360 Capital Mortgage REIT is appointing receivers across its Bathla-related loans and preparing to sell 162 homes, apartments, townhouses and land lots. The Trust retains $6.3 million in cash and expects monthly distributions to continue, but their level may fluctuate as recoveries progress.
- Receivers appointed or being arranged across all four Bathla-related loans
- Approximately $31.7 million of Trust exposure subject to recovery actions
- Property sales underway across 9 homes, 12 lifestyle properties and 10 land lots
- Loan 3 covers 72 apartments with 36 presales worth $25.8 million net of GST
- TCF trading at an approximate 15.8% discount to $5.95 NAV per unit
Receivers Target 162 Bathla-Related Properties
360 Capital Mortgage REIT (ASX:TCF) is shifting its Bathla recovery process into property sales, with receivers appointed or being arranged across all four loans linked to Universal Property Group and its special purpose vehicles. The Trust has approximately $31.7 million outstanding across those loans, secured against 162 individually titled homes, townhouses, apartments and land lots.
Receivers have already been appointed by a co-lender to the North-West Sydney townhouse loan. TCF’s responsible entity has appointed independent receivers Wexted to two further loans and is working with co-lenders to appoint receivers over the remaining apartment-backed loan. The stated aim is to accelerate disposals and recover principal and outstanding interest, although the filing does not quantify a final recovery value or any potential impairment.
Sales Campaigns Open Across Homes and Land
For Loan 1, selling agents are expected to take nine completed homes and three lifestyle lots to market this week. One duplex and one two-storey home have titles issued and are close to completion; TCF is assessing whether completing those properties or selling them in their current state would be preferable. The loan’s principal and interest stood at $15.2 million at 31 August, against a last valuation of $21.8 million excluding GST. TCF’s exposure is $12.9 million, with the balance held by the 360 Capital Private Credit Fund.
A separate 10-lot loan has also entered its sell-down phase, with agents appointed and one contract exchanged ahead of settlement. That loan had $5.4 million of principal and interest outstanding at 31 August, compared with a last valuation of $7.2 million excluding GST.
Apartment Settlements Depend on Occupancy Certificates
The most involved recovery appears to be the $8.5 million subordinated loan secured against 72 near-completed apartments. There are 36 presale contracts worth $25.8 million net of GST, while the other lender has approximately $28.4 million outstanding against a last valuation of $51.2 million excluding GST. Lenders are working with the Bathla administrator and project team to secure occupancy certificates so the presales can settle, while selling agents are being prepared to return for the remaining 36 unsold apartments.
Loan 4 is secured against 65 completed North-West Sydney townhouses. TCF has a $4.9 million first-ranking investment alongside another non-bank lender, and the residual stock has already begun selling down under the receivership.
Buyback Continues While Distribution Certainty Falls
TCF held $6.3 million in cash at 9 September and has bought back 65,810 units on market at an average $5.28 per unit. The Trust says it intends to continue buying units, citing an approximate 15.8% discount to its $5.95 net asset value per unit, with 5.4% of units on issue still available under the current buyback capacity.
Monthly distributions are forecast to continue, but the amount may vary as Bathla properties are sold and accrued interest is recovered. That makes the timing and price of the property disposals important not only to the Trust’s capital recovery, but also to the reliability of income being delivered to unitholders.
Bottom Line?
The recovery strategy is now visible in property sales and receiver appointments, but the key unknown remains how much of the $31.7 million exposure will ultimately be returned and when.
Questions in the middle?
- Will the presold apartments obtain occupancy certificates quickly enough to convert contracts into settlements?
- What prices will the Bathla properties achieve relative to their latest valuations and outstanding loan balances?
- How materially will monthly distributions change if sales proceeds or accrued interest recoveries arrive later than expected?