360 Capital Total Return Fund

strategy

360 Capital Group has decided to sell the majority of its funds management platform and co-investments in the funds that it manages to Centuria Capital Group.
You can find more information in relation to the 360 Capital Total Return Fund here and in the Notice of Meeting recently mailed to Unitholders here

 

 

The Fund’s strategy is to identify unique real estate based investment opportunities to exceed a target total return hurdle of 12.0%. The Fund has a deliberately broad mandate to enable it to pursue attractive investments in a disciplined manner across all sectors of direct property, as well as the unique ability to invest in debt investments and real estate based equity.

The Fund will continue to leverage 360 Capital Group support as 360 Capital is frequently presented with investment opportunities that are too small for larger AREITs and do not fall into the investment mandates of either the Group or its existing managed funds. 360 Capital intends to maintain a significant co-investment stake (24.3% as at 24 August 2016).

The Fund is forecasting FY17 distributions of 7.6 cents per stapled unit.

The initiatives being implemented by the Fund to deliver forecast distributions are:

  1. Closing the gap between trading price and NTA per Unit to restore Securityholder value. At 24 August 2016, TOT was trading at $1.19, a 10.5% discount to its NTA of $1.33 per security as at 30 June 2016.
  2. Efficient capital management - During FY16, $26.0 million of capital was recycled following the Funds disposal of its two direct assets. The Funds debt was fully repaid with the proceeds of the IPO in April 2015 and is debt free. With TOT trading below its NTA per Security, Securityholder approval was obtained to buy back Securities and over FY16, a total of 9.0m securities were bought back at an average price of $1.14 per Security, representing a 14.3% discount to the 30 June 2016 NTA of $1.33 per Security. Given liquid nature of TOT’s assets, 360 Capital believes a buyback at such a steep discount represents a good use of funds. 360 Capital Group (TGP) did not participate in buyback as it sees greater value in TOT than its current market price.
  3. Maximise Industria REIT (ASX: IDR) investment Approximately 94% of TOT's total assets relate to an investment in 14.7% of Industria REIT (ASX:IDR) which has inherent value which 360 Capital believes can be unlocked through improved valuation and leasing. TOT will also explore all alternatives for its IDR stake with a view to restoring value for TOT Securityholders including a sale of the investment or participating in corporate activity. Using IDR's trading price as at 24 August 2016, TOT's pro forma NTA would be $1.38 per Security and TOT would be trading at a 13.7% discount based on 24 August prices.
  4. Ongoing focuses - TOT will continue to seek to improve market awareness of the Fund. TOT will remain disciplined in implementing investment strategy and take advantage of future opportunities created by current volatility in investment markets.