Investment Offer

Morgans is a Joint Lead Manager to the Offer¹

The Trust Company (RE Services) Limited as the Responsible Entity (“RE”) has announced the launch of ASX listed² Metrics Real Estate Multi-Strategy Fund (“MRE” or “Fund”) to raise a target of $300 million³. The manager of the Fund is Metrics Credit Partners (“Metrics” or “Manager”).

The Offer includes a Broker Firm Offer to Wholesale Clients of Morgans. Please contact your Morgans Adviser to discuss the suitability of the Fund given your specific investment objectives, current portfolio holdings and if appropriate secure an allocation.

Metrics Credit Partners

Metrics is an Australian-based alternative asset management firm specialising in direct lending to Australian businesses and is an active participant in the Australian fixed income, private credit, equity and capital markets, currently managing approximately $20 billion of private debt and equity investments⁴. Metrics is the appointed manager of a number of wholesale and retail (listed and unlisted) investment trusts including the Metrics Master Income Trust (ASX:MXT) and Metrics Income Opportunities Trust (ASX:MOT), which successfully listed on the ASX in October 2017 and April 2019 respectively.

Investment Objective

The Investment Objective of the Fund is to provide investors with exposure to a diversified portfolio of private market commercial real estate (CRE) investments covering the entire capital structure from senior secured first registered mortgage debt through to equity to:

• deliver investors a 10 – 12% p.a. Target Total Return (net of fees),
• provide ~5.6% p.a. current monthly cash income⁵, and
• manage investment risks to preserve investor capital.

The CRE market is different to the bank dominated consumer residential mortgage market, where borrowers tend to be individual homeowners or investors rather than companies. CRE Investments seek to generate income or capital gains by providing capital to property-owning entities who require funding for CRE assets. Metrics seeks to partner only with large, reputable, established, professional private property developers in Australia to develop large development projects.

Fund Structure

The Fund will seek to achieve its Investment Objective by gaining exposure to the following wholesale funds managed by Metrics with initially an expected 50% of the Fund’s capital invested in each⁶:

• The MCP Real Estate Debt Fund (REDF) through the Debt Sub-Trust
• Metrics Real Estate Equity Opportunities Fund (MREPIIM) through the Equity Sub-Trust

Debt Sub-Trust

The Debt Sub-Trust will be principally exposed to Loans via REDF. REDF is a Metrics wholesale fund with over $3 billion in assets under management, diversified across approximately 100 individual CRE Debt Investments.

Exposure to REDF provides investors with consistent cash income which has delivered a net return of BBSW + 6.82% p.a. since inception in October 2017 (currently equivalent to 11.17% p.a.⁷), outperforming the target return⁸.

Equity Sub-Trust

The Equity Sub-Trust will be mostly exposed to ordinary equity, preferred equity, or debt instruments via MREPIIM. MREPIIM provides exposure to a portfolio of CRE equity and CRE Co-Investment Assets, which may include preferred return features to enhance prospects of realising upside. CRE Co-Investment Assets principally generate income for investors through capital gains following sale of property or refinancing.

MREPIIM portfolio currently consists of 8 investments⁹ with a projected blended IRR of in excess of 20% and includes investments in mixed use / medium and high-density residential and industrial development assets located in NSW, Victoria and Queensland (as at 31 July 2024).

MRE Overview

Key benefits of investing in the Fund include:

• Attractive blended total return with monthly income: Immediate deployment into existing diversified portfolios of CRE debt and equity investments. Monthly cash income currently ~5.6% p.a. derived from the Debt Sub-Trust. Target Total Return of 10 – 12% p.a. net of management fees and upfront and ongoing expenses through the economic cycle¹⁰. It is intended that the first distribution will be paid to Unitholders in early November 2024¹¹ and then monthly thereafter.
• Access to private market CRE investments: CRE Debt Investments are privately negotiated and non-traded typically secured loans where the objective is to deliver capital preservation and downside capital protection. CRE equity and CRE Co-Investment Assets refer to a range of ordinary equity, preferred equity, or debt instruments used to invest in companies undertaking real estate development projects and other CRE investments.
• Access to one of the largest private credit investors in the Australian real estate sector: Metrics has CRE debt assets under management of ~$11 billion. Metrics leverages its market position to originate high quality investment opportunities covering all parts of the capital structure (senior, mezzanine debt, preferred equity and equity).
• Experienced, credible Investment Team with a proven track record: Metrics comprises a high calibre Investment Team experienced in the direct origination and management of CRE investments. Metrics and the Investment Team has deep relationships with property development companies and sponsors that underpin the capability to originate attractive CRE debt, equity and CRE Co-Investment transactions.
• Market opportunity: Increasing regulatory capital requirements have forced banks to moderate their real estate lending. This mirrors trends observed in the US and Europe, where loans to companies have shifted to being predominately serviced by private non-bank institutional investors. Metrics’ focus in the CRE market is the provision of short-term loans (12-36 months) primarily for residential and industrial development projects in major Australian metropolitan precincts. This is supported by strong long-term fundamentals including near record high net migration and dwelling commencements remaining near record lows and strong demand for industrial logistics assets driven by growth in e-commerce.
• Equity capital protections and risk management: Exposure to ordinary equity focused on capital gain and ownership control, preferred equity with greater capital protection and a preferred return paid before ordinary equity and equity-like investments which benefit from a superior position in the capital structure.

Key Features of the Offer

• Ability to secure a Broker Firm allocation in the Metrics Real Estate Multi-Strategy Fund.
• A “day 1” Subscription Price set at a NAV per Unit of $2.00.
• The potential to earn income from CRE Debt Investments and potential income and equity upside from CRE Co-Investment Assets.
• Monthly cash income of ~5.6% p.a. currently from the Debt Sub-Trust which will derive income from Private Credit assets.
• Target Total Return of 10 – 12% p.a. net of management fees and upfront and ongoing expenses through the economic cycle¹⁰.
• Access to high quality investment partners through Metrics’ relationships and origination capability.
• Fee and total costs with incentives for performance that aligns with the interests of investors.
• ASX listed liquidity expected to be quoted on ASX under the code MRE².

Issuer: The Trust Company (RE Services) Limited
Transaction: Listed Investment Trust Offer
Morgans Role:  Joint Lead Manager
Offer Size: $300 million
Offer Launch Date: 2 September 2024
Expected Broker Firm Close Date: 25 September 2024

‍Past performance of any investment product (including REDF and MREPIIM) may not be repeated and is not a reliable indicator of the future returns of the Fund. Both REDF and MREPIIM (as well as the Fund) may not be successful in generating returns for investors, and may suffer losses.

An investment in the Fund is subject to risk.  Prior to investing, you should consider the risks involved and whether they are appropriate for your objectives and financial circumstances. The Fund will provide exposure to a portfolio of CRE debt and equity investments. As such, the Fund is exposed to the risks that are specific to these assets. These risks include but are not limited to investment risk, the risk that borrowers of Loans of which a Wholesale Fund is a lender may default on payments, and the risk that Co-Investment Assets may not generate a capital return.  Before applying for units in the Fund all investors should consider whether an investment in the Trust is a suitable investment for them including by considering the key risks detailed in Section 7 of the Product Disclosure Statement (PDS).

Cooling-off rights do not apply to an investment in the Unit Set pursuant to the Offer.  This means that, in most circumstances, you cannot withdraw your Application once it has been accepted.