Qualitas Limited · ASX:QAL
Qualitas — H1 2024 Earnings Presentation
41 slides from Qualitas's earnings presentation, Feb 22, 2024
Slide 1: Qualitas Limited – Interim Financial Results Presentation
ASX Announcement Qualitas Limited (ASX: QAL) 22 February 2024 Qualitas Limited – Interim Financial Results Presentation Qualitas Limited (ASX: QAL) (Company) provides the attached Results Presentation for the 6-month financial reporting period ended 31 December 2023. Authorised for release by the Bo
Slide 2: About Qualitas
About Qualitas Qualitas Limited ACN 655 057 588 (Qualitas) is an ASX-listed Australian alternative real estate investment manager with approximately A$8.1 billion1 of committed funds under management. Qualitas matches global capital with access to attractive risk adjusted investments in real estate
Slide 3: Qualitas 1H24 Results
Qualitas 1H24 Results (ASX:QAL) 22 February 2024
Slide 4: 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 2
Slide 5: Agenda and presenters
Agenda and presenters 1 2 3 4 A Market Outlook Funds 1H24 Outlook and 1H24 Highlights Management Financial Results and Guidance Appendices ANDREW SCHWARTZ KATHLEEN YEUNG PHILIP DOWMAN GROUP MANAGING GLOBAL HEAD CHIEF DIRECTOR OF CORPORATE FINANCIAL AND CO-FOUNDER DEVELOPMENT OFFICER 3
Slide 6: 1H24 – Focus on recurring earnings and strategic balance sheet utilisation
1H24 – Focus on recurring earnings and strategic balance sheet utilisation in line with growth objectives Increasing allocation to private credit from global investors Investors are focusing on selecting quality managers with due to permanent shift in the global banking sector scalable platforms and
Slide 7: Market Outlook and 1H24 Highlights
Market Outlook and 1H24 Highlights
Slide 8: Increasing allocations to private credit from global investors
Increasing allocations to private credit from global investors with a focus on quality and scale • Significant growth potential - private GLOBAL PRIVATE CREDIT AUM TO INVESTORS ARE INCREASINGLY credit currently represents ~1% of ALMOST DOUBLE BY 20281 COMMITING LARGER MANDATES TO global fixed income
Slide 9: 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 attractive deployment opportunities: ELEVATED DEMAND FOR CREDIT FROM BORROWERS WITH ONGOING LIQUIDITY WITHDRAWAL FROM TRADITIONAL FINANCIERS • 300k2 apartments needed over
Slide 10: 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, Unprecedented demand in residential assets 518k Record high net annual Record low increases in off-the-plan apartment sale prices boost development vacancy rate2 feasi
Slide 11: Significant growth in FUM and Fee Earning FUM with ~$2.1bn dry powder
Significant growth in FUM and Fee Earning FUM with ~$2.1bn dry powder underpinning earnings capacity RESULTS HIGHLIGHTS 31 DECEMBER 2023 Net capital commitment increase2 $5.6bn $4.2bn $2.1bn $8.1bn $2.1bn Fee Earning FUM3 +25% vs. 1H23 Invested FUM3 +17% vs. 1H23 FUM not yet earnings fees / dry powd
Slide 12: +25% in funds management revenue on 1H23
+25% in funds management revenue on 1H23 and strategic utilisation of balance sheet capital driving recurring earnings growth and efficiency gains $25.9m $9.7m $16.3m CONSISTENT RECURRING REVENUE GROWTH AND MARGIN EXPANSION 46% Funds management Principal income Funds management 42% revenue +31% vs.
