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360 Capital Industrial Fund (TIX)
is a publicly listed company on the Australian Securities Exchange (ASX).


{{businessSummary}}

General Overview

About 360 Capital

360 Capital Group Limited (360 Capital) is a real estate investment and funds management group that concentrates on the strategic investment and active investment management of real estate and real estate-related assets.

The company actively invests in direct property assets, property securities and various corporate real estate acquisitions within Australian real estate markets on a private equity basis. 360 Capital Group’s 18 full time staff have significant property, funds and investment management experience. 360 Capital Group manages nine investment vehicles holding assets valued at over $1.5 billion on behalf of over 12,000 investors and has over $200 million worth of co-investments across the 360 Capital Group.

360 Capital comprises a listed public company (360 Capital Group Limited ACN 113 569 136) stapled to a managed investment trust (360 Capital Trust ARSN 104 552 598).

360 Capital has two Australian Financial Services Licences issued by the Australian Securities and Investments Commission and is fully licensed to manage property managed investment schemes.

The company was formed in 2006 by Tony Pitt to actively invest in direct property assets, property securities and various corporate real estate acquisitions within Australian real estate markets on a private equity basis.

On 16 December 2010, 360 Capital Property Group Limited settled the acquisition of Becton Investment Management Limited.

On 8 October 2013, 360 Capital listed on the ASX under the code "TGP" following approval of the acquisition of 360 Capital by securityholders in the ASX-listed Trafalgar Corporate Group on 24 September 2013

Investment Philosophy

360 Capital Group's investment philosophy is based around a simple business plan focused on three areas of property in Australia, namely:

  • Property Investment
  • Property Funds Management
  • Special situations and opportunistic investment activities
  • 360 Capital Group does NOT undertake property development activities, invest in overseas markets, nor in residential investment and development activities.

360 Capital Group is focused solely on actively managing Australian based real estate portfolios across the commercial, retail and industrial sectors.

360 Capital Group also has an investment philosophy of co-investing with their clients, aligning their interests and sharing the benefits that property investment provides with their clients.

TIX

Strategy

360 Capital’s core focus for the Fund is to implement initiatives designed to protect and enhance portfolio income and capital growth in order to maximise Unitholder value.

The initiatives being implemented by the Fund to deliver forecast FY16 DPU of 21.6cpu are:

  1. Drive performance via active asset management and asset recycling – focus on generating income growth from contracted rental increases, proactive re-leasing of pending expiry, maintaining and enhancing portfolio quality via the sale of underperforming and non-core properties in order to recycle capital and undertaking capex in a disciplined manner. Maximise leasing opportunities to secure cash flow and capitalise on expected market transactions to provide NTA growth. Integrating the new portfolio and delivering on FY16 and FY17 earnings.
  2. Target suitable acquisitions in the $10.0m - $40.0m range - the Fund has a comparative advantage in targeting well-located, quality industrial facilities with strong lease covenants in this price range.
  3. Manage capital efficiently – continue to reduce LVR to a medium term target of below 40% in range of 35% to 40% and actively manage the balance sheet to increase acquisition capacity and provide a platform for further growth in earnings and overall performance. Appropriate interest rate hedging strategies and capital management initiatives are in place, such as an on-market unit buy-back and a DRP (currently suspended).
  4. Generate capital growth by leveraging the cycle - Industrial market metrics remain positive and the increased activity in industrial investment markets should enable the Fund to capitalise on valuation and rent cycles. Opportunistic disposal of approximately $50.0m in FY17 subject to leasing outcomes
  5. Expand broker coverage given close to S&P/ASX 200 AREIT Index inclusion


Fund Performance

The Fund delivered strong results for the half year to 31 December 2015 driven by higher property income from acquisitions and fixed rental increases, reduced finance costs and the acquisition of ANI.

