Good morning, everyone. Welcome to Qualitas 2025 Full-Year Results Presentation. I'm Andrew Schwartz, Group Managing Director and Co-Founder. Joining me today is Mark Fischer, Global Head of Real Estate and Co-Founder, Kathleen Yeung, Global Head of Corporate Development, and Philip Dowman, our Chief Financial Officer. Before we begin, I'd like to acknowledge the traditional custodians of the land from which I'm presenting, the Wurundjeri people of the Kulin Nation. I also acknowledge the traditional custodians of the lands from where you are participating today. We pay our respects to their elders, past and present. I'll now turn to the agenda and the presenters. Today, I will start with an overview of our performance and key highlights for the financial year. Mark will share insights into the market and our funds management business. Kathleen will provide an update on our ESG highlights, and Philip will take you through our financial results. Finally, I'll conclude with an outlook for FY2026 before we open for questions. Let's now move to our results. I'm pleased to report that Qualitas has delivered another strong full-year performance. We achieved record growth and margins in our funds management business. Importantly, we delivered these results while continuing to invest in our business. In FY2025, we delivered record annual growth in base management fees of 31%. This was our highest since IPO, and this was supported by strong fee-earning fund growth. We achieved a record funds management EBITDA margin of 52%. This reflects strong credit funds performance and balance sheet efficiency. We achieved a 9% balance sheet yield, which drove a 35% increase in our principal income. We held $149 million of cash at the 30th of June. Our cash position provides ample capacity for future co-investments and growth initiatives, a significant competitive advantage. We improved our unrecognised performance fee pool quality with 52% from credit funds. We deployed $4.6 billion throughout the year. Much of the deployment was in the form of new first mortgage investments to fund construction activities. As these investments further drew through the course of FY2026, given they are progressive drawdown in nature, it will be further beneficial to Qualitas earning higher base management fees in future periods. We have increased visibility of large projects for FY2026 and beyond. We delivered full-year normalised net profit before tax of $53 million. I'm pleased to report that this is towards the upper end of our FY2025 guidance and represents a 36% increase on FY2024. Our FY2026 net profit before tax guidance of $60 million - $66 million underscores the continuing growth and confidence in the momentum of our business. Overall, our FY2026 results reflect the strength of our business and the high-caliber team that powers it. Moving on to the financial results and highlights. FY2025 delivered strong top-line growth across all key revenue categories. Base management fees and principal income have both increased by over 30% year -on -year. Performance fee revenue grew significantly on FY2024. This performance fee growth reflects a strong performance from our credit funds, as we had anticipated. Funds management EBITDA margin expanded to 52%, up 70 basis points year -on -year due to margin accreted from principal income and performance fees. This is a record margin for the business and a meaningful milestone in profitability for our high-performing funds management platform. Normalized net profit before tax of $53 million was up 36% on FY2024. Our only corporate debt is the $20 million QRI manager loan. We continue to maintain a strong balance sheet. We ended the financial year with a cash balance of $149 million. I'm pleased to report that we have declared a final dividend of $0.075 per share, bringing FY2025 total dividends to $0.10 per share, representing an increase of 25% on FY2024. Shareholders should recognize that the dividend increase reflects our robust balance sheet and minimal debt, together with our momentum for growth at Qualitas. We are proud of the growth and margin expansion we have achieved, whilst at the same time experiencing solid outcomes for our funds in our growing platform. Moving now to key operational highlights of our funds management platform. At Qualitas, deployment momentum continues. We expect the fee-earning fund will remain a key driver of growth and a leading indicator of platform performance. In FY2025, fee-earning fund grew 28% to $8.7 billion. Deployment totaled $4.6 billion, up 9% on FY2024, with 75% in residential and 77% coming from repeat borrowers. As a reminder, in May, we shared a $5.1 billion pipeline update, which included a $500 million single-check investment. I can confirm that this investment has now been incorporated into our current pipeline for FY2026. In addition to the pipeline, which Mark will talk about, we are also working on a number of co-investments with individual cheque size in excess of $500 million, up to $1 billion. Committed fund now stands at $9.5 billion, with additional capital and deployment not yet reflected in this figure. In our construction funds, we deployed $1 billion of investments based on the peak draw allocation methodology. This has now been utilised over the last 18 months. Mark will explain peak draw later in this presentation. For now, peak draw applies to existing construction mandates and can drive allocation incremental to committed fund. Peak draw allows us to generate fee-earning funds in excess of committed fund, and it is highly efficient for our LP investors and Qualitas as manager. It provides us significantly greater capital than we would otherwise have available. Our management estimate is the peak draw methodology embedded in our construction funds has given Qualitas an additional $2 billion of dry powder over and above the $1.1 billion of conventional dry powder. Obviously, this is very positive development for us. Mark will take you through peak draw later. Our embedded performance fee pool increased by $17 million in the last 12 months, bringing the total unrecognised pool to $92 million, up 23% year -on -year. Capital flexibility is a key differentiator of our business. As deployment activates capital and drives fee-earning fund expansion, we remain well placed to pursue opportunities emerging across our core markets. I'll now hand over to Mark to provide further update on our funds management platform and the market we operate in.
