Qualitas Real Estate Income Fund Units · ASX:QRI
Qualitas Real Estate Income Fund Units — Investor Presentation (December 2023)
44 slides from Qualitas Real Estate Income Fund Units's investor presentation, Dec 6, 2023
Slide 1: Qualitas Real Estate Income Fund Equity Raising and Investor Presentation
The Trust Company Level 18, 123 Pitt Street, P: (02) 9229 9000 (RE Services) Limited Sydney, NSW 2000 F: +61 2 8256 1427 ACN 003 278 831 www.perpetual.com.au ABN 45 003 278 831 AFSL 235150 ASX Announcement Level 3, 530 Collins Free call: 1800 650 358 Street P: (03) 9665 0200 PO Box 361 Collins F: (0
Slide 2: Placement arrangement and About Qualitas
The Placement is being arranged by Morgans Financial Limited (ACN 010 669 726), E&P Corporate Advisory Pty Limited (ACN 137 980 520) and Macquarie Capital (Australia) Limited (ACN 123 199 548) (“Joint Arrangers”). In addition, the Joint Arrangers, Ord Minnett Limited (ACN 002 733 048), Taylor Collis
Slide 3: About the Trust Company (RE Services) Limited
About the Trust Company (RE Services) Limited The Responsible Entity of the Trust is The Trust Company (RE Services) Limited, a wholly owned member of the Perpetual Group (“Perpetual”). Perpetual has been in operation for over 135 years and is an Australian public company that has been listed on the
Slide 4: Annexure A – Investor Presentation
Annexure A – Investor Presentation 4
Slide 5: Qualitas Real Estate Income Fund Equity Raising Presentation
Qualitas Real Estate Income Fund Equity Raising Presentation December 2023 ASX:QRI NOT FOR RELEASE FOR DISTRIBUTION IN THE UNITED STATES
Slide 6: Important Notices and Disclaimer
Important Notices and Disclaimer The Trust Company (RE Services) Limited ABN 45 003 278 831; AFSL 235150 (TrustCo) is the responsible entity of the Qualitas Real Estate Income Fund ARSN 627 917 971 (Trust) and the issuer of units in the Trust. This document (Presentation) has been authorised for rel
Slide 7: Important Notices and Disclaimer (cont’)
Important Notices and Disclaimer (cont’) The words, 'expect', 'anticipate', 'estimate', 'intend', 'believe', 'guidance', 'should', 'could', 'may', 'will', 'predict', 'plan', 'forecast' and similar expressions are intended to identify forward-looking statements. Any indications of, and guidance on, f
Slide 8: Important Notices and Disclaimer (cont’)
Important Notices and Disclaimer (cont’) Certain market and industry data used in connection with this Presentation may have been obtained from research, surveys or studies conducted by third parties, including industry or general publications. None of the Trust Parties or Limited Parties have not i
Slide 9: Important Notices and Disclaimer (cont’)
Important Notices and Disclaimer (cont’) Bond Adviser disclaimer Bond Adviser Pty Ltd (ABN 31 164 148 467, ASF Licence 456783) (BondAdviser) has acted on information provided to it and our research is subject to change based on legal offering documents. This research is for informational purposes on
Slide 10: Important Notices and Disclaimer (cont’)
Important Notices and Disclaimer (cont’) Financial data You should note that this Presentation contains pro forma financial information. The pro forma historical financial information provided in this presentation is for illustrative purposes only and is not represented as being indicative of the Ma
Slide 11: Acknowledgement of Country
Acknowledgement of Country 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 7
Slide 12: Table of Contents