Financial management
  • Statutory Earnings of $1.6m
  • Operating Earnings of $24.9m or 11.7cpu
  • Distributions of $21.6m or 10.75cpu and in line with guidance
  • NTA per Unit of $2.20
ANI transaction
  • Compulsory acquisition of ANI completed 1 December 2015
  • 16 additional properties integrated with the existing portfolio of 21 properties
  • Purchased on equivalent property yield of 8.3%
  • Review of assets completed with timing of asset sales to be determined
Portfolio management, acquisitions / disposals
  • Occupancy of 99.4% with vacancy limited to 4,485sqm across two buildings – Noble Park VIC the immediate focus
  • Combined portfolio currently valued at a WACR of 7.9%. Over 90% of the portfolio has been valued since October 2014. Entire portfolio to be revalued by 30 June 2016. Indications on upcoming sales would indicate a 25bp to 50bp firming of TIX ‘s WACR may be appropriate in next valuation cycle.
  • WALE of 4.9 years
  • Like-for-like net income growth of 4.9%
  • 30,706sqm leased in the period representing 4.3% of the portfolio by income, with a further 66,948sqm subject to advanced negotiations
  • Negotiations well progressed on FY17 expiry
  • Expected valuation uplift in Q3/Q4 of FY16 as a result of recent likely transactions
  • $50.0m of assets sales post current leasing negotiations. Asset disposals provide the Fund an opportunity to reduce debt/gearing or reinvest in quality assets with long term WALE’s. No reinvestment currently forecast. Timing of asset sales will depend on leasing outcomes as well as acquisition opportunities for reinvestment of sale proceeds
Capital management
  • $140.4m of new equity raised via scrip component of ANI transaction
  • ANI debt has been fully repaid (Bankwest increased facility limit to accommodate ANI debt with existing hedges assigned to TIX)
  • Approximately $30.0m of available debt capacity
  • LVR is 44.5% and gearing is 43.4% and trending down
  • Overall facility limit adjusted to $420.0m incorporating a new $20.0m revolving facility to assist in cashflow management
  • New $80.0m, two year interest rate hedge with Bankwest taking hedge rate to 103% of drawn debt
  • All in debt cost of 3.85%
  • Gearing to be reduced <40%, and NTA increased significantly through proposed asset sales and anticipated valuations gains
  • Investigating alternate funding structures with longer tenure
Pricing metrics

ASX closing price of $2.44 as at 23 February 2016 reflects:

  •  9.3% FY16 operating earnings yield
  • 8.9% FY16 distribution yield
  • Total return for the six months to 31 December 2015 of +9.3% compared to an index1 return of +5.8%
  • Market capitalisation increased to $517.0m as at 23 February 2016

TIX

Capital Management

  • $140.4m of capital raised via scrip component of ANI transaction resulting in an additional 59.5m units on issue
  • ANI debt has been fully repaid (Bankwest increased facility limit to accommodate ANI debt with existing hedges assigned to TIX).
  • Approximately $30.0m of available debt capacity
  • LVR is 44.5% and gearing is 43.4% and trending down
  • Overall facility limit adjusted to $420.0m incorporating a new $20.0m revolving facility to assist in cashflow management
  • New $80.0m, two year interest rate hedge with Bankwest taking hedge rate to 103% of drawn debt
  • Investigating alternate funding structures with longer tenure
  • All in debt cost of 3.85%
  • Gearing to be reduced <40% through asset sales and anticipated valuations gains

TIX



Contact Info

360 Capital Industrial Fund

Level 8
56 Pitt Street
Sydney, NSW
AU Australia, 2000

Phone: +61 2 8405 8860
Fax: +61 2 9238 0354
Email: investor.relations@360capital.com.au
Website: http://www.360capital.com.au

Click here to view the interactive map
360 Capital Industrial Fund Google Map
360 Capital Industrial Fund Google Map

Share Registry

Boardroom Pty Limited - Click here to view share registry profile

Phone: +61 2 9290 9600
Fax: +61 2 9279 0664
Email: enquiries@boardroomlimited.com.au
Website: http://www.boardroomlimited.com.au/

Level 12
225 George Street
Sydney, NSW
AU Australia, 2000


Important Information

The General Overview, Services, Products and Projects information for this profile was last edited on 30 Jun 2016.

All Financial Data is provided "as is" for informational purposes only, not intended for trading purposes or advice. Neither Share Prices nor any independent data provider is liable for any informational errors, omissions or other defects, incompleteness, or delays, or for any actions taken in reliance on Financial Data.

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