Thanks, Andrew, and good morning, everyone. I'm very excited to say that we've delivered another strong set of results this period for the funds management platform. What really stands out to me is the consistency of growth across all key earnings drivers, which gives us confidence that we're well positioned to continue our growth trajectory. If I focus on a few highlights, fee-earning fund grew at a CAGR of 38% since FY2023 and 28% year -on- year, which provides strong forward visibility on our base management fee growth. Our invested fund grew over the same period at a 23% CAGR and 22% year -on -year, and we do expect further growth in this during FY2026 as the construction drawdowns increase, which will drive higher base management fee revenue. If I move to our balance sheet usage, the yield on the balance sheet has doubled over the last two years, reaching 9.2% at 30 June, with $166 million drawn into co-investments and $109 million of undrawn co-investment commitments. This ongoing balance sheet flexibility will be key as we continue to scale the platform and also highly earnings accretive as that occurs. Finally, our unrecognised performance fee pool is now 62% from credit funds, which is up from 47% in FY2024 and just 4% three years ago, which reduces the volatility in our performance fee revenue. If I move now to what sets Qualitas apart in the market, there are a number of key differentiators for Qualitas . Firstly, our 17-year track record as an alternative real estate manager has built a strong reputation that underpins some deep institutional relationships. We have our predominantly institutional capital base that enables us to prioritize quality deployment and a focus on stable fund structures. This is shown by 89% of our committed fund being in long-duration vehicles, ensuring asset liability matching. Pleasingly, we've maintained our strong fund performance with 94% of fee-earning fund on performance fee arrangements exceeding their hurdle rate. Importantly, in a more competitive market, our investment discretion and timely execution sets us apart in providing certainty to counterparties. Finally, we've focused on upholding our founding philosophy, what we call the Qualitas Way. This means preserving our entrepreneurial mindset while maintaining uncompromising high-performance standards. All this together, our strong growth profile shown by today's results validates that our focus on quality creates long-term value. I'll now touch on the current dynamic in the private credit market, where we continue to see a clear shift globally, where manager track record, reputation, and platform quality are increasingly critical in attracting and retaining capital at scale. The chart here shows that global private credit is consolidating around established managers who have that proven track record. While more players may enter the market, capital is increasingly flowing to the trusted platforms. This is against a backdrop now where fundraising is stabilizing after slowing during rate hikes, with average fund sizes now tripling as investors make larger allocations but to fewer managers. Importantly for us at Qualitas, thematically, geographic diversification is accelerating. Capital is shifting from North America into Europe, with Asia-Pacific now emerging as the next growth frontier. Australia offers particularly attractive risk-adjusted returns in that regard and has relative stability and relative insulation from global volatility. Finally, this scale requires a demonstrable track record. This is where Qualitas benefits, as we're a trusted real estate private credit manager with existing strong institutional relationships, shown by the fact that 60% of our fund investors have made five or more commitments to different funds. All of this just reinforces the value of track record and credibility in what is a structurally growing asset class, providing managers such as Qualitas with greater access to capital and therefore deployment flexibility. I'll now move to what we're seeing in commercial real estate markets generally. As we've entered FY2026, we've started to see momentum in commercial real estate markets. The size of opportunity for deployment by Qualitas is a function of two things: commercial real estate transaction activity, which feeds our investment loan and equity investments business, and then new