Qualitas fund in $262m raising

Melbourne-based finance house Qualitas has bolstered the size of its listed property debt and ­equity fund.

Qualitas’s Tim Johansen, left, inspects a development in Melbourne.

Melbourne-based finance house Qualitas has bolstered the size of its listed property debt and ­equity fund, launching a $262m raising on Wednesday.

The move will allow the listed Qualitas Real Estate Income Fund to expand its operations and capitalise on more opportunities across both residential and commercial property, lifting its profile as an alternative lending source as the big banks keep a tight leash on the sector.

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.

The Qualitas offering is an ­accelerated, non-renounceable, pro rata entitlement of one new fully paid ordinary unit for every existing unit in the trust at a price of $1.60 a unit.

Evans Dixon Corporate Advisory will act as lead arranger to the entitlement offer.

The trust’s portfolio is majority-skewed (83 per cent) towards the senior debt space and has established itself as a market fixture as a complement to major banks. The remaining 17 per cent is targeted to mezzanine finance.

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

It primarily focuses on establishing a stable monthly cash ­income from its portfolio of commercial real estate loans, mostly through first mortgages.

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.