Qualitas to raise $266m to fund demand for property loans

Qualitas to raise $266m to fund demand for property loans

13 September 2019

Melbourne-based investment firm Qualitas has bolstered the size of its listed property debt and ­equity fund, launching a $266m raising on Wednesday.

Signalling a surge in demand for property loans, the Qualitas Real Estate Income Fund, is fielding a rise in applications, particularly for senior loans for investment, construction and land financing.

Qualitas global head of capital Tim Johansen said the raising would allow the trust to bulk up its ­lending pipeline.

“As the banks continue to ­retreat from commercial real ­estate lending, alternative credit providers are increasing their market share,” Mr Johansen said.

“We are seeing continued demand for predominantly senior loans to be used for investment, construction and land financing. By increasing the capital base of QRI, we will be able to take ­advantage of these investment opportunities.”

Qualitas will reduce the management fee on capital raised through the entitlement offer by 50 per cent until the funds are invested, acknowledging the importance of using the new capital in an appropriate time frame.

Qualitas floated its trust on the Australian Securities Exchange last November after raising more than $230m for the listed fund.

Residential projects dominate the fund’s book. Commercial or office real estate projects make up the rest. Most its funded projects are in Victoria, followed by NSW.

The fund that calls itself Australia’s first “pure property debt” listed investment trust focuses on delivering stable monthly cash distributions through interest earnings on the loans it issues, with first mortgages preferred over second mortgages and other senior debt.

The mortgage REIT is a well established feature in the US market, but is new to Australia.

Tony Pitt’s 360 Capital is its main competitor in the listed space. That group is expanding its corporate credit strategy and is setting up the 360 Capital High Yielding Credit Fund, aiming to list on the ASX early next year.

Evans Dixon is handling the offer and are joint lead managers with Shaw and Partners.