development commencements, which feed our construction loans and equity investments. Right now, we're seeing transaction activity clearly showing signs of recovery for the investment space. By way of example, in the first quarter of 2025, there was a 41% increase in commercial real estate investment transactions versus the first quarter of 2024. This is the strongest since 2022 and has signaled renewed equity investor confidence. As equity investors transact on buying and selling real estate, this leads to more investment opportunity for our credit platform. In the office sector, we think pricing has bottomed out, and we're now clearly in the recovery cycle. There's significant sale campaigns across the country on assets that we think will drive further recovery and create further deployment opportunity for us. In logistics and industrial, we had one of the strongest quarters on record in Q1 2025, with a lot of the capital inflows focused on greenfield projects, which is leading to interesting financing opportunities for us. At the same time, the syndicator model and private investors remain active in the retail sector, supporting deployment for us there. Whilst transaction activity has begun to recover as markets soar, traditional financing growth remains limited. This is creating significant opportunities for alternative lenders like Qualitas . What we're seeing here is this dynamic expanding our pipeline beyond residential into other commercial sectors, which I'll touch on more when I talk about the pipeline later. If I go now to the residential sector specifically, the numbers continue to be compelling. Apartment commencements rose 34% in FY2025 across capital cities in the Gold Coast, with over 28,000 apartments started, which is consistent with the signalling of the next development cycle. Equally, the markets remain materially undersupplied. Qualitas maintained its approximate 10% market share of this, funding just under 3,000 units in FY2025. As the next cycle continues to gather pace, we see upside potential for our participation in this. If I look ahead, we're very optimistic about FY2026 from a residential deployment perspective. The net overseas migration story remains strong, underpinning demand. Building costs have become predictable. We're now in a declining cash rate environment, and all of these things provide greater confidence to developers to commence new projects. Against this as well, we still maintain the significant price gap between detached houses and apartment prices, which we think supports ongoing apartment demand. If I move now to our deployment achievements and pipeline. In FY2025, we deployed $4.6 billion, which was entirely in private credit. As we start the new financial year, private credit continues to dominate our pipeline. As at August, we have $2.1 billion of private credit opportunities under our control in the pipeline, and this is 25% growth on our pipeline at the same time last year. Reflective of my commentary just earlier around the reactivation of commercial real estate markets, 40% of our current pipeline is in the non-residential sectors. In addition to these pipeline opportunities, and as Andrew flagged, we also have significant visibility on large investment opportunities beyond our controlled pipeline, with transactions in excess of $500 million and up to $1 billion per transaction. In order to capture this ongoing opportunity that we're seeing in the pipeline over the medium term, we continue to invest in the platform, with seven senior investment team hires recently, many bringing decades of origination experience. We've also invested in new senior roles and functions, including a Head of Transaction Management and General Counsel for the investment team and a Chief AI Transformation Officer. These functions aim to increase productivity and efficiency of the platform in the way we originate, execute, and manage our investment process. We're also excited that we recently welcomed a new CEO for Arch Finance, Michael Maloney, who brings over 30 years of experience with a background in building out structured financing businesses. In summary, our platform is exceptionally well positioned. It's underpinned by a scaled origination engine, deep institutional capital partnerships, and a growing pipeline of high-quality opportunities. I'll turn now to net deployment and