MA Financial is believed to be in the market testing buyer interest for the Australian listed commercial real estate developer GARDA Property Group.
GARDA owns 18 real estate assets worth $650.7m and its market value is close to $350m.
The company internalised management in recent years and has previously counted MA Financial – previously called Moelis – and Morgans as its advisers.
Sources told DataRoom that parties have been approached around the market by MA Financial testing their interest in an acquisition of the business.
It has five industrial developments, five office buildings and eight industrial properties, with a development pipeline of 160,000sqm.
The business has a 5.05 per cent capitalisation rate and the properties have a 5.7-year weighted average lease expiry, with much of its earnings growth dependent on development.
GARDA counts Matthew Madsen as its executive chairman and is based in Brisbane, with its portfolio predominantly Brisbane based.
The company’s share price closed at $1.50.
Sources say that GARDA had a buyer earlier in the year at about $1.80 per share but a deal never eventuated.
In its full year results, it said that its net tangible assets had increased 41.4 per cent or 60c to $2.05, with its real estate portfolio value increasing 31.1 per cent or $154m.
Its debt level is 35.6 per cent or $320m.
For the year to June, it posted a $140.5m net profit.
Talk of a sale comes in an environment where demand for new development is set to soften in the months ahead with a period of rising inflation and weakening macro-economic environment.
As a consequence, funding is becoming increasingly harder to come by for developers.
Demand for office properties from investors has weakened since the start of the global pandemic with a growing number of office workers opting to work from home.
As a result, mergers and acquisition activity has been relatively quiet in the real estate space.
Comparable companies to GARDA are considered to be Elanor Commercial Property Fund, GDI Property Group and Australian Unity Office Fund.
Australian Unity Office has also recently been up for sale, but buyers have been deterred from making an acquisition due to large vacancy levels in its portfolio.
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