Profit Rises 33% to $1.34M as 360 Capital Mortgage REIT Raises $8.85M Capital
360 Capital Mortgage REIT reported a solid half-year profit increase to $1.34 million and launched a strategic capital raising to grow its senior loan investments. Distributions rose notably, reflecting confidence in its expanding loan portfolio amid rising interest rates.
- Half-year profit increased to $1.34 million from $1.01 million
- Earnings per unit rose to 31.8 cents, up 7.4 cents year-on-year
- Capital raising of $8.85 million completed at $5.94 per unit
- Loan portfolio expanded to $33.5 million with new senior secured loans
- Distributions increased to 30.10 cents per unit from 21.00 cents
Profit Growth Amid Strategic Expansion
360 Capital Mortgage REIT (ASX: TCF) has delivered a robust financial performance for the half-year ended 31 December 2024, reporting a profit attributable to unitholders of $1.34 million, up 33% from $1.01 million in the prior corresponding period. Earnings per unit climbed to 31.8 cents, reflecting improved operational efficiency and higher investment income.
The Trust’s total investment income rose to $1.717 million, driven by interest income from its loan portfolio and distribution income from unlisted wholesale trusts. This growth underscores the Trust’s successful navigation of a rising interest rate environment, which has made commercial and residual residential real estate loans more attractive.
Capital Raising to Fuel Portfolio Growth
In December 2024, the Trust undertook a capital raising initiative, issuing 1.49 million new units at $5.94 per unit, raising a total of $8.85 million. This capital injection is earmarked to expand and diversify the Trust’s portfolio of senior loan investments. The placement was well supported by institutional and sophisticated investors, with unitholder approval secured for the conditional placement and an off-market buyback mechanism.
The capital raise aligns with the Trust’s strategy to increase exposure to senior and stretch senior real estate loans, capitalising on the current market conditions. The new funds will enable the Trust to pursue higher-yielding opportunities while managing risk through diversification.
Loan Portfolio Expansion and Diversification
As at 31 December 2024, the Trust’s loan portfolio stood at $33.5 million, up from $24.6 million six months earlier. The portfolio comprises five loan investments, predominantly senior loans secured by first mortgages, with a weighted average interest rate of 11.6% per annum and a loan-to-value ratio of 68.9%. The weighted average term to maturity is eight months, reflecting a relatively short duration.
During the period, the Trust invested $21.8 million in new loans, including two residual stock loans secured by completed freestanding homes in Colebee and Schofields. Loan repayments totalled $14.2 million, including the full repayment of the Tallawong loan. Additionally, the Trust sold down $3.6 million of loans to third parties via the 360 Capital Private Credit Fund (PCF), enhancing portfolio diversification and liquidity.
Distributions Reflect Strong Earnings
Distributions to unitholders increased significantly to 30.10 cents per unit for the half-year, compared to 21.00 cents in the previous corresponding period. This rise reflects the Trust’s improved earnings and cash flow generation. Monthly distributions ranged from 4.17 to 6.66 cents per unit, with the higher payouts in the latter months of 2024.
The Trust does not currently operate a distribution reinvestment plan, maintaining a straightforward cash distribution policy that supports investor income expectations.
Governance and Management Changes
Unitholders approved a new investment management agreement with 360 Capital Mortgage REIT IM Pty Limited, effective 20 December 2024. This agreement introduces a dedicated investment manager with a 10-year minimum term, reflecting a long-term commitment to active portfolio management. The management fee structure was adjusted, reducing the Responsible Entity fee and introducing an investment management fee aligned with the Trust’s asset base.
The Trust also gained approval for an off-market buyback mechanism, providing liquidity options for unitholders and enhancing capital management flexibility.
Outlook
360 Capital Mortgage REIT is positioned to capitalise on the current credit market dynamics, focusing on senior secured loans with attractive yields. The recent capital raising and portfolio diversification efforts suggest a proactive approach to managing risk and enhancing returns. Investors will be watching closely how the Trust deploys its new capital and manages loan maturities in a rising interest rate environment.
Bottom Line?
With a strengthened balance sheet and strategic capital raise, 360 Capital Mortgage REIT is set to deepen its foothold in the senior real estate loan market, but the impact of market volatility on loan performance remains a key watchpoint.
Questions in the middle?
- How will rising interest rates affect the credit quality and default risk of the Trust’s loan portfolio?
- What is the expected timeline and impact of deploying the newly raised $8.85 million capital into new loan investments?
- How effective will the new investment management structure be in driving portfolio growth and managing risk over the next decade?