fee-earning fund. Our net deployment held steady at $1.9 billion, but follow-on investments are a growing share of our activity, increasing 19% of gross deployment in FY2024 to 54% for FY2025. These follow-on investments include upsizing of existing investments, as well as projects that move to the next phase, such as a pre-development land loan rolling into a construction loan or extending maturities of loans. Follow-on investments are important for us because they generate new transaction and base management fees at a lower origination cost. As we continue to scale the platform and development activity accelerates, follow-on opportunities will become more prevalent, supporting higher margins and sustainable earnings growth. The significant net deployment has been the key driver of our fee-earning fund. In FY2025, fee-earning fund grew to $8.7 billion, up from $6.8 billion the prior year. Coupled with an expected stabilisation of churn in FY2026, this positions the platform for continued growth in base management fees. I'll now move on to further details on peak draw that Andrew flagged in his presentation. In FY2025, our peak draw allocation above our committed fund reached $1 billion by year-end, up from just $100 million in FY2024. If I break down what this means and why it matters, it's because construction loans are not drawn all at once. Instead, developers draw funds progressively each month as construction progresses. In large portfolios, such as the ones Qualitas manages, some loans are being repaid while others are still drawing down funds. Rather than allocating capital based on total loan limits, peak draw allocation is focused on ensuring forecast invested fund of the mandate is maximized to the pre-agreed peak draw limit, but does not exceed it. This means the total deployed construction loan limits may exceed the committed fund within that particular fund. This benefits our fund investors by improving their returns and optimizing their capital utilization. Construction credit mandates from institutional investors are not considered fully deployed until it reaches its peak draw limit. This benefits us at Qualitas as well because we earn the same base management, transaction, and performance fees on the full loan limits, not just on drawn amounts, regardless of whether capital comes from peak draw or committed fund. What this means is our fee-earning fund can exceed our committed fund in our construction funds. If we look ahead, we estimate around $2 billion of additional peak draw capacity in those construction funds, plus $1.1 billion of fund not yet earning fees, which is reflected in our committed fund numbers. This together gives us substantial flexibility to deploy new capital into opportunities while continuing to expand our investor base in the construction strategy. I'll now pass over to Kathleen to go through our progress on ESG initiatives.
Thanks, Mark, and good morning, everyone. When it comes to ESG, our focus continues to be on a few key areas. At the corporate level, First Nations reconciliation remains a priority. Over the past year, we've advanced from our Reflect Reconciliation Action Plan, or Reflect RAP , to an Innovate RAP , where we're turning our learnings into action. Our charitable partnerships, chosen by staff, focus on youth homelessness, youth mental health, and children's health, causes that really resonate with us. We're also deeply committed to building diverse teams. We believe that having a broad range of perspectives and experiences around the table leads to stronger decision-making and better outcomes for the organization. Governance and risk remain front of mind too. We regularly review our processes, including the composition of our Board, to make sure we're keeping up with best practice and remain fit for purpose. On the investment side, our key initiative is helping borrowers decarbonize the built environment. Through our sustainable finance work, we're raising awareness with investors and encouraging lower carbon project solutions with our partners. We're especially proud to have been selected as the only Australian private credit manager on the UNPRI's Private Debt Advisory Committee. This gives us a global voice on how private credit can drive outcomes set by the UNPRI. I'll pause there and hand over to Philip to provide more detail on our financial results.
