360 Capital’s Cash Payout Signals Shift to Capital-Light Strategy
360 Capital Group (ASX – TGP) reported a 15% rise in operating profit for FY25 and announced a substantial $78.8 million special distribution, reflecting strong momentum in its real estate and credit platforms.
- 15.2% increase in FY25 operating profit to $7.7 million
- Special distribution of $78.8 million ($0.40 per security) declared
- Mortgage REIT (TCF) assets up 55%, delivering 21.5% total return
- Equity REIT (TOT) occupancy rises to 93.4%, gearing steady at 35.5%
- Group cash balance remains strong at $95 million pre-distribution
Strong Financial Performance and Strategic Moves
360 Capital Group (ASX, TGP) has delivered a robust FY25 result, with operating profit rising 15.2% to $7.7 million and statutory profit surging to $4.8 million, up from just $0.3 million the previous year. The group maintained its dividend and distribution payout at 3.5 cents per security, balancing steady income with growth initiatives.
The company’s diversified platform, spanning real estate equity, mortgage credit, and private credit funds, underpinned this performance. Notably, loan transactions surged 155% year-on-year to $109.6 million, driving increased fee income and establishing momentum in the credit segment.
Capital Management and Special Distribution
Reflecting a capital-light strategy and strong cash position, 360 Capital declared a significant special distribution of $78.8 million, equivalent to $0.40 per security, payable in September 2025. This move follows the group’s successful simplification strategy, including the sale of its 56% interest in Hotel Capital Partners, and aligns with new 10-year investment management agreements securing long-term growth for its listed REITs.
The special distribution will reduce the group’s cash balance from $95 million to approximately $16.2 million, signaling a shift toward greater reliance on third-party capital to fuel future growth. Investors should note the distribution includes a capital gains component, which may have tax implications.
Portfolio Highlights and Market Outlook
The 360 Capital REIT (TOT) portfolio saw occupancy improve to 93.4%, with gearing maintained at a moderate 35.5%. The group increased its co-investment in TOT to 43.1%, capturing anticipated upside from the modern, well-leased asset base. Meanwhile, the Mortgage REIT (TCF) grew gross assets by 55.4% and delivered a total return of 21.5% to unitholders, supported by a successful capital raising and a new 10-year investment management agreement.
Looking ahead, 360 Capital anticipates the Australian commercial real estate market has bottomed after a 2.5-year downturn, with transactional activity picking up and interest rates expected to decline through 2025 and 2026. The group plans to continue expanding its loan portfolio and private credit offerings, while opportunistically pursuing acquisitions and special situations amid market volatility.
Strategic Focus and Investor Alignment
With an aligned board owning over 51% of securities and a disciplined growth strategy, 360 Capital is focused on value creation across its real estate and credit platforms. The group’s dividend policy targets distributing at least 80% of operating earnings, though FY26 dividends are forecast to be lower at around 1.0 cent per security due to the special distribution and reduced cash income.
Overall, 360 Capital’s FY25 results and strategic capital management position it well to capitalize on emerging opportunities in a stabilizing real estate market, while balancing investor returns and growth ambitions.
Bottom Line?
360 Capital’s FY25 results and special distribution mark a pivotal step toward a capital-light growth model amid a recovering real estate market.
Questions in the middle?
- How will the reduced cash balance post-distribution affect 360 Capital’s ability to fund new investments?
- What specific acquisition or special situation opportunities is the group targeting in the current market environment?
- How might changes in interest rates and capital markets impact the performance of the Mortgage REIT and Private Credit Fund?
