360 Capital Mortgage REIT Surges 75% Profit, Raises $13.6m, Keeps NTA Steady
360 Capital Mortgage REIT delivered a robust FY25 with a 74.6% jump in profit and a successful $13.6 million capital raise, while maintaining a stable net tangible asset value per unit.
- Profit attributable to unitholders up 74.6% to $3.2 million
- Investment income increased 62.5% to $3.9 million
- Loan portfolio expanded 54.9% to $38.1 million with 11.8% average interest rate
- Distributions per unit rose 38.4% to 62.3 cents
- Completed $13.6 million capital raising and implemented unit buy-back
Strong Financial Performance
360 Capital Mortgage REIT (ASX – TCF) reported a standout financial year ended 30 June 2025, posting a 74.6% increase in profit attributable to unitholders, reaching $3.2 million. Investment income rose sharply by 62.5% to $3.9 million, driven by an expanded loan portfolio and higher returns from loan investments. Earnings per unit climbed 44% to 64.8 cents, reflecting the Trust’s enhanced profitability and operational efficiency.
Portfolio Growth and Capital Management
The Trust’s loan portfolio grew by 54.9% to $38.1 million, fully deployed across eight loans with an average loan-to-value ratio (LVR) of 69.2% and a weighted average interest rate of 11.8%. This growth was supported by two capital raisings during the year, raising a total of $13.6 million through placements and a non-renounceable entitlement offer priced at the Trust’s net tangible asset (NTA) value of $5.94 per unit. The capital was immediately invested in new and existing mortgage loans, ensuring no cash drag.
Stable Net Tangible Assets and Market Pricing
Despite the significant growth in assets and income, the Trust maintained a stable NTA per unit of $5.94, consistent with the prior year. The ASX trading price increased by 10.1% to $6.00 per unit, trading at a slight premium to NTA, signaling positive market sentiment. The Trust also introduced an off-market buy-back mechanism approved by unitholders, providing liquidity options for investors, and launched a unit purchase plan post year-end, raising an additional $1.7 million.
Strategic Shift to Investment Entity
In November 2024, the Trust was designated as an investment entity, changing its accounting treatment by ceasing consolidation of controlled entities and instead measuring investments at fair value through profit or loss. This shift aligns with the Trust’s strategy of focusing on capital appreciation and investment income, with performance measured on a fair value basis. The change introduces greater transparency but may also increase earnings volatility linked to market valuations of loan assets.
Risk and Outlook
The Trust’s portfolio remains concentrated in residual stock loans secured by first mortgages on completed homes and land lots, with a weighted average loan maturity of 10 months. While diversification efforts continue, concentration risk persists given the portfolio’s current scale. The Trust’s prudent credit risk management and regular portfolio monitoring aim to mitigate potential defaults. Looking ahead, 360 Capital Mortgage REIT plans to maintain steady distributions and pursue further portfolio growth and diversification opportunities.
Bottom Line?
With strong profit growth and capital deployment, 360 Capital Mortgage REIT sets the stage for continued expansion amid evolving market dynamics.
Questions in the middle?
- How will the investment entity designation affect future earnings volatility and valuation transparency?
- What strategies will the Trust employ to reduce concentration risk in residual stock loans?
- How might rising interest rates impact the Trust’s loan portfolio returns and credit risk profile?