Thanks, Kathleen, and good morning. I am delighted to report a year of record growth in our normalised net profit after tax to $37 million, up 36%, reflecting continued strong earnings momentum across the platform. This growth was achieved through four core recurring revenue drivers. Firstly, as Andrew and Mark have highlighted, the continued exceptional growth in fee-earning funds under management, up 28% year -on -year to $8.7 billion. This in turn drove a 31% lift in base management fees, a key recurring revenue stream. Secondly, record total deployment of $4.6 billion for the year underpinned a strong second-half lift in transaction fees earned. Thirdly, there was a strong contribution from net performance fees, contributing $8.1 million of net earnings, up from $2.4 million net earnings in the prior corresponding period. The growth in performance fee contribution is a natural consequence of rapid growth in credit funds under management. Lastly, earnings from our balance sheet investments also achieved record earnings of $31.3 million, up 35% on the prior corresponding period. These revenue drivers exceeded our growth in expenses, leading to a further modest expansion in our normalised group EBITDA margin to 51%, up from 50% in the prior corresponding period. As a result of the strong growth in earnings, we are very pleased to announce a 30% increase in our final dividend to $0.075 per share, compared to the $0.0575 per share final dividend last financial year. This underlines both the strength of our earnings and our strong financial position. Moving to our funds management result in detail. Looking now in detail at the funds management segment results, we achieved 39% growth in total funds management EBITDA, reaching $55.9 million for the year. A particular highlight of this result was the 31% increase in base management fees, driven by the strong growth in fee-earning funds under management. We achieved a 35% increase in the contribution from income on our principal investments, largely through deployment increasing the balance of the drawn amount of those co-investments. Our performance fee contribution was also up $5.7 million versus prior corresponding period, reflecting continued growth in performance fees earned on our credit funds under management. Overall, we maintained our funds management EBITDA margin, notwithstanding significant investment in new talent to grow our investment capacity. Corporate costs were also up by 25%, reflecting the investment made in additional office space in Melbourne in particular and investment in a new data management platform. These investments not only supported this year's growth, but also strengthened our platform's capacity to capture more high-quality growth opportunities in FY2026. For you, our shareholders, this means recurring revenues are growing faster, margins are holding firm, while our growth capacity has been expanded. Moving to our operating margin. Referring to the chart on the left of the slide, our funds management EBITDA margin, excluding performance fees, is a core operating efficiency measure, with this steadily improving year -on -year since the IPO. This illustrates the scalability of our platform. The stabilization of our operating margin in FY2025 versus growth in the prior three years reflects the timing of investment in drivers of future capacity and efficiency. These include more investment team resources, increased occupancy costs, and a material investment in a new data management platform. Going forward, this investment is expected to be complemented by a strong focus on AI capabilities to further enhance our investment capacity without needing to scale headcount as much in the medium term. Looking at the chart on the right of the slide, the key takeaway for shareholders is the strong growth in fee-earning funds under management, driven by large new institutional mandates raised and deployed over the past three years. The proportion of construction deployment over this time leads to a lag in the growth in invested funds under management as construction loans invest over time. Internally, we focus on our top-line margin being base management fees as a percentage of fee-earning fund, which is stabilizing at around 70 basis points as these new institutional mandates are now largely deployed. Moving to our principal income and balance sheet. As previously highlighted, our principal income grew by 35% to $31 million this period, driven by a near doubling in income from investments as we deployed more capital into co-investments alongside our funds. As a result of higher drawn co-investments, average FY2025 cash balances were lower than in FY2024, leading to a small decline in interest earned on cash, while underwriting income remained steady. The Qualitas balance sheet remains strong, with $149 million of cash and cash equivalents reported as at 30 June 2025. Our end-of-period investments reported of $166 million are up by $46 million compared to June 2024, underpinning our higher principal income in FY2025. Further growth in drawn co-investments is expected in FY2026, while still leaving adequate liquidity for underwriting opportunities in support of FY2026 deployment. Post-balance date, we have also crystallized and invoiced $11.7 million of previously accrued performance fees, with contracted annual cash performance fee payments now enlivened from one of our large credit mandates. For shareholders, our strong earnings momentum and balance sheet strength means we have adequate capital to pursue value accretive opportunities, supporting co-investment and underwriting requirements, while also sustaining strong dividend flows. I will now hand back to Andrew for his closing remarks and guidance statement.
