360 Capital’s Elevated Cash Prompts $78.8M Special Payout Amid Market Uncertainty

Robust Financial Performance Amid Market Stabilisation

360 Capital Group (ASX – TGP) has delivered a notable turnaround in its financial results for the year ended 30 June 2025, reporting a statutory profit attributable to securityholders of $4.8 million, a sharp increase from just $0.3 million the previous year. Operating profit also rose 15.2% to $7.7 million, supported by a 19.4% uplift in operating earnings per security to 3.7 cents. These gains come as interest rates in Australia began to ease in the second half of FY25, helping to stabilise valuations and boost confidence in the commercial real estate sector.

Growth in Real Estate Credit and Funds Management

The Group’s strategic focus on real estate credit has gained traction, with $109.6 million in loans originated during FY25 and subsequently sold down through its mortgage funds. This expansion was underpinned by $76.4 million in loans underwritten and sold to the 360 Capital Mortgage REIT (TCF) and the 360 Capital Private Credit Fund (PCF). Funds management revenue from credit activities surged 46.3% to $1.9 million, reflecting increased establishment and base management fees. Capital raisings in TCF and PCF further bolstered funds under management, positioning the Group well to leverage its unique dual REIT structure in Australia.

Stabilising Real Estate Equity Portfolio

360 Capital REIT (TOT), the Group’s flagship real estate equity fund, continued to strengthen its capital position through modest capital raises and asset sales, reducing gearing to a comfortable 35.5%. Operational improvements included leasing out remaining vacancies at 38 Sydney Avenue, Forrest ACT, leaving only one vacancy in the portfolio. The Group increased its ownership stake in TOT to 43.1%, with co-investments now totaling $54 million. TOT’s fully franked distribution yield of 7.6% based on its trading price reflects a stabilised portfolio benefiting from increased transactional activity and easing interest rates.

Capital Management and Special Distribution

In a notable capital management move, 360 Capital Group repurchased and cancelled 14 million securities at an average discount of 18.8% to net asset value, utilising $9.1 million of its strong cash reserves. The Group ended FY25 with $95 million in cash and no debt, a position that has prompted the Board to declare a substantial special distribution of approximately $78.8 million, or $0.40 per security. This distribution reflects the Group’s elevated cash holdings following the disposal of its last major investment in March 2024 and aims to reduce the drag on earnings from holding excess cash.

Looking Ahead – Earnings Forecast and Market Uncertainty

While the Group maintains its dividend policy of distributing at least 80% of operating earnings, it forecasts a lower dividend/distribution of around 1.0 cent per security for FY26. This outlook is tempered by uncertainties in transactional fee revenues and the broader market environment. The special distribution includes an estimated capital gain component, with final tax details to be provided to securityholders in 2026, underscoring the importance of investors seeking tailored tax advice.