A field guide for income investing in property debt, ft. Qualitas' Andrew Schwartz

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This episode of The Australian Investors Podcast features Andrew Schwartz, founder of Qualitas.

Qualitas is a specialist private debt investment firm and property financier.

How do the Qualitas funds work?

Qualitas allows large-scale developers, investors and property-focused institutions get financing for their projects. For example, a 65% LVR loan for two years maturity.

Qualitas then attracts investors, who contribute capital either into the wholesale funds or its listed trust (QRI), seeking reliable income in the form of distributions. The investors, like those who buy into QRI, benefit from the regular interest payments being 'passed through' the funds back to them.

In this way, Qualitas' QRI isn't the type of managed fund that would be expected to achieve substantial year-on-year growth, but more-so an investment for income purposes. The Qualitas Real Estate Income Fund (ASX: QRI) is a retail-friendly version of its unlisted funds (which are wholesale investor only). QRI allows people with an ASX brokerage account to buy into a Listed Investment Trust (LIT) backed by these mortgages. QRI is designed to pay dividends every month.

In this episode, Owen Rask & Andrew Schwartz talk about:
  • Andrew's lessons learned from the '87 crash, early '90s recession & the GFC
  • The ins-and-outs of alternative property lending in Australia, and why the opportunity is substantial
  • How private debt funds work and why property developers choose Qualitas for their banking needs
  • The ways Andrew and his team ensure they are lending to respected and reliable borrowers (i.e. risk reduction)
  • The difference between mezzanine and senior debt inside the 'CRE capital stack'

This is a great episode for investors looking to learn about property and alternative sources of income in a portfolio.
Resources:

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Date recorded: September 8th, 2021

Disclosure & sponsorship: at the time of writing, Owen does not have a financial interest in any of the securities or funds mentioned. Andrew is the founder of Qualitas. The Rask Group Pty Ltd received a fixed fee, set in advance, for Qualitas to appear on this episode of the podcast.

124 episodes