Qualitas Real Estate Income Fund Units · ASX:QRI
Qualitas Real Estate Income Fund Units — Corporate Update (August 2021)
33 slides from Qualitas Real Estate Income Fund Units's corporate update, Aug 16, 2021
Slide 1: Qualitas Real Estate Income Fund Market & Portfolio Update June quarter 2021
Qualitas Real Estate Income Fund (ASX:QRI) ARSN 627 917 971 QRI Qualitas Real Market Estate Income & Portfolio Fund (ASX:QRI) Update June quarter 2021 Exclusive Adviser Update: 2pm (AEST), Monday 16 August 2021 1
Slide 2: Presenters & Agenda
Presenters & Agenda Andrew Schwartz Nick Bullick Yin-Peng Chiew Reuban Sivarajasingam Group Managing Director Director, Real Estate Director, Strategy Director, Advised Distribution & Co-Founder (Portfolio Manager - QRI) Listed Funds 1 Qualitas update 2 Market update - house views 2 QRI update 3 Q&A
Slide 3: Executive summary
Executive summary • Private debt is a well-established asset class for income, and commercial real estate (“CRE”) debt sits within this segment • As investors seek income and yield in this low interest rate environment, the growing $380Bn CRE debt market presents attractive risk-adjusted returns1 •
Slide 4: Qualitas Group
QUALITAS Qualitas Group
Slide 5: Introduction to Qualitas
Introduction to Qualitas Qualitas is one of Australia’s leading institutional alternative real estate investment management firms, specialising in investing across the entire capital structure of real estate debt and equity 13 Year Track Record1 $3.7 Bn 10 Active managed fund Zero Losses of capital
Slide 6: The Qualitas team
The Qualitas team Andrew Schwartz Mark Fischer Tim Johansen Rob McLellan Kathleen Yeung Philip Dowman Anna Wagner Group Managing Director Global Head of Global Head of Chief Risk Officer Global Head of Strategy Chief Financial Officer Head of People & & Co-Founder Real Estate Capital Culture 32 year
Slide 7: Manager commitment to sustainability
Manager commitment to sustainability Qualitas recognises the increasing importance of environmental, social and governance (ESG) factors and believes embedding these into its governance, culture and investing approach will improve performance over time. Sustainability Beliefs Sustainability creates
Slide 8: Market update
Market update Qualitas house view 8
Slide 9: Thematic investing supported by fundamentals
Thematic investing supported by fundamentals Qualitas utilises key strategies to take advantage of the current market opportunities: Long term population COVID-19 Government support Economic resilience growth and demographic changes Long term low interest rate environment Themes Banks continuing to
Slide 10: CRE debt market outlook
CRE debt market outlook Economic resilience... KEY ECONOMIC INDICATORS1 Continuing COVID-19 risks GDP growth +1.1% Q1-2021 (-6.2% Q2-2020) Government support No distress in CRE debt market Inflation increasing +1.1% Q1-2021 (-0.3% Q2-2020) Long term low interest rates… Unemployment THEMES 5.1% Suppo
Slide 11: Sector outlook
Sector outlook Qualitas undertakes a sector by sector approach to investing in CRE debt, identifying the risks and opportunities: • Supply of medium to high-density dwellings in major cities declining or at low levels, demand expected to increase in eastern seaboard cities over med-term RESIDENTIAL
Slide 12: The resilience of CRE debt
The resilience of CRE debt Impaired Assets to Exposures 6.0% 5.0% Loan impairment in 4.0% Australia’s CRE finance 3.0% GFC market (ADIs)1 2.0% 1.0% COVID-19 0.0% Sep 2004 Sep 2005 Sep 2006 Sep 2007 Sep 2008 Sep 2009 Sep 2010 Sep 2011 Sep 2012 Sep 2013 Sep 2014 Sep 2015 Sep 2016 Sep 2017 Sep 2018 Sep
Slide 13: CRE debt pipeline and deployment
CRE debt pipeline and deployment QRI benefits from Manager’s strong commercial real estate (“CRE”) debt pipeline: Actively originating new loan opportunities: CRE Debt Pipeline • for QRI and Qualitas wholesale funds ~$475m • across all loan types and sectors • focusing predominantly on eastern seabo
Slide 14: QRI Update
QRI Update As at 30 June 2021 14
Slide 15: Key Fund Details
Key Fund Details DISTRIBUTIONS Monthly1 TOTAL NAV $428m NAV REPORTING Weekly Investment Strategy To provide Unitholders with exposure to predominantly Australian CRE loans Investment Objectives To achieve the Target Return, provide monthly cash income1, capital preservation and portfolio diversifica
Slide 16: June quarter highlights
June quarter highlights Strong CRE debt origination across all property sectors • Manager focus on achieving best risk-adjusted returns in increasing competitive landscape New capital $67m raised: Placement and Unit Purchase Plan (“UPP”) • $54m Placement closed 1 April, $12.7m UPP closed 29 June • W
Slide 17: QRI Investment Objectives Met
QRI Investment Objectives Met Consistently delivered returns1 to unitholders: Target Return achieved RBA Cash + 5.0% to 6.5% Monthly cash 6.14% 6.15% Distribution Return p.a. Distribution Return p.a. distributions (Jun-21: 3 month) (Jun-21: 12 month) Well diversified by loan type, Portfolio diversif
