Qualitas Real Estate Income Fund Units · ASX:QRI
Qualitas Real Estate Income Fund Units — Investor Day (October 2023)
50 slides from Qualitas Real Estate Income Fund Units's investor day presentation, Oct 19, 2023
Slide 1: Qualitas 2023 Investor Day Presentation
ASX Announcement Qualitas Limited (ASX: QAL) 19 October 2023 Qualitas 2023 Investor Day Presentation Qualitas Limited (ASX: QAL) (Qualitas or Company) is today holding its Investor Day in Sydney, Australia and via webcast. Enclosed are the presentation materials. The webcast will be available to joi
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$8.0 billion 1 of committed funds under management. Qualitas matches global capital with access to attractive risk adjusted investments in real estate
Slide 3: Qualitas Investor Day Presentation
Qualitas Investor Day (ASX:QAL) Presentation 19 October 2023
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
Agenda 1:00 PM 1:30 PM 1:35 PM 1:50 PM 2:05 PM 2:25 PM Registration Welcome Qualitas – Agile Through-the-Cycle Ask the Co-Founders Integrating ESG into Alternatives and Lunch Remarks Built for Growth Platform Q&A Fiona Reynolds – Chair of Qualitas ESG Advisory Group Andrew Schwartz – Dr Ian Woods –
Slide 6: Qualitas – Built for Growth
Qualitas – Built for Growth Andrew Schwartz – Group Managing Director and Co-Founder 4
Slide 7: Qualitas – An alternative real estate investment manager with proven track record of performance and product innovation
Qualitas – An alternative real estate investment manager with 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 270
Slide 8: Targeting to more than double our FUM by FY28
Targeting to more than double our FUM by FY28 FY282 October - 20231 2014 2009 $75m 8x $575m 14x $8bn >2x ~$18bn Opportunistic equity Senior debt Senior debt Senior debt Mezzanine Equity core Equity core Opportunistic equity Build-to-rent (BTR) BTR Mezzanine Opportunistic equity Opportunistic equity
Slide 9: Distinctive business model enabling dominance in the thematics we choose to invest in
Distinctive business model enabling dominance in the thematics we choose to invest in Long duration capital and sticky Economies of scale driving recurring investor base management fee centric business model and margin expansion Flexibility to invest in favourable Deep bench of talent thematics thro
Slide 10: Multi-decade trend towards alternatives will continue and likely accelerate
Multi-decade trend towards alternatives will continue and likely accelerate Capital and macroeconomic tailwinds that underpin Qualitas’ success over the last 15 years are amplifying Permanent decline in Global investors are Australian CRE is an Private capital availability of capital from significan
Slide 11: Long tenured leadership team with ongoing investment in our people
Long tenured leadership team with ongoing investment in our people Andrew Schwartz Group Managing Director and Co-Founder 28 yrs Avg. industry Mark Fischer Dean Winterton Philip Dowman Kathleen Yeung Tim Johansen Michelle Christou experience Global Head of Real Estate Global Head Chief Financial Glo
Slide 12: Long duration capital with in-built platform protections to minimise redemption risk
Long duration capital with in-built platform protections to minimise redemption risk Substantial long-term capital in closed-ended fund structures enhances earnings stability through periods of volatility FUM BY TYPE AS AT OCTOBER 20231 Funds with long-dated Funds with either contracted expiry match
Slide 13: Scalable platform accelerating growth in recurring core funds management earnings since IPO
Scalable platform accelerating growth in recurring core funds management earnings since IPO FUM1 Deployment ~$1bn deployed $7,997m $2,995m but undrawn construction credit3 $2,983m $1,230m 168% Recurring earnings growth 143% and margin expansion 45% FY21 Oct-23 FY21 FY23 Normalised $60m 27% EBITDA ma
Slide 14: Pathway to achieve our FY28 FUM target
Pathway to achieve our FY28 FUM target Potential inorganic bolt-on LONG TERM KEY opportunities TARGET3 METRICS Target ~$18bn1,2 >50% funds Greater penetration of management EBITDA investor channels margin Base management Scale Innovative fees as % of average product expansion Multi-stage existing in
Slide 15: Track record of product innovation and strategy creation