Slide 13: New capital from diverse investor channels and existing investors
New capital from diverse investor channels and existing investors recommitting to scale flagship funds • Secured three substantial institutional mandates in 1H24 totalling c.$2.0bn, executing strategy to scale FUM ($M) flagship funds: – Additional $700m commitment from ADIA1 38% increased FUM in QDC
Slide 14: Expanding pipeline with high conversion rate of mandated opportunities
Expanding pipeline with high conversion rate of mandated opportunities to closed investments • FYTD closed and IC approved transactions totaled DEPLOYMENT ($M) $2.3bn as at 31 January 2024 exceeding pipeline as Progression of pipeline at 16 October 2023. FYTD24 • Pipeline and deployment as at 31 Jan
Slide 15: Funds Management
Management @) QUALITAS
Slide 16: Qualitas overview
Qualitas overview Funds management platform is well-positioned in the current economic environment and is set-up for long-term success Qualitas Asset light alternative CRE investment manager of third-party capital Integrating ESG standards in new product development (low carbon focused debt fund) an
Slide 17: Substantial dry powder and undrawn construction credit
Substantial dry powder and undrawn construction credit sets a strong foundation for future growth and margin expansion RECONCILIATION OF INVESTED FUM, FEE EARNING FUM AND FUM Deployed FUM with investment screening work already done Dry powder represents c. 50% Full base management fees to of current
Slide 18: Over 15 years track record attracting and retaining investors
Over 15 years track record of demonstrated investment performance continues to attract and retain investors across all channels and geographies INVESTOR COMPOSITION INSTITUTIONAL CAPITAL BY GEOGRAPHIC SPLIT CURRENT NUMBER OF COMMITMENTS 10% 6% 8% Institutional One commitment 38% Domestic $8.1 82 $8.
Slide 19: Arch Finance
Arch Finance Execution focus on larger loans and realisation of cost synergies Focus on high quality assets and borrowers under serviced by both traditional and Identified underserviced gap Market tailwinds supporting Qualitas has spent 15+ years alternative financiers. in the provision of credit fo
Slide 20: Our ESG vision and progress
Our ESG vision and progress ESG VISION Leveraging Qualitas’ platform and position as a leading Delivering real impact through our social and Continuing to review and refine our governance alternative CRE financier to play a role in assisting community programs, including charitable framework to work
Slide 21: 1H24 Financial Results
Wee Financial Results QUALITAS
Slide 22: Group earnings
Group earnings1 Consistent strong recurring revenue growth with investments in funds management and capital platform to drive future growth % • Statutory NPAT of $12.6m, increased by 17% on P&L BREAKDOWN ($THOUSANDS) 1H24 1H23 1H23 reflecting: (YOY) Net funds management revenue2 10,754 8,619 25% – F
Slide 23: Funds management
Funds management Strong top line growth across all funds management earnings categories with meaningful funds management EBITDA margin expansion % • Base funds management fee and transaction fee P&L BREAKDOWN ($THOUSANDS) 1H24 1H23 growth of 14% and 57% versus 1H23 driven by: (YOY) Base funds manage
Slide 24: Principal income and Arch Finance
Principal income and Arch Finance Sustained growth in principal income driven by increasing returns and deployment in underwriting % • Gross total $380m3 deployed for underwriting PRINCIPAL INCOME ($THOUSANDS) 1H24 1H23 18 transactions across private credit with $377m (YOY) recycled to fund investme
Slide 25: Operating performance
Operating performance Consistent operational efficiency gains supported by stabilising fee margins and strong growth in Invested FUM • Average Invested FUM 2-year CAGR of 41%. INCREASING ECONOMIES OF SCALE • BMF as % of Invested FUM declining due to the deployment of large institutional mandates. Ex
Slide 26: Balance sheet
Balance sheet Increasing utilisation of balance sheet capital in underwriting and co-investment while maintaining flexibility for future growth opportunities • Loan receivables c.$7m represents underwriting QUALITAS GROUP BALANCE SHEET ($THOUSANDS) 1H24 FY23 1H23 positions to existing funds. Assets
