) and gearing of 38.6% (2020: 36.7%).

FY22 Guidance

The REIT reconfirms that based on information currently available and barring any unforeseen events or further COVID-19 impacts, a FY22 distribution guidance of 7.2cpu representing no growth on FY21. This equates to a forecast FY22 distribution yield of 5.6% based on the closing price as at 1 July 2021 of $1.29.

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