ADIA Invests $200 Million in Australia’s CRE Private Credit

Qualitas Limited, a leading alternative real estate investment manager listed on Australian Stock Exchange (ASX), has announced a commitment of up to $198.7 million from a wholly owned subsidiary of the Abu Dhabi Investment Authority (ADIA) for the existing Qualitas Diversified Credit Investments (QDCI) platform.

This is the third investment by ADIA to QDCI bringing the total committed capital of QDCI to $1.11 billion since the first investment made in August 2022, the ASX said on Thursday.

The latest commitment from ADIA will see $145.71 million activated immediately for deployment and the remaining $52.99 million will be activated at ADIA’s discretion (with no certainty that it will be activated in whole or in part).

The mandate continues to have a wide investment scope, focusing on the growing Australian commercial real estate (CRE) private credit market and senior credit strategies.

Qualitas’ co-investment in QDCI remains at A$50 million, representing 3.09% on the company’s commitment of $50 million and ADIA total activated committed capital of $1.62 billion.

In August 2022, Qualitas granted options to ADIA under which the Abu Dhabi based investment firm may acquire up to 32.6 million new ordinary shares in Qualitas, representing up to 9.86% of issued equity on a fully diluted basis, excluding share rights issued under the Company’s Employee Equity Plan, if it committed incremental investment mandates totalling up to A$1.7 billion.

Following ADIA’s latest commitment, it can now exercise options in respect of up to 29.3 million shares based on the activated component increase of $145.71 million. The strike price is based on the volume-weighted average issue price of Qualitas shares, currently at $1.66 per share. The current strike price includes the issue of 2.01 million loan shares on 6 December 2022 and 2.2 million loan shares on 8 December 2023.

Qualitas gave no assurance that all or any of the options that are now exercisable will be exercised. Any options not exercised will expire on 1 August 2024.

Wide Opportunities

Andrew Schwartz, Group Managing Director and Co-Founder of Qualitas, said that QDCI has performed well since inception and the pipeline continues to grow.

“This latest increase in commitment from ADIA demonstrates the depth of opportunities within the Australian CRE private credit market and further evidences Qualitas’ ability to attract, retain and grow our institutional investor base – a key differentiator in the current environment,” Schwartz added.

On June 26, Qualitas has secured its first commitment from a North American-based global institutional investor, with $364.28 million to be invested in commercial real estate (CRE) private credit across construction loans, predevelopment land loans and investment loans.

The new mandate brings Qualitas’ total funds under management (FUM) to $5.7 billion representing 42% FUM growth from 30 June 2023. A significant proportion of Qualitas’ FUM (81%) is invested in private credit and 83% is invested on behalf of institutional investors.