Slide 27: Outlook and Guidance
Outlook and Guidance QUALITAS
Slide 28: No change to outlook and guidance
No change to outlook and guidance FY24 OUTLOOK FY24 GUIDANCE • Interim dividend of 2.25cps declared. Estimated range $37m – $41m • FY24 dividend per share in line with target dividend payout ratio of between 50% to 95% of operating earnings. NPBT1 Outlook statements and guidance have been made based
Slide 29: Thank you
Thank you MELBOURNE OFFICE SYDNEY OFFICE BRISBANE OFFICE Level 38, 120 Collins Street, Level 5, 1 Bligh Street, Level 14, 167 Eagle Street, Melbourne VIC 3000 Sydney NSW 2000 Brisbane QLD 4000 QAL INVESTOR ENQUIRES P: +61 3 9612 3939 E: investor.relations@qualitas.com.au qualitas.com.au
Slide 30: Disclaimer
Disclaimer This presentation has been prepared by and its sole responsibility of Qualitas Limited (ACN 655 057 588). To the maximum extent permitted by law, the information contained in this presentation is given without any liability whatsoever to Qualitas Limited, any of its related entities, or Q
Slide 31: Appendix 1: Reconciliation of Financials
Appendix 1 Reconciliation of Financials
Slide 32: Reconciliation of statutory financial to normalised financial
Reconciliation of statutory financial to normalised financial % ($THOUSANDS) 1H24 1H23 (YOY) Statutory EBITDA 19,264 16,635 16% (Gain) / loss on mark to market (MTM) value of QRI investment (969) (656) QRI capital raising costs 1,086 - Normalised EBITDA 19,381 15,979 21% Statutory net profit before
Slide 33: Appendix 2: Segment information
Appendix 2 Segment information
Slide 34: Diversified product and investment profile as at 31 December 2023
Diversified product and investment profile as at 31 December 2023 FUNDS UNDER MANAGEMENT1 FUNDS UNDER MANAGEMENT UNDERLYING GEOGRAPHIC UNDERLYING SECTOR (BY COMMITTED FUM) RISK ALLOCATION2 EXPOSURE2 EXPOSURE2 (BY INVESTED FUM) (BY INVESTED FUM) (BY INVESTED FUM) 6% 12% 5% 20% 9% 14% 1% 16% 42% 10% 5
Slide 35: Appendix 3: FUM metrics
Appendix 3 FUM metrics
Slide 36: FUM overview as at December 2023
FUM overview as at 31 December 2023 FUND NAME STRATEGY INVESTMENT TYPE FUM EXPIRY1 QRI (ASX listed) Senior debt / mezzanine $642m Perpetual QSDF Senior debt – diverse $776m Perpetual QPICF Income Senior debt – diverse $773m May-31 CREDIT FUNDS Senior Debt SMA Senior debt – diverse $211m Perpetual Ar
Slide 37: Credit funds – FUM metrics as at December 2023
Credit funds – FUM metrics as at 31 December 2023 COMMITTED INVESTED FEE EARNING FUM NOT YET FUND FEE BASE FEE FUND NAME FUM FUM FUM EARNINGS FEES STRUCTURE BENCHMARK base fee, PF, QRI (ASX listed) $642m $519m1 $642m - % on net asset value transaction fee QSDF $776m $615m $615m $160m QPICF $773m $24
Slide 38: Equity funds – FUM metrics as at December 2023
Equity funds – FUM metrics as at 31 December 2023 COMMITTED INVESTED FEE EARNING FUM NOT YET FUND FEE BASE FEE FUND NAME FUM FUM FUM EARNINGS FEES STRUCTURE BENCHMARK Opportunity I $81m $58m $58m - % of Invested FUM base fee, PF % of committed FUM (Invested FUM Opportunity II $259m $225m $249m - pos
Slide 39: Closing period FUM
Closing period FUM $M FY19 FY20 FY21 FY22 FY23 1H24 Committed FUM Funds management 1,810 2,290 2,503 3,7941 5,6741 7,7851 Arch Finance 448 480 480 465 400 350 Total Committed FUM 2,258 2,770 2,983 4,259 6,074 8,135 Invested FUM Funds management 1,086 1,444 1,660 2,458 3,448 3,741 BTR equity2 - - - 4
Slide 40: Fund key
Fund key LISTED ENTITY ASX: QAL Qualitas Limited LISTED FUNDS ASX: QRI Qualitas Real Estate Income Fund UNLISTED FUNDS QSDF Senior Debt Fund BTR Build-To-Rent QBIF Build-to-Rent Impact Fund QCDF Construction Debt Fund QCDF II Construction Debt Fund II QDCI Diversified Credit Investments QDREF Divers
Slide 41: Glossary
Glossary AUM Assets under management Mandated investments Qualitas entered into exclusivity with borrowers with financial close subject to due diligence and Investment Committee approval Average Invested FUM Average monthly Invested FUM excluding BTR equity and Arch Finance MREIT Mortgage Real Estat