Investment Offer

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Realm

Dominion Income Trust 1 Offer

Morgans is a Joint Arranger and Joint Lead Manager to the Offer¹
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Equity Trustees Limited as the Responsible Entity (“RE”) has announced the launch of ASX listed Realm Dominion Income Trust 1 (“DN1” or “Trust”)² to raise up to a maximum of $300 million³. The Trust will invest in an unsubordinated, unsecured, deferable, cumulative, and redeemable floating rate note (“Note”) issued by the Dominion Investment Trust (“Note Issuer”).

The Note is intended to deliver regular monthly interest income, generated from a diversified portfolio of debt instruments. The Note is intended to be refinanced or redeemed and repaid to Unitholders by 27 February 2030 (5 years)⁴. The Note has a final Maturity Date on 27 February 2031 (6 years)⁵. The Trust seeks to provide investors with a means of portfolio diversification, as it is expected to have a lower correlation to listed equity markets and a greater correlation to bond and credit markets.

Livewire interview with Andrew Papageorgiu (Managing Director of Realm)

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

Realm Investment House

The underlying assets of the Trust and the Note Issuer are managed by Dominion Investment Management Pty Ltd (“Manager”), part of Realm Investment House (“Realm”). Realm is a highly credentialed asset management firm specialising in credit and fixed income markets with over a decade track record of delivering exceptional risk-adjusted returns, currently being in the top 97th percentile over 1, 3 and 5 years of managers in its peer universe.

Realm currently manages ~A$7.6 billion in assets and launched its first retail fund in 2012 and is the appointed manager of several other investment trusts. Realm’s investment team is experienced in the management of corporate bond, asset backed and private debt investments and seeks to manage risk through detailed initial and ongoing due diligence, structuring and portfolio risk management strategies.

Overview of the underlying Note

The Note will acquire assets from corporates, banks, and non-bank financial debt issuers with strong financial performance, as assessed by the Manager’s investment and risk management process. The Note will have exposure to debt instruments, including loans, trust interests, notes, and bank facilities.

Portfolio Strategy

The Investment Strategy seeks to produce a sufficient return to pay the scheduled Interest Payments to the Trust whilst also ensuring the portfolio's value will be sufficient to repay the Face Value of the Note to the Trust when due. The liquidity of the portfolio is intended to be managed to ensure a high likelihood that sufficient cash will be available to repay the Face Value of the Note on either the Target Repayment Date or the Maturity Date.

The Manager expects to implement the Investment Strategy largely by investing in a blend of various investment funds managed by Realm (Realm Managed Funds)⁶. The Manager adjusts key strategies based on market conditions and assessments to position the Note Issuer’s investments. Realm tracks over 5,000 credit securities using quantitative tools to identify those with the highest potential returns.

Indicative Portfolio

The indicative portfolio would have a diverse exposure to over 150 debt issuers and an underlying exposure to over 300 securities with a portfolio average weighted rating target of BBB. As an indication, the portfolio composition for the initial period may be as follows⁷:

The above indicative portfolio composition is based on 30% invested in foreign issuers. All foreign currency exposures are generally fully hedged.

Dominion Income Trust Overview

Key benefits of the Trust investing in the Note include:
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Monthly income
The Manager targets monthly cash distributions of the 1-month Bank Bill Rate plus a margin of 3.50% p.a. (net of fees)⁸ i.e. approximately 7.80%p.a.⁹.

Cumulative interest payments
The Note targets making monthly Interest Payments to the Trust (subject to there being sufficient income). Where there is insufficient income in a relevant month to pay Interest, the unpaid Interest will be deferable and cumulative.

Risk‑adjusted returns
Monthly Interest Payments are supported by a diversified exposure to global and domestic credit markets, through direct investments or via Realm Managed Funds.

Portfolio diversification
A Note is a debt instrument and is expected to have a low correlation to public equities and expected to be more correlated to bond and credit markets.

Maturity Date
The Note is intended to be refinanced or redeemed and repaid to Unitholders on 27 February 2030 (5 years) (Target Repayment Date)⁴. Note have a final Maturity Date on 27 February 2031 (6 years)⁵.

Margin step up
If the Note is not redeemed by the Target Repayment Date, the Margin increases by 1.00% p.a. to 4.50% p.a. (net of fees) until the Maturity Date.

Early Redemption
In the event market conditions develop negatively in a manner where the Manager determines that the Note Issuer’s ability to pay the Interest Payments or repay the Face Value of the Notes may be reduced, the Manager may redeem the Notes early. If the redemption occurs more than six months prior to the Target Repayment Date, the redemption price shall be $101 per Note, which is a premium to the Face Value and may therefore increase Distributions to Unitholders.

