LDR Capital Property Fund Finalizes Fourth Asset Sale with $30 Million Felixstow Office Transaction

Accelerated Strategic Portfolio Repositioning Under New Leadership

Since assuming management in February 2026, LDR Capital Property Fund has advanced its portfolio repositioning strategy by announcing its fourth significant asset sale. The disposal of the Felixstow office property is a pivotal move in the Fund’s plan to simplify and enhance its asset base by prioritising higher-quality, income-generating properties. This transaction follows three prior divestments, underscoring management’s commitment to the strategic roadmap presented to securityholders at the time of the takeover.

Collectively, these four divestments have generated approximately $106 million in net cash after accounting for all adjustments, committed capital expenditures, and transaction costs. Although this amount represents a 9.6% discount relative to the book valuations as of 31 December 2025, management has indicated that this pricing aligns with current market conditions and is part of a deliberate portfolio recalibration. Chairman Paul Lederer highlighted the importance of disciplined execution, stating the Fund has "acted decisively to reshape the portfolio" consistent with its strategic objectives.

Details of the Felixstow Office Asset and Lease Covenants

The property located at 196 O G Road, Felixstow, South Australia, is classified as a secondary-grade office asset situated approximately six kilometres northeast of Adelaide’s central business district. The building offers 6,288 square metres of net leasable area and maintains full occupancy, ensuring a stable income stream at the time of sale.

DXC Technology, a global IT services provider, holds a lease on the property extending through August 2030, providing the new owner with predictable cash flow over the next five years. The secondary-grade status and location outside the primary CBD reflect the asset’s position within the broader Australian office market, where secondary and tertiary assets have faced ongoing valuation pressures. The $30 million gross sale price for this fully leased property establishes a benchmark for comparable secondary-grade office assets in regional Australian markets.

Focus on Debt Reduction and Capital Deployment Strategy

LDR Capital’s management has confirmed that net proceeds from the four divestments will be prioritised for debt reduction rather than distributions, acquisitions, or capital reserves. This approach underscores a strategic emphasis on strengthening the Fund’s balance sheet and lowering financial leverage. The decision to focus on debt repayment reflects management’s view that improving financial stability is critical at this stage of the portfolio repositioning.

Chairman Paul Lederer articulated the Fund’s broader objective to "build a simpler, higher quality portfolio capable of delivering enduring cashflows that will provide for a sustainable distribution and long-term NTA growth." By reducing debt, the Fund aims to enhance financial flexibility and support sustainable distributions while fostering long-term net tangible asset growth. This strategy positions debt reduction as a foundational step toward achieving stable and growing distributions in future periods.

LDR Capital’s Real Estate Platform and Asset Management

Established in 2025, LDR Capital is a real estate funds management platform created to oversee assets owned by the Lederer Group and aligned investors. The platform offers professional fund management and governance across a diversified portfolio of commercial real estate investments. Since inception, LDR Capital has grown to manage approximately $1.6 billion in Australian real estate assets spanning multiple property types and locations.

The LDR Capital Property Fund serves as one investment vehicle through which the platform deploys capital and generates returns for securityholders. As an externally managed REIT, LED provides access to Australian commercial office assets, with portfolio management governed by defined investment and governance frameworks. The platform’s establishment and its assumption of LED’s management in February 2026 represent a strategic initiative to centralise real estate asset management aligned with the Lederer Group’s investment goals.

Australian Office Market Valuation Context

The 9.6% discount between the sale price and the 31 December 2025 book valuations reflects prevailing market conditions in the Australian commercial office sector. The office market has encountered significant challenges including shifts in work patterns, rising interest rates impacting valuations and yields, and increased supply of modern assets competing for tenants. Secondary and tertiary office properties, particularly those outside major CBDs, have experienced heightened valuation pressures compared to premium-grade assets in primary locations.

The Felixstow property’s secondary-grade classification and location northeast of Adelaide place it within a segment facing notable competitive and valuation headwinds. The 9.6% discount to book values highlights the market repricing across office asset classes during the first half of 2026. Despite these challenges, securing unconditional contracts and anticipating settlement in late September 2026 demonstrate the Fund’s ability to execute sales and realise liquidity amid a difficult environment.

Settlement Schedule and FY26 Strategic Update

Settlement of the Felixstow sale is expected in late September 2026, establishing a clear timeline for cash proceeds realisation and application toward debt reduction. This timing coincides with the Fund’s financial year end and may influence reported financial positions and debt levels in FY26 results. A detailed strategic update will accompany the FY26 results announcement scheduled for late August 2026, offering securityholders insights into portfolio repositioning progress, capital allocation priorities, and long-term value creation strategies.

The FY26 results update is a critical milestone for investors seeking transparency on the Fund’s repositioning efforts, remaining portfolio status post-divestments, and management’s outlook on strategy and financial performance. This enhanced disclosure contrasts with prior asset management periods and reflects the new management team’s commitment to clear communication and accountability.

Leadership and Securityholder Engagement

Chairman Paul Lederer emphasized disciplined execution and fulfillment of commitments to securityholders, stating, "we've done exactly what we said we would do" and affirming focus on delivering on promises. His remarks highlight management’s dedication to transparency and accountability in executing the repositioning strategy. Lederer described the divestments as advancing the Fund toward "building a simpler, higher quality portfolio," consistent with its strategic goals.

Evolution Trustees Limited acts as the responsible entity, with Ben Norman authorising this announcement as a Director. Ryan Pittman, appointed Fund Manager, leads operational execution of strategy and asset management decisions. The Fund Manager’s successful negotiation of the Felixstow sale at $30 million, securing unconditional contracts and maintaining full occupancy through settlement, demonstrates the management team’s execution capabilities since assuming control in February 2026.

Office Sector Trends and Secondary Asset Positioning

The Australian commercial office sector continues to face structural and cyclical pressures affecting valuations and investment strategies. Secondary-grade office assets outside major CBDs are particularly vulnerable, as tenant demand increasingly concentrates on premium-grade properties with modern features and sustainability credentials. LED’s decision to divest secondary-grade assets aligns with sector trends favouring quality over commodity office space.

The Felixstow lease to DXC Technology until August 2030 offers tenant stability and credit quality insights. As a multinational IT services company, DXC’s long-term lease signals commitment to physical office space for certain operations, despite broader industry trends toward flexible work arrangements. The incoming owner inherits both the benefits of a secure lease and potential operational risks related to tenant lease modifications or early termination.

Investment Considerations for Securityholders

For existing LED securityholders, the divestment programme and focus on debt reduction carry important implications. The reduction in property holdings through four sales will decrease the Fund’s asset base and potentially rental income, though this is balanced by expected portfolio quality improvements and a stronger balance sheet. The absence of interim distribution or capital return announcements indicates that cash is being fully directed toward debt repayment, which may impact near-term distributions.

The strategic shift toward higher-quality assets with sustainable cash flows positions the Fund to potentially deliver more consistent and growing distributions once debt reduction advances. Management’s emphasis on "enduring cashflows that will provide for a sustainable distribution and long-term NTA growth" suggests a phased strategy where near-term metrics may be constrained during portfolio transition. The FY26 results announcement in late August 2026 will provide critical updates on progress and financial positioning following the divestments.