This article is from the Australian Property Journal archive
ALTERNATIVE real estate investment manager Qualitas says the impact of the Reserve Bank’s interest rate hikes will make its impact on the commercial real estate (CRE) market in the second half of 2023, and could lead to further withdrawals of liquidity in the market and asset value recalibration.
Qualitas posted an interim net profit after tax of $10.7 million in its maiden full first half, having listed on the ASX late in 2021.
Committed funds under management was $5.8 billion, showing growth of $1.5 billion from existing and new investors which included three large mandates. This week, Qualitas and development partner Tim Gurner revealed they had secured a further $2 billion from on offshore investor to further the growth of their build-to-rent platform.
“We have experienced strong deployment primarily attributed to traditional financiers retreat from the commercial real estate sector, which allows us to be cautious and selective in our investment decisions,” said group managing director and co-founder Andrew Schwartz.
“We expect continued strong funds under management growth, building on the increasing interest of both domestic and offshore investors seeking to reallocate their portfolios towards alternative investments and specifically to CRE.”
Qualitas reaffirmed no change to FY23 guidance. Net profit before tax is estimated between $30 million and $33 million and earnings per security to be between 7.1 and 7.8c per security.
Schwartz said the lagged impact on CRE is likely to be seen in the second half of the calendar year, and could lead to further withdrawals of liquidity in the market and asset value recalibration, while the observed easing of construction cost increases should assist developers with restarting projects that may have been put on hold.
“Such an environment is expected to favour Qualitas as an experienced investor throughout the cycle, with a 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.”
Tailwinds for continued growth include the ongoing housing supply shortage and a return to pre-COVID levels of overseas migration, Schwartz said.
“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.”
“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.”
