Garmin Group Holdings (01271) plans to sell data center development projects

According to the Zhitong Finance App, Garmin Group Holdings (01271) announced that on September 18, 2026, the seller (two indirect wholly-owned subsidiaries of the Company) entered into such an agreement with the buyer. The seller has agreed to sell, and the buyer has already agreed to purchase these properties at a minimum total cost of HK$2,179 million and a potential further additional amount of up to HK$266 million.

These properties are data center development projects for leasing purposes. The first two phases of Property 1 were delivered to the buyer (as the current occupier) in December 2025 and began generating rental income; the remaining development and renovation works are still ongoing. Property 2 is under construction to be used as a data center and currently does not generate rental revenue.

The Board of Directors is currently adopting all possible strategies to reduce the leverage on the Group's balance sheet, increase its working capital and consolidate long-term financial stability. The sale provides the Group with an opportunity to sell the two properties as a whole to a single buyer and realize huge cash proceeds, thereby strengthening the Group's financial position while reducing its overall liabilities, and reducing its financing costs and risk of developing such properties, subject to continued liability under such agreements.

The Group has been seeking potential sales transactions since June 2025 and has entered into different non-binding procedures with the parties, but no formal agreement has been reached. The buyer has now agreed to acquire these properties in accordance with these agreements. Although the two deliveries are not mutually conditional, a transaction with a single buyer can reduce the time, execution risk and repetitive costs required to find and negotiate with different buyers, and can coordinate matters such as due diligence, lender consent, repayment, and mortgage cancellation. The payment structure allows each property to be transferred and paid the minimum total cost upon delivery, while the costs attributable to specific remaining works are only paid when conditions are met after delivery. As a result, this structure allows the sale to take place before such works are completed, and the board does not have to rely on receiving further additional payments when evaluating the merits of the sale. The board of directors has considered selling separately or bundling the sale with the Company's two other properties, but after considering that both properties are located close together and are technically designed to be operated together; and that the buyer is the current occupant of Property 1 (the sale of Property 1 to a third party requires its consent), and believes that the terms, timing and execution certainty under this structure are more suitable and feasible to meet the Group's financial needs.

The Board has assessed the sale on the assumption that no further additional payments will be collected, including a reduction of approximately 19.0% of the minimum total cost compared to the initial valuation of completed status, and an anticipated accounting loss of HK$1,088 billion. This loss mainly reflects sales proceeds below historical book value, which itself was not a separate cash payment at the time of delivery. The Board has weighed this loss against the immediate use of net cash proceeds to reduce debt, the financing costs and execution risks of delayed sales, and the costs and risks of continuing to own such properties. The expected annual financing cost savings of approximately HK$136 million from the plan's repayment; the Group's remaining works, transition arrangements and other liabilities mainly include specific renovation works specified under such agreements. The estimated total cost of specific renovation works and specific construction works under these agreements is approximately HK$118 million, of which approximately HK$72.5 million must still be paid by the Group to complete such works and meet the relevant post-settlement conditions. The total estimated cost is determined by reference to the amount remaining payable under the relevant sub-contract agreement for the completion of specific renovation works under such agreements. After considering the above matters, the outcome of the buyer search process, the alternatives available, and the financing and mortgage cancellation arrangements described above, the Board considers that the benefits of the sale will still outweigh the anticipated accounting losses and retention liabilities even if no further payment has been charged.