Thanks, Philip. Before I move to guidance, I wanted to provide a brief update on our growth outlook. We continue to see global capital flows favoring Australia, with investors attracted by the superior returns, stability, and growth of the local market. Our significant international institutional investor base positions us well on this front. We see CRE momentum building, driven by lower rates, population growth, and easing construction costs, all set to unlock investment activity. At Qualitas , we're set to benefit from this with our deep origination network and large-scale capital. As a people-led business, we continue to invest in our people, focusing on core revenue functions to seize the emerging opportunities. Qualitas is very well positioned to benefit from these growth drivers and capture future opportunities. Now turning to our FY2026 guidance. As discussed through this presentation, we are well positioned for the year ahead. We anticipate that the recurring base management fees will continue to drive earnings growth in FY2026. It is with this lens that we've provided our FY2026 guidance: net profit before tax between $60 million - $66 million, and FY2026 earnings per share of $0.14 per share - $0.154 per share on a fully diluted basis. This excludes mark-to-market movements for Qualitas co-investments in the Qualitas Real Estate Income Fund and QRI capital raising costs. In making this assessment, we are taking a view on increased fund investments to meet undrawn construction credit, the timing and quantum of new deployment, and our performance fee assumptions. This concludes the formal part of our presentation. We are now happy to take any questions.
Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you are on a speakerphone, please pick up the handset to ask your question. Our first question today comes from David Pobucky with Macquarie. Please go ahead.
Good morning, Andrew, Mark, Kathleen, and Philip. Thanks for taking my questions. I think Mark spoke about the opportunities in office and logistics to a greater degree than the team has spoken to historically, and mentioned 40% of the current pipeline is in non-resi sectors. I was just curious about the dynamic in those commercial sectors and the risk profiles of each, and perhaps what that 40% was a year ago or a couple of years ago.
Thanks, David, for the question. If I go back about a year ago, it was closer to 20% was non-residential, and now we're sitting around 40%. There has been a noticeable increase in what we're seeing in our non-residential activity. To your question of what do those transactions look like, they're typically one of two things. They're a recapitalisation as values have traced downwards, and people need to recapitalise to potentially get out of a capital structure that wanted to be at a lower gearing level than where we might be comfortable. That's transaction type one. Transaction type two that we're seeing is what I call transitional business plans on assets. Assets that need some refurbishment and repositioning, some releasing activity, where we're coming in and giving capital to the borrower to allow them to get through that and reposition their asset to hopefully capture the momentum that we're now seeing in the market. It's definitely noticeable in our pipeline. It's not an isolated transaction here or there. As we've invested in the team and expanded their capability and networks, we're starting to see more transaction flow. As I said in the presentation, as markets are thawing, as people are starting to buy and sell commercial real estate again, we think we'll see more of that going forward.
Thank you. The second one is on the deployment pipeline of $2.1 billion. You mentioned that Qualitas has visibility on a further $1 billion of opportunities in addition to the current pipeline. I'm just hoping for a little bit more color around those additional opportunities, if you can provide it.
Sure. When we talk about the $2.1 billion of pipeline as at August, it's what we call controlled pipeline. They are transactions that we are mandated on and either Investment Committee approved already or working through diligence on. When we talk about the others, they're in addition to that. These are ones that we're working through constructively with prospective borrowers, but not yet formally in our control. When we talk about those numbers, what we're highlighting is that there are multiple large-scale transactions. There's one in and around $500 million, there's one a little larger than that, and then there's a really large transaction around $1 billion. It wasn't a single cumulative number. The point we were making was there's multiple large transactions that we're not yet in control of, but we're increasingly confident on that are in addition to the $2.1 billion of transactions that we do control at this point.
Thank you. Just the last one from me. At the first half, Andrew spoke about what the team was seeing in Victoria around resi development and sales activity towards the back end of calendar year 2024 and supporting your confidence in the backdrop. I was just hoping for an update around what you're seeing in Victoria since then, and how is that trend looking from a deployment perspective? Is it intensifying given the tailwinds that we're seeing?
Sure. I think Victoria specifically remains one of the harder markets nationally for reasons I'm sure everyone understands. That said, we continue to see the higher quality, the top tier of private developers have the ability to attract pre-sales to their projects and therefore have the ability to commence new projects. We've continued to see those that have that strong capability be able to do that, and we've been supporting them. A number of our repeat borrowers on repeat projects have been exactly that. We've funded perhaps stage one of a project, now rolling into stage two because they've continued to get sales momentum. What I would say is the general developer market at large in Victoria is not so blessed, and some of them are finding it a lot harder to get the revenue and pre-sales required to commence projects. Certainly those that are the very well-experienced, great operator counterparties that we like to deal with are seeing momentum back in Victoria. Certainly as we look at our pipeline, we're starting to see that even more.