Limited equity buffer
Certain Realm Co-Investors will invest at least $10 million into units in the Note Issuer¹⁰. As the units held by the Co-Investors rank behind the Note, this provides an equity buffer support to the Note Issuer’s ability to pay the amounts due on the Note.

An experienced management team
Realm comprises a management team whose senior leaders have on average over 27 years of market experience in portfolio management, supported by a team of over 16 investment professionals.

ASX Liquidity
Expected to be quoted and trade on the ASX under the code “DN1”.

Key Features of the Offer

Opportunity to participate in the Broker Firm Offer via Morgans as a Joint Arranger and Joint Lead Manager to the Offer.
The Note has a Face Value of $100 and is redeemable by the Note Issuer on 27 February 2030⁴. If not redeemed by this date, the Margin will increase by 1.00% until the Maturity Date.
If not redeemed before, the Note will mature on 27 February 2031.
Monthly cash distributions equal to the 1-month Bank Bill Rate plus a Margin of 3.50%⁸ i.e. approximately 7.80% p.a.⁹
A diverse exposure to over 150 debt issuers and an underlying exposure to over 300 securities across government bonds, corporate bonds and structured credit with an average weighted rating target of BBB (Investment Grade).
Access to highly experienced investment management team with ~$7.6 billion FUM, using a strong quantitative framework to look through the cycle to deliver exceptional risk-adjusted returns, being in the top 97th percentile of managers in its peer universes.
ASX listed liquidity expected to be quoted on ASX under the code DN1².

Issuer: Equity Trustees Limited (Responsible Entity)
Transaction: Realm Dominion Income Trust 1 Offer
Morgans Role:  Joint Arranger and Joint Lead Manager
Offer Size: $300 million
Offer Launch Date: 29 January 2025
Expected Morgans Broker Firm Close Date: 11 February 2025

Before applying for Units in the Trust all investors should consider whether an investment in the Trust is a suitable investment for them. Notes are not guaranteed by the Issuer, the Note Issuer, the Manager, the Co-Investors or any other person.

An investment in the Units is subject to a range of risks, which are more fully detailed in Section 9 of the PDS. Key risks to the Units include the risk that the Note Issuer’s investment strategy will not be able to generate sufficient income to pay the Interest Payments or repay the Face Value of the Notes to the Trust or that the portfolio will not be as diversified as contemplated, credit spread risk, default risk, interest rate risk and liquidity risk, among others. If any of these risks or other material risks eventuate, it will likely have an adverse impact on the Trust’s future financial performance and position and may impact the return on your Units.

Cooling-off rights do not apply to an investment in the Units pursuant to the Offer. This means that you will be unable to withdraw your Application once it has been accepted.

Design and Distribution Obligations (DDO)

The Corporations Act imposes obligations on the Issuer to determine an appropriate Target Market for the Offer. Morgans as the distributor must take steps which result in the Offer being distributed only to investors that are within the Target Market.

Footnotes

Morgans will receive fees for its role.
Application will be made to list Dominion Income Trust on ASX.
The Offer size may be less than $300 million, subject to a minimum raise of $150m.
This is a target only and the Issuer may elect at its discretion not to redeem and repay the Note at the Target Repayment Date.
The Note Issuer must redeem the Note and pay the Face Value plus any accrued but unpaid Interest (including all outstanding deferred Interest) on the Maturity Date. Once the Note is repaid by the Note Issuer, the proceeds (after payment of any outstanding Management Fees) will be distributed to the Unitholders and the RE intends to then wind up the Trust.
Detailed information on Realm Managed Funds can be found in Section 3.4 of the PDS.
The indicative portfolio composition and indicative credit quality are indicative only (for the initial period after the initial deployment phase) and the Note Issuer may temporarily hold assets outside the above ranges or parameters.
This is a target only and may not be achieved.
Described in section 2.6 of the PDS.
Based on 3-month Bank Bill Rate of 4.30%.

More information

Investors should read the PDS in full to understand the features and risks of the Offer. Please contact your Morgans adviser to apply under the Offer.

If you have any questions about the Offer, please contact your Morgans adviser, call 134 226 or find your nearest office.

Download Prospectus

The Offer is being offered only in Australia and the PDS will only constitute an offer to a person receiving it in Australia. Not for distribution, directly or indirectly, in the United States or to, or for the account or benefit of, US Persons, except in accordance with an available exemption from the registration requirements of the US Securities Act. The distribution of the Prospectus (including an electronic copy) in jurisdictions outside Australia may be restricted by law.