Track record of product innovation and strategy creation Significant growth potential as investors globally increase allocation into alternative investments ESTABLISHED EMERGING FUTURE GROWTH OPPORTUNITIES Asset • ESG real estate private credit class • Real estate private credit and private equity •
Slide 16: Key takeaways
Key takeaways 1 FY28 growth plan1 • >2.0x FUM, targeting ~$18bn by FY281 • >50% funds management EBITDA margin Differentiated business 2 model • Distinctive ecosystem built specifically for scale as a large alternative investment manager • Continue to increase platform efficiency 3 Multiple growth l
Slide 17: Agile Through-the-Cycle Platform
Agile Through-the-Cycle Platform Mark Fischer – Global Head of Real Estate and Co-Founder 15
Slide 18: Through the cycle investment strategies
Through the cycle investment strategies Identifying investment thematics where we could build a meaningful market presence in and supported by long term tailwinds WHAT WE LOOK FOR IN DETERMINING OUR STRATEGIES Differentiated proposition where Qualitas Consolidate market position - create a Agile thr
Slide 19: Track record of investment performance underpinned by our ability to raise and deploy capital through-the-cycle
Track record of investment performance underpinned by our ability to raise and deploy capital through-the-cycle OPPORTUNISTIC BROADENING TO CREATION OF SCALED CREDIT PLATFORM AND VALUE INVESTOR PRIVATE CREDIT AND FUNDS INCOME PRODUCTS EQUITY LENS TO DRIVE GROWTH • Outsized returns in post-GFC • Regu
Slide 20: Early FY24 momentum
Early FY24 momentum Significant deployment pipeline in credit strategies in first quarter of FY23 WHAT HAVE WE DONE TO CAPITALISE • Team structured to focus on distinct credit and equity strategies from an execution perspective • Recently increased investment in origination resources across Sydney,
Slide 21: Current market landscape
Current market landscape Dry powder is a clear differentiator amongst competitor set MARKET AND COMPETITION LESSENING COMPETITION AS INVESTMENT SIZE INCREASES AND CAPITAL RAISING MORE CHALLENGED • Market liquidity remains withdrawn • Significant reduction in competitors, few with large capital manda
Slide 22: Key takeaways
Key takeaways 1 Platform flexibility • Debt and equity skillset is a key differentiator, enables us to be agile and nimble • Team structured for optimal efficiency Proven investment 2 performance through-the- • Track record of product innovation and FUM growth cycle 3 Disciplined deployment • Positi
Slide 23: Integrating ESG into Alternatives
Integrating ESG into Alternatives Fiona Reynolds – Chair of Qualitas ESG Advisory Group Dr Ian Woods – Independent Member of Qualitas ESG Advisory Group Brian Delaney – Member of Qualitas ESG Advisory Group & Board Director Moderated by Jason Rackley, Head of ESG at Qualitas 21
Slide 24: ESG vision and priorities
ESG vision and priorities ESG VISION Leveraging Qualitas’ platform and position as a Delivering real impact through our social Continued review and refinement of leading alternative CRE financier to play a role in and community programs including our governance framework to ensure assisting Australi
Slide 25: A Dominant Player in Build-to-Rent
A Dominant Player in Build- to-Rent Mark Fischer – Global Head of Real Estate and Co-Founder Ashleigh Macdonald – Operations Manager, GQ BTR Victoria 23
Slide 26: Largest Australian BTR platform by committed AUM
GQ platform Leading Australian BTR platform, established in 2021 by Qualitas and GURNERTM Grown to become $3.2bn 4 assets Largest Australian BTR Gross capital commitment In portfolio to date platform by committed 1,400+ units AUM1 Secured portfolio to date 3,600+ units Pipeline across Sydney, Strong
Slide 27: Beach House – 297 units St Kilda, Melbourne
Beach House – 297 units City Road – 394 units Queens Parade – 339 units Hassall Street – 397 units St Kilda, Melbourne Southbank, Melbourne North Fitzroy, Melbourne Parramatta, Sydney To be completed in Q1 2024 To be completed in Q1 2025 Construction to begin in Q4 2023 Construction to begin in 2024
Slide 28: GQ proposition
GQ proposition Targeting key assets within the BTR sector PILLAR 1 PILLAR 2 PILLAR 3 PILLAR 4 Target demographics Low existing supply of Constrained future supply Strong existing % of renters, % of apartments, quality product and service of competing stock neighborhood amenity income levels KEY APAR
Slide 29: Private Dining!
