Qualitas Real Estate Income Fund Units · ASX:QRI
Qualitas Real Estate Income Fund Units — H1 2024 Earnings Presentation
28 slides from Qualitas Real Estate Income Fund Units's earnings presentation, Feb 29, 2024
Slide 1: Qualitas Real Estate Income Fund 1H24 Financial Results
Qualitas Real Estate For personal use only Income Fund 1H24 Financial Results ASX:QRI
Slide 2: Disclaimer
Disclaimer The information that relates to the Qualitas Real Estate Income Fund ARSN 627 917 971 (‘QRI’ or ‘Trust’) is issued by The Trust Company (RE Services) Limited ABN 45 003 278 831 AFSL 235 150 (Perpetual) as responsible entity of the Trust. Any information not in reference to QRI has been pr
Slide 3: Acknowledgement of Country
Acknowledgement of Country For personal use only Qualitas acknowledges the Traditional Custodians of Country throughout Australia and their ongoing connection to land, sea, and community. We pay our respect to their Elders past and present. JOURNEY OF GROWTH BY ALYSHA MENZEL 3
Slide 4: 1H24 highlights
1H24 highlights For personal use only Financial Portfolio Growth Distribution return 99% ASX300 and ASX300 A-REIT 8.94% Floating interest exposure3 Index inclusion, only mortgage real estate investment trust in both indices 1H24 Annualised1 $56m Net tangible assets $1.6018per unit 0.85yrs Capital ra
Slide 5: QRI fund objectives are supported by macro tailwinds
QRI fund objectives are supported by macro tailwinds For personal use only KEY OBJECTIVES Deliver income to investors Monthly distribution Capital preservation Portfolio diversification by investing in portfolio of Delivering attractive No impairment since Short tenured portfolio Australia & New Zea
Slide 6: Loan portfolio overview as at December 2023
Loan portfolio overview as at 31 December 20231 Borrower quality generally increases with transaction size - internal syndication across all income credit funds provides QRI investors with opportunities to participate in large investments with lower risk profiles previously accessible by institution
Slide 7: Qualitas Group
For personal use only Qualitas Group
Slide 8: Qualitas – Industry leading CRE fund manager with a 15-year track record
Qualitas – Industry leading CRE fund manager with a 15-year track record, deep sector expertise, extensive origination and alignment of interest through co-investment For personal use only $8.1bn QRI is the only MREIT in ASX300 & Funds under ASX300 A-REIT 48 management1 indices Total equity investme
Slide 9: Market Outlook
For personal use only Market Outlook
Slide 10: Increasing allocations to private credit from global investors
Increasing allocations to private credit from global investors with a focus on quality and scale For personal use only • Significant growth potential - private GLOBAL PRIVATE CREDIT AUM TO INVESTORS ARE INCREASINGLY credit currently represents ~1% of ALMOST DOUBLE BY 20281 COMMITING LARGER MANDATES
Slide 11: Why now is the time to invest in CRE private credit in Australia
Why now is the time to invest in CRE private credit in Australia Ongoing liquidity withdrawals from traditional financiers and equity-like returns generated with debt-like security profile attracting global investors For personal use only AUSTRALIAN CRE FINANCIER LANDSCAPE HAS CHANGED INVESTORS ARE
Slide 12: Private credit is filling a void in CRE financing
Private credit is filling a void in CRE financing Selected the residential sector as a key focus area given it presents the most For personal use only attractive deployment opportunities: ELEVATED DEMAND FOR CREDIT FROM BORROWERS WITH ONGOING LIQUIDITY WITHDRAWAL FROM TRADITIONAL FINANCIERS • 300k2
Slide 13: Long-term tailwinds in the Australian residential sector
Long-term tailwinds in the Australian residential sector continue to attract global investors 0.8% Stabilising construction costs, 518k For personal use only • increases in off-the-plan apartment Unprecedented demand in sale prices and potential rate cuts residential assets Record high net annual Re
Slide 14: MREITs vs. Equity REITs
MREITs vs. Equity REITs Equity buffer embedded in QRI’s portfolio provides downside protection in an environment where asset values are being re-calibrated For personal use only MREIT Equity REIT Equity buffer Equity • Downside protection bearing the • Direct upside and Equity REIT via equity buffer
Slide 15: Where does CRE credit and QRI sit on the risk and return spectrum?
