Divestments settled: $103.7 million in net sales proceeds cuts LDR Capital Property Fund gearing to 30.8%
LDR Capital Property Fund (ASX: LED) has settled all four previously announced asset divestments, generating $103.7 million in net sales proceeds. In its 10 November 2026 operating update, the Fund reported that pro forma gearing fell from 42.6% at 30 June 2026 to 30.8% at 9 November 2026.
Drawn debt dropped from $190.9 million to $113.5 million, while the loan-to-value ratio (LVR) reduced from 50.1% to 38.0%. Net proceeds have been applied to debt reduction, which the Fund says provides greater financial flexibility as it repositions its portfolio.
The update also set out the following operating highlights:
- Post-settlement net tangible assets (NTA) maintained at $0.58 per security
- Portfolio occupancy of 95.7%
- Weighted average lease expiry (WALE) of 3.7 years across the three retained assets
- 3,071 sqm of new leases and heads of agreement since August 2026
- FY27 distribution guidance of 1.5 cents per security reaffirmed
Ryan Pittman, LDR Capital Managing Director and Fund Manager
“We have maintained the momentum established in FY26, completing the settlement of all four asset disposals announced earlier this year. This is an important milestone in the repositioning of LED…”
The FY26 results presentation showed pro forma gearing of 29.3%. The revised 30.8% reflects the reduction in cash to fund the FY26 distribution payable and other working capital needs since 30 June 2026.
Settlement timing by asset
Since the release of its FY26 results, the Fund settled the sales of O G Road, Mt Gravatt and Limestone Centre. Cannon Hill settled in June 2026, completing the sale of the four secondary assets previously announced in June and July 2026.
The Cannon Hill sale was the opening move in the programme, priced at a 4.6% discount to book value, which set the benchmark for how secondary office assets would be marked on exit.
| Asset | Net sales proceeds ($m) | Settlement |
|---|---|---|
| Cannon Hill | 23.8 | Settled Jun-26 |
| O G Road | 23.8 | Settled Sep-26 |
| Mt Gravatt | 27.9 | Settled Nov-26 |
| Limestone Centre | 28.2 | Settled Nov-26 |
| Total | 103.7 | n/a |
Settlement of Mt Gravatt and Limestone Centre was originally targeted for 31 August 2026. The settlement was subject to certain conditions being met, which were only achieved in late October 2026.
The Limestone Centre and Nexus Centre contracts were exchanged together at an average 6.0% discount to December 2025 book values, and the settlement conditions attached to that deal explain the delay noted above.
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What a capital recycling strategy means for LED investors
Capital recycling involves selling secondary or non-core assets and using the proceeds to repay debt, then repositioning towards “essential properties capable of generating enduring cash flows and supporting sustainable distributions.” That is the direction LDR Capital has set for the Fund.
LDR Capital was appointed manager in February 2026. For LED, the strategy translates into the following:
- Reducing debt was named as a stated priority
- Proceeds from further asset recycling will initially be directed towards debt reduction
- The portfolio is being repositioned towards essential properties
Retained portfolio: three assets valued at $255.5 million
Following the settlements, LED’s retained investment property portfolio comprises three assets: 50 Cavill Ave (Surfers Paradise, QLD), WorkZone West (Perth, WA) and Garema Court (Canberra, ACT). Their combined valuation is $255.5 million as at 30 June 2026.
| Metric | 50 Cavill Ave | WorkZone West | Garema Court | Portfolio |
|---|---|---|---|---|
| Valuation 30 Jun 26 ($m) | 123.0 | 92.5 | 40.0 | 255.5 |
| Occupancy | 90.9% | 99.5% | 97.7% | 95.7% |
| WALE | 2.8 | 4.8 | 3.5 | 3.7 yrs |
| NABERS Energy | 5.0 stars | 6.0 stars | 5.0 stars | 5.4 stars |
Occupancy and WALE are measured by net lettable area at 9 November 2026 and include signed Heads of Agreement.
Leasing activity since August 2026
At WorkZone West, a heads of agreement was signed for Level 3 (2,443 sqm) on a five-year term commencing 1 Jun 2027. Once the lease is signed, occupancy at the asset will have increased from 70.5% to 99.5% since LDR Capital was appointed manager.
At 50 Cavill Avenue, leasing remains a key priority, with management progressing discussions and negotiations across up to 10 leases expiring through to June 2027. New leases were signed across Suites 11B (395 sqm, 3-year term), 4D (153 sqm, 1-year term) and 5D (80 sqm, 3-year term), with a further 2,061 sqm subject to renewal discussions or negotiations.
Next priorities: 200 Adelaide Street, Harris Street Fund exit and refinancing
200 Adelaide Street and the acquisition pipeline
LDR Capital continues to engage with potential acquirers of 200 Adelaide Street, Brisbane. There is no certainty that a transaction will proceed, though the potential divestment remains a priority within the Fund’s asset recycling strategy.
LDR Capital has identified a diversified pipeline of potential acquisitions that meet the Fund’s investment criteria. Under the Investment Management Agreement, it intends to first offer LED any opportunity within the Fund’s investment policy (subject to limited exceptions), but the immediate priority remains recycling non-core assets and strengthening the balance sheet.
Harris Street Fund exit proposal
LED holds a 49.9% interest in the Harris Street Fund, valued at approximately $11.2 million, and a 97% interest in the Harris Street Capital Notes, valued at approximately $36.6 million. Both figures are as at 31 October 2026, based on information provided by Kyron Capital, and the Capital Notes mature on 30 June 2027.
On 20 October 2026, LED submitted a proposal to Kyron Capital (formerly Elanor Investors Group). Under it, LED would increase its investment in the capital notes to $42.5 million to partially fund a special buyback of its equity interest, with maturity extended by a further 2.5 years.
The proposal is conditional on Kyron Capital and its associates acquiring LED’s remaining equity interest in the Harris Street Fund.
Based on its engagement with Kyron Capital to date, LED has concerns regarding the issuer’s ability to repay the capital notes upon maturity in the absence of its proposal or an alternative transaction. LED believes the proposal provides a potential pathway to realising its equity investment and preventing a potential event of default, and it remains open to alternative proposals from Kyron Capital or third parties.
LED has requested a meeting with the newly appointed independent trustee board of the Harris Street Fund. Kyron Capital has indicated the board is unlikely to be available in the remainder of 2026.
Debt refinancing
LED’s existing debt facility matures in August 2027. LDR Capital has commenced discussions with potential financiers regarding refinancing arrangements, with a further update to be provided as discussions progress.
What happens next for LED
The announcement points to the following upcoming events:
- Debt refinancing: the existing facility matures in August 2027, and a further update will be provided as discussions with potential financiers progress.
- Harris Street Capital Notes maturity: the notes mature on 30 June 2027, the date against which LED’s exit proposal is framed.
- WorkZone West Level 3 lease: the 2,443 sqm lease is on a five-year term commencing 1 Jun 2027, once signed.
- Distributions: a targeted 0.75 cents per security in each of the March 2027 and June 2027 quarters, supporting FY27 guidance of 1.5 cents per security (subject to Fund performance and market conditions).
- 200 Adelaide Street: engagement with potential acquirers continues, with no certainty that a transaction will proceed.
Ryan Pittman, LDR Capital Managing Director and Fund Manager
“Our priorities remain clear: progressing further asset recycling, refinancing the Fund’s debt facilities and positioning LED to pursue investment opportunities that align with our strategy of owning essential properties that generate enduring cash flows.”
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