ASX ANNOUCEMENT: QRI Market and Portfolio Update – March 2021
30 April 2021
The Qualitas Real Estate Income Fund (ASX:QRI) March 2021 quarterly update is now available. You can view this latest update in the ASX Announcement.
Mark Fischer (Global Head of Real Estate), Nick Bullick (Director, Real Estate) and Yin-Peng Chiew (Director, Strategy), present QRI’s stable portfolio performance and how investment objectives will continue to seek to be achieved having regard to the outlook for commercial real estate debt (“CRE”) debt market.
Investment objectives met
The Trust met its investment objectives of Target Return (RBA Cash Rate + 5.0% – 6.5%), portfolio diversification and capital preservation during the quarter.
The Manager is pleased to deliver consistent and attractive risk-adjusted returns for a well diversified 34 loan portfolio that is predominantly senior first mortgage. The Trust’s performance remains strong for the first quarter of 2021 with a 5.87% p.a. net return and a stable 6.32% p.a. distribution return achieved (3-month).
Based on the current loan portfolio, accounting for the recent $54m placement capital raised and subject to no unexpected repayments, the Manager expects that the strong fully allocated capital position of the Trust will underpin a consistent level of distributions to investors of at least 6.00% p.a. until June 2021[1]
The loan portfolio is performing as expected, there were no impairments or interest arrears and the conservative portfolio weighted loan to value ratio of 61% was maintained, which resulted in a stable NAV position for the Trust.
March quarter market & portfolio recap
In light of the Australian economic recovery which is underway, market conditions were favourable and characterised by very strong borrower demand which fuelled the Manager’s CRE debt pipeline which now stands at circa $475m (up from $400m as reported previously). The Manager leverages its sophisticated borrower network to access a broad spectrum of compelling CRE debt opportunities which underpins the pipeline.
Given the strong position with respect to the CRE debt pipeline, the Trust’s fully allocated portfolio, and recent favourable unit price trading, the Manager raised additional capital and successfully closed a $54m private placement (“Placement”) on 1 April 2021 which increased the size of the Trust to $415m. The capital raising also provided an opportunity to diversify the Trust’s unitholder base and introduce new wholesale investors, further supporting liquidity.
As of the date of this release, the Manager is pleased to report that on a proforma basis (to the 31 March 2021 position), that the Trust is 92% deployed as a result of a new sizeable $83.5m senior investment loan that settled in April 2021 and that the remaining cash (including the capital raised from the recent Placement) is fully allocated to investments that are expected to settle from now until June 2021.
Due to the quieter period after the holidays, during the quarter, the Trust settled 3 loan extensions totalling $21m as well as received $49m of returned capital from loan repayments and fund redemptions.
Trust benefits to Investors
QRI continues to deliver the following benefits to investors that are seeking attractive sources of income and capital preservation:
- Steady and reliable income in the form of regular monthly cash distributions[2]
- Attractive and healthy premiums above the current low cash rate[3]
- Capital preservation, as all CRE loans enjoy security by way of real property mortgages
- Stable net asset value at or above $1.60 with no impairments since the IPO, supported by the Trust’s simple and robust loan valuation process
- CRE debt asset class differentiation managed by a local property specialist with expertise in investing across both real estate debt and equity
- Domestically focused investments with 100% of the portfolio currently invested in Australia only
Kind regards,
The Qualitas Team
30 April 2021
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[1] Forecast about future performance are not guarantee and may not occur.
[2] The payment of monthly cash income is a goal of the Trust only and neither the Manager or the Responsible Entity provide any representation or warranty (whether express or implied) in relation to the payment of any monthly cash income.
[3] Returns are not guaranteed. The premium achieved is commensurate to the investment risk undertaken.
Disclaimer
This communication has been issued and authorised for release by The Trust Company (RE Services) Limited (ACN 003 278 831) (AFSL 235150) as responsible entity of The Qualitas Real Estate Income Fund (ARSN 627 917 971) (Fund) and has been prepared by QRI Manager Pty Ltd (ACN 625 857 070) (AFS Representative 1266996 as authorised representative of Qualitas Securities Pty Ltd (ACN 136 451 128) (AFSL 34224)).
This communication contains general information only and does not take into account your investment objectives, financial situation or needs. It does not constitute financial, tax or legal advice, nor is it an offer, invitation or recommendation to subscribe or purchase a unit in QRI or any other financial product, should consider the current Product Disclosure Statement (PDS) of the Trust and the Trust’s other periodic and continuous disclosure announcements lodged with the ASX which are available at www.asx.com.au and assess whether the Trust is appropriate given your objectives, financial situation or needs. If you require advice that takes into account your personal circumstances, you should consult a licensed or authorised financial adviser.
While every effort has been made to ensure the information in this communication is accurate; its accuracy, reliability or completeness is not guaranteed and none of The Trust Company (RE Services) Limited (ACN 003 278 831), QRI Manager Pty Ltd (ACN 625 857 070), Qualitas Securities Pty Ltd (ACN 136 451 128) or any of their related entities or their respective directors or officers are liable to you in respect of this communication. Past performance is not a reliable indicator of future performance.