QRI announces $266 million Entitlement Offer

11 September 2019

•  Offer to raise up to $266 million of new units to make further loan investments, increase liquidity in QRI for existing unitholders and diversify the unitholder base
• Pro-rata 1 for 1 Accelerated Non-Renounceable Entitlement Offer (“ANREO Offer”) to existing unitholders and new investors (subject to a shortfall offer)

11 September 2019:  The Trust Company (RE Services) Limited ACN 003 278 831 (Responsible Entity) as responsible entity of the Qualitas Real Estate Income Fund (ASX: QRI) (Trust) and QRI Manager Pty Ltd ACN 625 857 070 (Manager) as investment manager of the Trust, today announced an entitlement offer to raise up to $266 million of new capital for the Trust.

The entitlement offer is an accelerated, non-renounceable, pro rata offer of one new fully paid ordinary unit for every one existing unit in the Trust to existing eligible unitholders at an Offer Price of $1.60 per new unit (Entitlement Offer). If there is a shortfall under the Entitlement Offer, the shortfall may be placed at the discretion of the Responsible Entity to new wholesale and retail investors.

Tim Johansen, Managing Director, Global Head of Capital, Qualitas, said the capital raise will allow the Trust to capture opportunities identified in its lending pipeline.

“As the banks continue to retreat from commercial real estate lending, alternative credit providers are increasing their market share. We are seeing continued demand for predominantly senior loans to be used for investment, construction and land financing. By increasing the capital base of QRI, we will be able to take advantage of these investment opportunities.”

The Manager recognises the importance of deploying this new capital in an appropriate timeframe, and to ensure alignment of interests with unitholders, will reduce the Management Fee by 50% on the capital raised in the Entitlement Offer until it is invested[i].

QRI aims to deliver stable monthly cash income generated by a portfolio of commercial real estate loans, secured by predominantly first mortgages, and to a lesser extent, second mortgages[ii]. As at 31 August 2019, 83% of the Trust’s portfolio was invested in senior loans (first mortgage) and 17% in mezzanine [iii].

Since listing on the Australian Securities Exchange on 27 November 2018, the Manager has progressively deployed the capital raised and paid monthly distributions. The annualised net return for the month of August was 5.27%.

Evans Dixon Corporate Advisory Pty Limited (Evans Dixon) is acting as Lead Arranger to the Entitlement Offer. Evans Dixon and Shaw and Partners Limited are together the Joint Lead Managers.

Details of the Offer

The Entitlement Offer will comprise of the following:

1. pro-rata entitlement of new units to eligible wholesale unitholders who are accelerated (Wholesale Entitlement Offer). This offer will open on Wednesday, 11 September 2019 and close on Thursday, 12 September 2019. Any entitlements not taken up will be made available to new wholesale investors. New units will be issued on Thursday, 26 September 2019;

2. pro-rata entitlement of new units to all eligible retail unitholders (Retail Entitlement Offer). This offer will open on Friday, 16 September 2019 and close on Tuesday, 8 October 2019. New units will be issued on Friday, 18 October 2019; and

3. all eligible retail unitholders can elect to be accelerated (Early Retail Entitlement Offer). This offer will also open on Monday, 16 September 2019 and close on Friday, 20 September 2019. New units will be issued on Thursday, 26 September 2019.

If there is a shortfall under the Entitlement Offer (Shortfall), the Shortfall may be placed at the discretion of the Responsible Entity to new investors, which will expand the Trust’s investor base and provide greater liquidity for unitholders, or to existing unitholders.

The current trading halt will continue until the earlier of a further announcement by the Manager announcing, among other things, the outcome of the Wholesale Entitlement Offer and commencement of trading on Friday, 13 September 2019.

A Product Disclosure Statement (PDS) for the Offer was lodged with ASIC today and is available from the ASX or Trust’s website https://www.qualitas.com.au/listed-investments/entitlement-offer-2019/ . The PDS will be dispatched to dispatched as at the record date to existing unitholders not invited to participate in the Wholesale Entitlement Offer. Investors should consider the PDS in deciding whether to acquire, or continue to hold, units in the Trust.

Key Dates of the Offer

 Investor Queries

General

Phone: +61 3 9612 3900 | Email: qri@qualitas.com.au

Trust website: www.qualitas.com.au/listed-investments/QRI

Unit Registry

Phone: 1300 402 177 | Email: qualitas@automicgroup.com.au

Website: www.automic.com.au

Notices and disclaimers

This communication has been issued by The Trust Company (RE Services) Limited (ACN 003 278  831)  (AFSL 235150) 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. Before acting on any information contained in this communication, you should consider whether it’s appropriate to you, in light of your objectives, financial situation or needs.

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.

[i] from 1.5375% p.a to 0.7688% p.a, Inclusive of GST, less RITC will be applied to uninvested capital. Management Fees form part of the Management Costs of the Trust which is 1.89% – 2.05% of the Trust’s NAV. The reduced fee arrangement ceases once the capital raised (less 5%) is invested. For more information, please refer to the Product Disclosure Statement (PDS)

[ii] There is no guarantee the Trust will meet its Investment Objective. The payment of monthly cash income is a goal of the Trust only.

[iii] Excludes Trust Loan Receivable & cash. The Manager classifies the AFWT subordinated notes as mezzanine as it ranks behind senior noteholders.

[iv] There is no guarantee the Trust will meet its Investment Objective. The payment of monthly cash income is a goal of the Trust only