PRIVATE DINING! ™
Slide 30: GQ platform vision – significant enterprise value with over $5bn GAV over medium term
GQ platform vision – significant enterprise value with over $5bn GAV1 over medium term GROWTH VISION Target GAV of $5bn+ over Base case GQ platform is Continue to leverage Target stabilised EBITDA Target two to four assets in medium term1 vs. $290bn forecast to be profitable resources from two margi
Slide 31: GQ platform structure
GQ platform structure GURNER™ GROUP Qualitas Limited (ASX:QAL) 50% 50% GQ Platform BTR Equity Fund I (Melb and Syd) BTR Equity Fund II (Syd) BTR Equity Fund III (Melb) Fully deployed Awaiting deployment Two assets under exclusivity Funds management, performance and acquisition fees in line with othe
Slide 32: The Evolution and Opportunity in Private Credit
The Evolution and Opportunity in Private Credit Mark Power – Head of Income Credit 30
Slide 33: CRE private credit – Qualitas FUM growth outperforming the market
CRE private credit – Qualitas FUM growth outperforming the market WE ARE GROWING FASTER THAN THE MARKET INVESTORS ARE ATTRACTED TO ATTRACTIVE RISK ADJUSTED RETURN DELIVERED BY PRIVATE CREDIT 32% Risk and return over a 5-year period2 QAL FUM 10-yr CAGR growth 12% Opportunistic Private Credit 259 252
Slide 34: Significant opportunities emerge from the divergence of CRE sectors combined with the liquidity dislocation
Significant opportunities emerge from the divergence of CRE sectors combined with the liquidity dislocation AUSTRALIAN CRE IS NOT JUST ONE TYPE OF ASSET AUSTRALIAN CRE FINANCIER LANDSCAPE HAS CHANGED SINCE THE GFC Traditional financiers market share as % of total authorised deposit-taking institutio
Slide 35: CRE private credit loans are not just one type of loan
CRE private credit loans are not just one type of loan Pre-completion phase Land Construction Senior land loans Mezzanine and senior construction loans Secured against infill vacant land with development potential. Drawn down over time as the construction progresses. • Provide mezzanine financing to
Slide 36: CRE private credit loans are not just one type of loan
CRE private credit loans are not just one type of loan Completed building Completed building Senior investment loans Residual stock loans Secured again real estate that is or is potentially income generating. Secured by unsold completed residential assets. • Tennant quality underpins rent • Strong s
Slide 37: Positioned to benefit from the potential uptick in residential construction
Positioned to benefit from the potential uptick in residential construction REAL ESTATE CYCLE UNDERLYING LOAN MATURITY UNDERLYING GEOGRAPHIC UNDERLYING SECTOR EXPOSURE1 EXPOSURE1 EXPOSURE1 EXPOSURE1 3% 8% 5%2 2% 26% 14% 13% 21% 42% 42% 7% 53% 25% 74% 33% 32% Residential Industrial Construction Inves
Slide 38: 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 • Sponsor guarantees reviewed every six weeks
Slide 39: Qualitas Real Estate Income Fund (ASX:QRI)
Qualitas Real Estate Income Fund (ASX:QRI) Differentiated proposition on the ASX – democratising access to CRE for public market investors Attractive positive inflation adjusted returns1 9.02% 8.76% Sep-23 annualised distribution Sep-23 annualised return p.a. based on NAV of net return p.a. based on
Slide 40: Key takeaways
Key takeaways 1 CRE private credit • CRE private credit is outperforming traditional investment options • Qualitas credit FUM is growing significantly faster than the overall market Expanding addressable 2 market • Liquidity withdrawal from traditional financiers and CRE sub-sector divergence presen
Slide 41: Case Study: Private Credit Loan
Case Study: Private Credit Loan Samantha Khalid – Head of Execution, Credit Investments 39
Slide 42: 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 43: 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 44: Case Study: Construction Loan
Case Study: Construction Loan Gil Norwood – Head of Total Return Credit 42
Slide 45: Case study: residential construction loan
Case study: residential construction loan Port Melbourne, Victoria $108m / $94m1 70% 22 months 14.1% IRR Senior debt facility limit LVR Term Returns 1.25% 2.70% BBSY + 2.70% margin 104 of 122 Arrangement fee Line fee Interest rate Townhouses presold THE OPPORTUNITY 122 townhouses located close to Me
Slide 46: Case study: residential construction loan
Case study: residential construction loan Port Melbourne, Victoria WHY DID THE BORROWER CHOOSE AN ALTERNATIVE WHY QUALITAS? FINANCIER? • Responsiveness • Existing 2nd tier alternative (senior) lender unable to deliver • Seeking leverage within the structure in recognition • Qualitas previously issue
Slide 47: Case study: residential construction loan
Case study: residential construction loan Port Melbourne, Victoria RISKS AND MITIGATION HOW IS THE DEAL TRACKING? Construction/delivery risk • Sponsor guarantees for performance of owner builder entity • Proof of payment for sub-contractors • Builder replacement scenario for builder default/insolven
Slide 48: Disclaimer
Disclaimer This presentation has been prepared and issued 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 ent
Slide 49: 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 50: Glossary
Glossary ADI Authorised deposit-taking institution HNW High net worth AUM Assets under management Invested FUM / Funds currently deployed. Capital drawn for equity funds. Funds drawn capital drawn on live deals / loans less repayments for credit funds Average invested FUM Average monthly invested FU
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