Qualitas posts results backed by strong FUM

Yasmine Raso

Senior Journalist, Financial Newswire

23 February 2023

Alternative real estate investment manager, Qualitas Limited, has reported a 117 per cent surge in group net profit after tax (NPAT) to $10.7 million for the six months to 31 December 2022 (1H23), supported by strong funds under management (FUM) growth.

When compared to 1H22 the firm’s FUM grew 36 per cent to reach $5.8 billion, driving the 21 per cent increase in FUM revenue to $20.7 million and producing a compound annual growth rate (CAGR) of 38 per cent since its inception in 2008.

Qualitas also achieved a record six-month capital deployment of $1.76 billion, a 68 per cent increased on 1H22.

“During 1H23, we grew FUM by $1.5 billion from both existing and new investors which includes three large new mandates,” Group Managing Director and Co-Founder, Andrew Schwartz, said.

“We have experienced strong deployment primarily attributed to traditional financiers retreat from the commercial real estate (CRE) sector, which allows us to be cautious and selective in our investment decisions.

“We have sought to maximise invested capital via new warehouse facilities, utilising the strength of the Qualitas balance sheet to optimise the invested capital for our funds and to benefit from the deployment opportunities currently presenting.

“Scalability of our platform is evidenced by the significant increase in the average gross investment size. Qualitas’ ability to transact at these investment sizes has enabled us to attract and finance premium opportunities not accessible to other market participants, providing us with a very strong competitive advantage in both debt and equity financing.”

Qualitas managed 16 active funds across commercial real estate (CRE) private credit and equity, including the Australian Securities Exchange (ASX)-listed Qualitas Real Estate Income Fund.

The firm said it expects to see the impact of rising interest rates hit the CRE sector in the second half of the calendar year, which could present favourable conditions due to its “strong track record of disciplined investment selection and due diligence, and an ability to critically evaluate risks and develop plans to mitigate any changes in risk profile”.

“CRE private credit is gaining momentum particularly with offshore institutional capital providers, given the benefits of a rising interest rate environment. The sector also provides shelter from the impact of inflation. Our funds and balance sheet capital returns can both benefit from rising interest rates,” Schwartz said.

“The current market conditions that have seen the moderating of competition, coupled with the increased hesitancy of traditional funding sources to deploy capital in the CRE sector, will continue to be favourable to Qualitas as it encourages ongoing demand for our funds at attractive risk adjusted pricing.”

Qualitas also said its earnings per share (EPS) increased from 3.6 cents in 1H23 from 1.7 cents in 1H22.