Garda realises major loss on Melbourne offices

The Burnley buildings (outlined) sold for a 27 per cent discount to book value.
Garda built Botanicca 9 on land acquired for $9.67 million in 2017.

ASX-listed Garda Property Group has sold two Burnley offices for a major loss on their June 30 valuation and an even more significant drop on asking prices when they were for sale 14 months ago.

In the Botanicca Corporate Park at 572-576 and 588 Swan Street, Buildings (or Botanicca) 7 and 9 – with 6587 square metres and 7109 sqm respectively – have been picked up by an entity of Warren Ebert’s Sentinel Property Group now raising capital.

The $80 million result reflects a 7.5 per cent blended net passing yield; a third of the combined area is vacant.

If fully leased at market levels, the return rises to 9.25pc.

Dawkins Occhiuto’s Andrew Dawkins and Walter Occhiuto were the agents.

Botanicca 7 contains 6587 square metres.

The deal is conditional on a successful due diligence, capital raising and finance.

Proceeds will partially repay debt.

Garda shares closed at $1.12 on Friday, down from c$1.48 a year earlier.

Garda takes another hit on Melbourne office

Brisbane based Garda offered the Burnley offices last August seeking $120m-plus – it held Botanicca 7 for about seven years and developed Botanicca 9 after 2017.

The campaign was refreshed last quarter; still classified as “assets held for sale” in the company’s most recent financial report, however, the manager warned book value at June 30 was $110.5m.

Sentinel is picking it up at a 27pc discount to that – its impressive circa double digit yield for a Melbourne investment grade asset is a largely unheard of result in at least three cycles (story continues below).

Garda just sold 436 Elgar Road, Box Hill, for a 14 per cent drop on book value.

The deal comes seven months since Garda sold 436 Elgar Road, Box Hill, for $40.3m.

Garda also took a hit there – a 14pc drop to book value.

Charter Hall sold Orica House for a circa-nine per cent discount to book value.

The yield was healthier though, 5.9pc.

Following the portfolio reweigh, the group retains an interest in Melbourne’s inner east – 8-10 Cato St, Hawthorn East, which it bought last May from Servier in a structured deal which saw the seller move to Botanicca 9 and bank $20.1m.

Vulnerable sector

With COVID and the ‘work from home’ trend depressing office demand – while a building boom adds more product – office vacancy has surged and capital values have largely fallen over the past 36 months.

Earlier this week we reported Charter Hall sold Orica House – Australia’s first skyscraper – to Harry Stamoulis.

Worth $155m, that deal reflects a circa-nine per cent discount to book value.

Dexus also recently took losses speculated to be between 15-20pc on two Sydney CBD offices.

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Marc Pallisco

A former property analyst and print journalist, Marc is the publisher of