Table of Contents 1 The Offer 2 Qualitas Group 3 QRI and Market Outlook 4 Appendices Note: See page 2 - 6 for Important Notices and Disclaimer, page 38 for Risk Factors and 39 for International Offer Restrictions. 8
Slide 13: Capital raising for the only mortgage REIT in the ASX300 A-REIT
Capital raising for the only mortgage REIT in the ASX300 A-REIT and ASX300 PLACEMENT OFFER QUALITAS REAL ESTATE INCOME FUND (ASX:QRI) Placement expected to issue 31,250,000 New Units in Aims to deliver stable monthly cash3 income generated by a QRI of ~$50m at $1.60 per Unit, to wholesale and portfo
Slide 14: The Offer
The Offer
Slide 15: QRI key investment highlights
QRI key investment highlights One of the pioneers of listed MREITs in Australia, democratising an asset class previously exclusive to sophisticated private market investors KEY MACROECONOMIC TAILWINDS Australia is considered by Ongoing decline in CRE private credit fills the global institutional inv
Slide 16: Qualitas Real Estate Income Fund (ASX:QRI)
Qualitas Real Estate Income Fund (ASX:QRI) Differentiated offering in the ASX300 A-REIT index – only channel for listed market investors to invest directly in Qualitas credit strategy with daily liquidity QRI AT A GLANCE MONTHLY DISTRIBUTION INCREASES IN LINE WITH CASH RATE1 $601m 34 10% QRI FY23 ac
Slide 17: Placement offer
Placement offer The Placement will benefit all unitholders through increasing portfolio size, enhancing diversification and improving trading liquidity KEY DATES1 BENEFITS OF THE EQUITY RAISING Trading halt Pre-market open on Wednesday, 6 December 2023 Increase portfolio diversification and cost eff
Slide 18: Qualitas Group
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Slide 19: Qualitas – an alternative real estate investment manager with a proven track record
Qualitas – an alternative real estate investment manager with a proven track record of performance and product innovation $8.0bn QRI is the only MREIT in ASX300 & Funds under ASX300 A-REIT 48 management1 indices Total equity investments2 Provides investors access to CRE private credit via the ASX 27
Slide 20: An amazing 15-year journey
An amazing 15-year journey October - 20231 2014 2009 $75m 8x $575m 14x $8bn Opportunistic equity Senior debt Senior debt Mezzanine Opportunistic equity Equity core Mezzanine Build-to-rent (BTR) Opportunistic equity Mezzanine Notes: 1. FUM metrics as at 31 August 2023 and adjusted for additional A$53
Slide 21: Credit deployment across QAL platform gaining momentum
Credit deployment across QAL platform gaining momentum Significant deployment in credit strategies throughout FY23 with early momentum in FY24 WHAT HAVE WE DONE TO CAPITALISE ON • CRE private credit is outperforming traditional investment options and the Qualitas team is well positioned to execute o
Slide 22: Qualitas team
Qualitas team Leadership team with average 8 years tenure at Qualitas supported by a growing platform Andrew Schwartz Group Managing Director and Co-Founder 38 years’ experience Mark Fischer Dean Winterton Philip Dowman Kathleen Yeung Tim Johansen Michelle Christou Global Head of Real Estate Global
Slide 23: QRI management team
QRI management team Mark Fischer Philip Dowman Kathleen Yeung Dean Winterton Global Head of Real Estate & Co-Founder Chief Financial Officer Global Head of Corporate Development Global Head of Capital Investment Team Portfolio Management Team Corporate Development Team Capital Team • Fund investment
Slide 24: QRI and Market Outlook
QRI and Market Outlook QUALITAS
Slide 25: Why Australia, why CRE private credit and why Qualitas?