Slide 18: Trading performance
Trading performance $1.70 3 5 $1.60 $1.50 1 $1.40 4 $1.30 $1.20 $1.10 2 Unit Price NAV $1.00 Nov-18 Mar-19 Jul-19 Nov-19 Mar-20 Jul-20 Nov-20 Mar-21 1. Since IPO, predominantly traded at a premium to NAV 2. Unit price impacted by COVID-19 induced bear market, despite no impairments experienced in un
Slide 19: Credit LIT market
Credit LIT market QRI is the only pure play CRE debt listed investment trust, which aims to deliver attractive risk-adjusted returns relative to its peers and is currently trading at a premium to its NTA: Closing Price 12 mth LIT Investments Premium / Discount % Distribution yield Target Return on N
Slide 20: Strategy to increase direct loan investment
Strategy to increase direct loan investment Portfolio composition1 – direct vs. indirect loans 100% Reducing indirect investments to AFWT 9% QUALITAS reinvest in direct loans: 14% 90% FUNDS • $44m of QSDF2 units redeemed in 80% Dec-20 & Jan-21 70% QUALITAS 46% • $26.5m AWFT notes exited in Jun-21 60
Slide 21: Portfolio composition & metrics
Portfolio composition & metrics Category $ millions % Capital fully allocated2 Cash (QRI & Qualitas funds) uncommitted 51.8 13% Senior Debt Investment Loans 176.1 42% Deployment at 87% Senior Debt Construction Loans 13.3 3% Senior Debt Land Loans 132.4 32% • 32 Total Loans Mezzanine Debt Constructio
Slide 22: Detailed loan portfolio
Detailed loan portfolio Senior Investment Loans Senior Land Loans Senior Construction Loans Mezzanine Construction Loans No. of loans 18 9 2 3 Total loan amount $176m (42%) $132m (32%) $13m (3%) $30m (7%) Avg. loan amount $9.8m $14.7m $6.7m $10.0m Weighted avg. gross return 6.7% 9.3% 10.0% 12.7% Wei
Slide 23: Manager wrap up
Manager wrap up • QRI continues to perform and meet its investment objectives despite a macroeconomic backdrop of COVID-19 continuing into the foreseeable future • The alternative lending market continues to grow and QRI is well positioned due to its long term market presence and deep borrower relat
Slide 24: Q&A Please submit your questions
Qualitas Real Estate Income Fund (ASX:QRI) ARSN 627 917 971 Q&A Please submit your questions Platforms Macquarie, BT Panorama, BT Wrap, Asgard, Netwealth, AMP North, HUB24, Mason Stevens 24
Slide 25: Appendix
UALITAS Appendix
Slide 26: Qualitas Advisory Board
Qualitas Advisory Board Michael Schoenfeld Elana Rubin AM Brian Delaney Chairman Non-Executive Non-Executive Since April 2012 Since June 2013 Since March 2021 • Michael is a Chartered Accountant for over 38 years • Elana is a Director of Mirvac Group, Chair of AfterPay • Brian has more than 30 years
Slide 27: Institutional-grade governance
Institutional-grade governance Corporate Governance & Oversight Disciplined Investing & Risk Management* Advisory Board Qualitas Trustee Board1 Group governance and oversight of Governance and oversight of business affairs Qualitas wholesale funds Investment Committee Independent, non-executive chai
Slide 28: QRI summary and benefits
QRI summary and benefits QRI provides exposure to the Australian CRE debt 1 market: BENEFITS – Why Invest? • in a liquid, regular income1 paying form Regular, stable monthly income at attractive risk-adjusted returns1 • with capital preservation characteristics Capital preservation: real propert
Slide 29: QRI performance - delivered healthy returns
QRI performance - delivered healthy returns Monthly Return1 Net Returns by period 100% 8% 8% Annualised Return % Annualised Return % 75% 6% 6% % Deployment 4% 50% 4% 2% 25% 2% 0% 0% 0% RBA Cash Rate 3 month Net Return % p.a Look through deployment (%) RBA Cash Rate 12 month Net Return % p.a Net Retu
Slide 30: Portfolio targets met
Portfolio targets met Investment Mandate constraints1 30 June 2021 Predominantly focused on senior loans 79% (total capital)2 91% (QRI loans)3 Ranking Mezzanine loans: target range 20%-35% (incl. AFWT notes) 7% (total capital)2 9% (QRI loans)3 UNDERWEIGHT ≤ 40% in a single Qualitas wholesale fund 12
Slide 31: Credit LIT market - calculations
Credit LIT market - calculations Closing Price 12 mth Distribution Closing Last Closing Price NTA IPO Premium / Date of last Distribution Distribution Distribution yield % p.a. LIT Price reported Discount % compared to Price Discount % on NTA value per unit Month yield @ Closing 13/8/2021 NTA on NTA
Slide 32: Contact us
Contact us Kathleen Yeung E: Kathleen.yeung@qualitas.com.au Tim Johansen E: tim.johansen@qualitas.com.au Managing Director P: 03 9612 3910 Managing Director P: 0403 574 241 Global Head of Strategy Global Head of Capital Qualitas Qualitas Yin-Peng Chiew E: yin-peng.chiew@qualitas.com.au Ivan Katz E:
Slide 33: Important Information
Important Information This document has been prepared and issued by QRI Manager Pty Ltd ACN 625 857 070 This document includes “forward looking statements”. Such forward- looking (Manager), the investment manager of the Trust. The Trust Company (RE Services) Limited statements are not guarantees of
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