The Qualitas Real Estate Income Fund (“Trust”) is a listed investment trust (LIT) managed by the Qualitas Group and provides investors with exposure to the commercial real estate (CRE) debt market. The CRE debt market is be currently worth ~$290 billion and growing at ~4% p.a. (APRA) at a time when the Royal Commission and global Basel III capital reforms are causing banks to increasingly retreat from the sector. This presents a significant growth opportunity for non-bank financiers such as Qualitas to selectively capture additional market share and build upon its A$2.6 billion track record of CRE transactions across the capital structure. The Qualitas Group has a disciplined track record in CRE and loan origination, with zero capital losses across 144 transactions since inception in 2008.
The Trust is a closed-ended trust with a target return of 8.00% per annum (net of fees and expenses), which we believe to be commensurate to the risk associated with the provision of debt funding for typically illiquid and bespoke CRE assets. The funds raised will effectively be allocated through the Sub-Trust to Qualitas’ wholesale funds, Arch notes and direct loans, providing exposure to the senior and mezzanine loans originated by the Qualitas Group.
The Trust aims to raise an additional $150 to $266 million with a final allotment date of 18 October 2019 at an indicative NAV of $1.60 per unit. The fee structure includes a 1.50% p.a. of portfolio NAV management fee, with a 50% reduction in this fee to be applied on any uninvested capital raised through the offer, as well as a 20.00% performance fee for outperformance above the 8.00% p.a. (net) hurdle rate. Qualitas will draw additional loan amounts to its 10-year amortising 5% loan to cover setup and offer costs associated with the entitlement offer.
Please note that the attached Product Disclosure Statement (PDS) was lodged with ASIC on 11 September 2019. BondAdviser reserves the right to vary or withdraw our research opinion should material changes arise during the lodgement period.
Summary details of the transaction are listed in the table below:
|
Product Type |
Listed Investment Trust |
Sub-Asset Class |
Credit |
|
Issue Size* |
$416,000,000 - $532,000,000 |
Manager |
QRI Manager Pty Ltd |
|
Net Asset Value |
$1.60 |
Administrator |
QRI Fund Services Pty Ltd |
|
Fixed / Floating |
Floating |
Responsible Entity |
Trust Company (RE Services) Ltd |
|
Payment Frequency |
Monthly |
Custodian |
Perpetual Corporate Trust |
|
Target Distribution |
8.0% p.a. (net of fees & expenses) |
Unit Registrar |
Automic Pty Ltd |
|
Franking Credits Inclusive |
No |
Offer Opens** |
11 September 2019 |
|
ASX Listed |
Yes (ASX Code: QRI) |
Offer Closes** |
8 October 2019 |
|
Convertible |
No |
Allotment Date** |
18 October 2019 |
|
GICS Sector |
Not Applicable |
Commences Trading On** |
18 October 2019 |
|
Asset Class |
Fixed Income |
First Payment Date |
On or after 16 November 2019 |
* Issue size includes current capital of ~$266 million and between $150 and $266 million of new capital through the 2019 1 for 1 entitlement offer...
** Dates are varied and based on differing offer mechanisms. Generally, earliest and latest dates are shown, but we advise investors to check details..
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