Why Australia, why CRE private credit and why Qualitas? Australian CRE private credit sector – potentially a defensive investment amidst global uncertainty AUSTRALIA 1.6% 2023F GDP growth 12th 12% 2nd Largest Population growth Highest GDP per capita outperforming the average of economy globally1 to
Slide 26: 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 lower risk are attracting global investors AUSTRALIAN CRE FINANCIER LANDSCAPE HAS CHANGED INVESTORS ARE DRAWN TO ATTRACTIVE RISK ADJUSTED
Slide 27: It’s not always about price
It’s not always about price WHAT BORROWERS ARE SEEKING WHAT TRADITIONAL LENDERS PROVIDE WHAT QUALITAS PROVIDES Low funding costs Low funding costs Dynamically priced returns Efficient and reliable execution (minimum no. of counterparties) - Syndicated loans with multiple counterparties Large single
Slide 28: 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 LAND COMPLETED Senior land loans - Secured against infill vacant land with development potential Senior investment loans - Secured again real estate that is or is potentially income generating • Sites to be acti
Slide 29: QRI investment mandate constraints and key targets
QRI investment mandate constraints and key targets QRI’s portfolio is diversified in terms of loan type and geography Investment mandate constraints1 31 October 20232 Predominantly focused on senior loans 78% (Invested Capital)2 Ranking Mezzanine loans: target range 20%-35% (incl. AFWT notes) 22% (I
Slide 30: QRI October portfolio overview
QRI October portfolio overview Borrower quality generally increases with transaction size - internal syndication across all income credit funds provides QRI investors opportunities to participate in large investments with lower risk profiles previously exclusively accessible by institutional investo
Slide 31: Loan valuation and impairment assessment
Loan valuation and impairment assessment IMPAIRMENT RISK MITIGANTS IMPAIRMENT ASSESSMENT TRAFFIC LIGHT SYSTEM FOR LOAN RISK MONITORING • Equity buffer • Impairment is made when it is unlikely Progressing satisfactorily – that a loan payment (interest or • Borrower guarantees reviewed every six weeks
Slide 32: MREITs vs. Equity REITs
MREITs vs. Equity REITs The equity buffer embedded in QRI’s portfolio provides downside protection in an environment where asset values are being re-calibrated MREIT VS. EQUITY REIT1 MREIT Equity REIT Equity buffer Equity • Downside protection bearing the • Direct upside and Equity REIT via equity b
Slide 33: NAV since inception
NAV since inception Weekly reported NAV demonstrated QRI’s consistency in performance1 and robust asset management platform Distribution consistently exceeded target return during periods when cash rate was below 1% ASX300 and ASX300 $1.70 A-REIT inclusion $1.60 $1.50 $1.40 $1.30 Unit price impacted
Slide 34: Appendix A
Appendix A Investment process and case studies
Slide 35: Investment process across the loan life cycle
Investment process across the loan life cycle Qualitas undertakes extensive analysis and continuous assessment throughout the loan lifecycle Due diligence Formal investment Closing & Active asset Exit / Loan Origination & financial analysis approvals funding management repayment All originated oppor
Slide 36: Case study: senior debt residual stock loan (RSL)
Case study: senior debt residual stock loan (RSL) Melbourne inner city location ~$155m ≤ 75% 18 months ~450 Facility limit LVR Term Total apartments 1% 6 month BBSY + 6.5% margin ~200 Arrangement fee Interest and Interest rate Apartments funded servicing accounts by Qualitas WHY DID THE BORROWER CHO
Slide 37: Case study: senior debt residual stock loan (RSL)
Case study: senior debt residual stock loan (RSL) Melbourne inner city location 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 >60 ~5% Apartments sold Above valua
Slide 38: Case study: Land subdivision refinancing
Case study: Land subdivision refinancing ~$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 servicing risk • Prime
Slide 39: Case study: mezzanine construction loan
Case study: mezzanine construction loan Sydney inner west location ~$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 rate Retail and achieve
Slide 40: Case study: mezzanine construction loan
Case study: mezzanine construction loan Sydney inner west location 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 coverage • Residual LVR
Slide 41: Appendix B
Appendix B Risk Factors and International Offer Restrictions
Slide 42: Risk Factors
Risk Factors Investment in the Trust is subject to a number of risks and Investors should refer to Section 8 Risks relating to the portfolio of the PDS dated 7 October 2021 (https://www.qualitas.com.au/listed-investments/qri- overview/) for further details in relation to the risks involved in an inv
Slide 43: International Offer Restrictions
International Offer Restrictions This document does not constitute an offer of New Units in the Trust in any jurisdiction in which it would be unlawful. In particular, this document may not be distributed to any person, and the New Units may not be offered or sold, in any country outside Australia e
Slide 44: Qualitas offices and QRI investor enquiries
MELBOURNE OFFICE SYDNEY OFFICE BRISBANE OFFICE Level 38, Level 5, Level 14, 120 Collins Street 1 Bligh Street 167 Eagle Street Melbourne VIC 3000 Sydney NSW 2000 Brisbane QLD 4000 QRI INVESTOR ENQUIRES P +61 3 9612 3939 E qri@qualitas.com.au W qualitas.com.au/qri qualitas.com.au
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