Where does CRE credit and QRI sit on the risk and return spectrum? For personal use only SENIOR CRE CREDIT ON THE RISK AND RETURN SPECTRUM1 QRI SITS AT THE LOWER END OF THE RISK SPECTRUM ACROSS QUALITAS’ FUNDS MANAGEMENT PLATFORM1 Size of bubble = scale of investment within Qualitas’ fund management
Slide 16: Appendix
For personal use only Appendix
Slide 17: The Qualitas team
The Qualitas team Managed by a team of specialists with extensive experience investing through the cycle For personal use only Andrew Schwartz Mark Fischer Dean Winterton Kathleen Yeung Tim Johansen Philip Dowman Group Managing Director Global Head of Real Estate Global Head of Capital Global Head o
Slide 18: Income statement
Income statement1 % ($THOUSANDS) 1H24 1H23 (YOY) Investment income For personal use only Distribution income 31,757 25,710 24% Interest income from cash at bank and financial assets 624 521 20% Net gains/(losses) on financial instruments 880 398 121% Management fee rebate2 202 211 (4%) Total investm
Slide 19: Balance sheets
Balance sheets1 % For personal use only ($THOUSANDS) 1H24 1H23 (YOY) Assets Cash and cash equivalents 12,443 11,683 7% Receivables and prepayments 5,882 5,706 3% Financial assets2 631,446 590,135 2% Total assets 649,771 607,524 7% Liabilities Distributions payable 4,898 4,889 - 3 Payables 2,049 1,47
Slide 20: QRI value proposition to borrowers
QRI value proposition to borrowers WHAT BORROWERS ARE SEEKING WHAT TRADITIONAL LENDERS PROVIDE WHAT QUALITAS PROVIDES For personal use only Low funding costs Low funding costs Dynamically priced returns Efficient and reliable execution (minimum no. of counterparties) - Syndicated loans with multiple
Slide 21: CRE private credit loans are not just one type of loan
CRE private credit loans are not just one type of loan Pre-completion Completed building For personal use only LAND COMPLETED Senior land loans - Secured against infill vacant land with development potential Senior investment loans - Secured against real estate that is or is potentially income gener
Slide 22: Unitholder returns
Unitholder returns Returns increase in line with the RBA cash rate For personal use only ANNUALISED RETURN 10% 9.00% 8.76% 8% 6% 4.35% 4% 2% 0% Jun-21 Aug-21 Oct-21 Dec-21 Feb-22 Apr-22 Jun-22 Aug-22 Oct-22 Dec-22 Feb-23 Apr-23 Jun-23 Aug-23 Oct-23 Dec-23 QRI Distribution (% p.a.) Trailing 12-months
Slide 23: Case study: senior debt residual stock loan (RSL)
Case study: senior debt residual stock loan (RSL) Melbourne inner city location For personal use only ~$155m ≤ 75% 18 months ~450 Facility limit, repaid to LVR Term Total apartments $64m 1% 6 month BBSY + 6.5% margin ~200 Arrangement fee Interest and Interest rate Apartments funded servicing account
Slide 24: Case study: senior debt residual stock loan (RSL)
Case study: senior debt residual stock loan (RSL) Melbourne inner city location For personal use only RISKS AND MITIGATION HOW IS THE DEAL TRACKING? Construction risk Interest servicing risk • Due diligence on structural integrity • Interest reserve account to meet 3 months of interest >100 ~5% Apar
Slide 25: Case study: Land subdivision refinancing
Case study: Land subdivision refinancing For personal use only ~$24.6m $2.8m 2 year 11.4% 1.1x 65% Initial loan Refinanced to Loan term IRR Multiple LVR WHY QUALITAS? POTENTIAL RISKS WHY WE PROCEEDED • Strong relationship • Market/valuation risk • Strong pre-sales • Deep understanding of • Interest
Slide 26: Case study: mezzanine construction loan
Case study: mezzanine construction loan Sydney inner west location For personal use only ~$45m ~77% / 88% 30 months ~270 Facility limit (including LVR / Loan-to-Cost Ratio Term Apartments capitalised interest) (LCR) 1.2% 52% BBSY + 9.15% margin ~2,200sqm Arrangement fee Apartment pre-sale Interest r
Slide 27: Case study: mezzanine construction loan
Case study: mezzanine construction loan Sydney inner west location For personal use only RISKS AND MITIGATION HOW IS THE DEAL TRACKING? Construction risk Market risk • Significant value of trades work locked in prior to loan • Accelerating sales momentum since launch ~220 >97% settlement Pre-sales c
Slide 28: For personal use only
For personal use only MELBOURNE OFFICE SYDNEY OFFICE BRISBANE OFFICE Level 38, 120 Collins Street, Level 5, 1 Bligh Street, Level 14, 167 Eagle Street, Melbourne VIC 3000 Sydney NSW 2000 Brisbane QLD 4000 QRI INVESTOR ENQUIRES Phone +61 3 9612 3939 Email qri@qualitas.com.au Website qualitas.com.au/q
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