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SQM Research has upgraded its rating on Trilogy Monthly Income Trust
- With Louis Christopher
SQM Research has today upgraded its rating on Trilogy Monthly Income Trust from a rating of 3.5 stars to 3.75 stars. The rating upgrade is due to growth in the mortgage loan portfolio, a reduction in concentration risk and improvements in the Responsible Entity’s financial statements.
Since the last review in August 2014, funds under management increased by 63.7% to AUD 27.5 million at the end of April 2015. Growth in FUM was underpinned by a 55% increase in the value loan portfolio to AUD 13.8 million and a 73% increase in loan numbers. As at 5th June 2015, there were seven new loans in the pipeline that are expected to add approximately AUD 16.0 million to the portfolio. The growth in the loan book can in part be explained by the strategic decision by the Board to hire a Business Development Manager – Geoff Coakley for NSW and ACT. Mr Coakley has been a valuable addition to the team and has sourced a sizeable share of the new loans underwritten.
During the last review, concentration risks to Queensland and to the largest two borrowers were a concern. Since then, the concentration risk to Queensland has decreased to 84.2% from 95.3% and the two largest borrowers represent 29% of the portfolio down from 56.6%. The exposure to the single largest borrower has also declined to 16% from 34%. Consistent with the strategic decision to grow the NSW loan portfolio, three of the new eight loans being reviewed are to NSW residents. While the concentration risk has improved, SQM Research would like to see further diversification across states and borrowers.
The financials of the Fund and the RE – Trilogy Funds Management have improved modestly to reflect the increased volume in business. The financial statements reviewed for the RE are up to March 2015 and are unaudited. The financial statements for the Fund reviewed are as at 31 December 2014. A significant reduction of long term liabilities of the RE is positive. The new registry and loan administration system implemented in January 2015 will result in cost efficiencies over time and feed through to bottom-line revenue numbers.
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About SQM Research
SQM Research is an independent research house which specialises in providing accurate related research and data to financial institutions, property professional, real estate investors and the media. It is owned and operated by one of the country’s leading property analysts, Louis Christopher.
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