How Did Metrics Real Estate Fund Achieve $41.9M Profit in Its First Year?

Strong Debut for Metrics Real Estate Multi-Strategy Fund

Metrics Real Estate Multi-Strategy Fund (ASX, MRE) has marked its first full financial year with a robust performance, as detailed in its inaugural annual report for the period from 31 July 2024 to 30 June 2025. Launched following an oversubscribed initial public offering (IPO) that raised $302.8 million in October 2024, the Fund reported consolidated revenue of $44.7 million and a profit before income tax of $41.9 million.

The Fund comprises two stapled trusts, the Metrics Real Estate Multi-Strategy Passive Trust (MREPASS) and the Metrics Real Estate Multi-Strategy Active Trust (MREACT). Together, these entities form a diversified commercial real estate investment vehicle focused on generating cash income, preserving capital, and managing risk, while offering potential equity upside through exposure to senior loans, mezzanine debt, and equity investments.

Distributions and Unit Performance

During the reporting period, MREPASS declared distributions totaling 8.21 cents per unit, amounting to $12.4 million. Subsequent to the period end, the Directors declared further distributions of 0.87 cents per unit in both July and August 2025, reflecting ongoing income generation. MREACT did not declare distributions in this period, aligning with its growth-oriented investment mandate.

The Fund’s net assets attributable to unitholders stood at $328.7 million, supported by 151.4 million units on issue. Net tangible assets per unit were reported at 2.17 cents, with the unit price reflecting the cum-distribution value. The Fund’s earnings per unit were a notable 25.3 cents, underscoring strong operational results in its first year.

Portfolio Composition and Geographic Reach

The Passive Trust’s portfolio is heavily weighted towards senior-ranking loans, comprising 99% of its holdings, with a weighted average credit rating of BBB– and a weighted average loan-to-value ratio of 71%. All loans are to Australian borrowers, with a credit duration of approximately 1.1 years. The Active Trust’s portfolio is diversified across residential (73%), industrial (14%), and commercial (13%) sectors, with geographic exposure primarily in New South Wales (70%), Victoria (15%), and Queensland (14%). The Active Trust also holds interests in development projects and joint ventures, contributing to its growth profile.

Governance, Risk Management, and ESG Commitment

Managed by Metrics Credit Partners Pty Ltd and with The Trust Company (RE Services) Limited as Responsible Entity, a Perpetual Limited subsidiary, the Fund adheres to rigorous governance and risk management frameworks. The annual report highlights comprehensive oversight mechanisms, including an Audit and Finance Committee and a Governance, Risk & Compliance Committee, ensuring compliance with regulatory requirements and fiduciary duties.

Environmental, social, and governance (ESG) considerations are integrated into the Fund’s investment process, reflecting a commitment to responsible investment principles. Metrics employs a ‘double materiality’ approach, assessing both the financial impact of ESG factors and the broader societal effects of its investments.

Outlook and Market Position

While the Fund’s initial year results are promising, the Directors caution that future returns are subject to market conditions and investment performance variability. The Fund’s closed-end structure means liquidity is provided via ASX trading rather than redemptions. Investors will be watching closely for consistent distribution payments and net asset value stability as the Fund matures.

Notably, the termination of a previously announced scheme implementation deed between Perpetual Limited and KKR in February 2025 is referenced but not expected to materially affect the Fund’s operations.