Key Highlights

  • FY26 distributions increased 18% to 8.5 cents per security.
  • Funds from operations rose 54% to 11.1 cents per security.
  • Property lending grew to 27% of group assets.
  • Net tangible Assets reached AUD 1.64 per security.

Garda Property Group (ASX:GDF) increased its FY26 distribution as funds from operations rose and Capital shifted from direct property ownership into property lending. Asset sales helped fund Debt reduction and expansion of the lending book, which now represents a larger share of group assets.

What the company does

Garda Property Group is an ASX-listed stapled security combining units in the GARDA Diversified Property Fund with shares in GARDA Holdings Limited. Historically a direct owner and manager of Australian office and industrial property, predominantly in Queensland, the group has in recent years expanded into direct property lending, using proceeds from asset sales to fund loans secured against real estate, alongside its remaining directly held portfolio.

Latest developments

Garda's FY2026 results, released on 30 July 2026, showed total distributions of 8.5 cents per security for the year, an 18% increase on FY2025, comfortably ahead of the company's initial FY2026 guidance, with FFO of 11.1 cents per security representing 54% growth year-on-year. The board lifted the quarterly distribution mid-year to 2.25 cents per security, reflecting the pace of Earnings growth. The result was underpinned by a continued reallocation of capital: proceeds of roughly $190 million from the sale of the North Lakes and Cairns assets were redirected into debt reduction and the group's expanding lending operations, which grew from around 7% of group assets in FY2025 to 27% in FY2026, while directly held property fell from 83% to 70% of the asset base over the same period.

Financial evidence

Net tangible assets rose 3.0 cents to $1.64 per security at year-end, while the FFO Payout Ratio for the year was 77%, indicating the distribution is comfortably covered by underlying cash earnings even after the sharp increase. Revenue was roughly evenly split between the property portfolio and lending operations, each contributing 49% of group revenue, underlining how quickly lending has become a core part of the earnings base rather than a minor diversification. Despite the strong FFO and distribution growth, Garda's security price closed the period around $1.03, a discount of roughly 37% to reported net tangible assets, a gap that is common across smaller listed property vehicles but nonetheless notable given the scale of earnings growth reported. Management has guided to a forward distribution Yield target of 7% on NTA for FY2027, equating to roughly 11.5 cents per security, implying further distribution growth is expected.

Risks and uncertainties

Garda's pivot toward direct property lending changes its risk profile: Loan investments carry counterparty and security-value risk that differs from owning property outright, and a downturn in the property market could increase the risk of loan impairments just as this segment has grown to represent more than a quarter of group assets. The persistent discount between the security price and NTA suggests the market is applying some caution to the growth strategy or to the smaller, less liquid nature of the stock. Office and industrial property markets, particularly in Queensland where Garda's remaining direct portfolio is concentrated, remain sensitive to broader economic conditions, tenant Demand and financing costs.

What to watch

Investors should watch whether Garda's FY2027 guidance of an 11.5 cents per security distribution, based on a 7% NTA yield target, is delivered, and whether the lending book continues to perform without Credit losses as it scales further. Any narrowing of the security price's discount to NTA, and further disclosure on the credit quality and Diversification of the lending portfolio, will also be worth following as the group's Business mix continues to evolve.