Thank you, and congratulations on the result.
Thanks, David. I might just add one thing to Mark's comments, although he did really already say it. I do think Victoria, amongst all the various states, gets a particularly negative view expressed in the market. I think at Qualitas, we'd say the experience is relatively patchy in respect of what we see out there. For those developers who are very well seasoned, have been in the market for a long time, I think they are actually achieving great success in their various projects. We're seeing that firsthand, either because we're involved from a debt perspective or an equity perspective. We do see quite significant amounts of sales going through. I would say what they're capitalizing on is the fact that Victoria, in our views, has probably become the most affordable state. Previously, that title was probably held by Southeast Queensland, Brisbane in particular. In more recent times, given the demand that's been pushing into Brisbane, I really think it's now Victoria where if you're looking for the affordability play and the quality, you're most probably looking at Victoria, coupled to the fact that you've got quite stable building costs in respect of third-party builders, which you also don't have that luxury in New South Wales and Brisbane at the moment. I think that's sort of one category of developer. Then there's others in the market who have probably mispriced their stock at the moment, or just the quality of the investment product that they're aiming to achieve is a fail on the market, and therefore they're not really able to get the traction that they would otherwise get. At best we would describe it as it's not one market and it's patchy from what we see out there. I'd say overall there's an element of market negativity that at Qualitas we would say is a bit overdone based on various developments that we're seeing where they are actually achieving some really good results.
I might just add one quick point as well finally, and it goes to geographic makeup of what we achieved in FY2025. For the first time really in the business, around 50% of our deployment was in the New South Wales market. Historically, that's probably been closer to a third. A lot of our focus and investment in building out our team in the Sydney market has really paid off for us as well, which I think has been a nice feature of our FY2025 results.
Thank you. Our next question today comes from Ed Woodgate at Jarden. Please go ahead.
Hi, morning team. Can you hear me okay? We'll scratch on the result and scratch the fee-earning far much strongly, and the number of other metrics are going in the right direction. Just had a question in the context of the versions of your average fee-earning fund and average invested fund. We're hearing from industry participants that the labor availability for construction projects is improving. Have you seen any increased willingness to deploy because of this? Has there been any change post-interest rate cuts? Just guess what are the key roadblocks for projects being approved?
If I could just, sorry, your question was not that clear from an audible perspective. Can I just check we understood the question? It's really an outlook question and it revolves around labor availability and interest rate settings. Was that the question, Ed?
Yeah, just in the context of that, do you see deployment improving and the gap between fee-earning funds and average investment funds potentially closing?
Yeah, sure. Happy to take that one. Thanks for the question, Ed. I think the comments we've made around where we're sitting from a pipeline perspective already at August of the new financial year signals how we're feeling confidence-wise about deployment. What we do expect is a big part of the deployment for FY2026 will continue to be in construction. The things that you have mentioned around a bit of a stabilisation in labor availability, interest rate cutting cycle happening. As I mentioned in my presentation, the demand story we don't think has gone away for residential in Australia. That construction activity and momentum we think is going to increase. If I stand back from it a little bit, however, we've just announced record deployment in the business again, and it's continued to grow year -on -year. This is in an environment where really from a historical long-term through cycle perspective, residential project commencements are quite suppressed. We're continuing to grow our deployment in a world of fewer projects commencing, and we're now flagging that we think more projects are going to commence because the dynamic is better. We would like to think that we can maintain our market share of that as that continues to happen. Hence why we're quite positive about what the residential deployment story will look like. The point around the interest rate setting, however, is important because I think what that is going to have most impact on for us is this freeing up of commercial real estate markets from a non-residential perspective. Rate stabilisation is what all equity investors in commercial real estate were looking for. They're now seeing rate cuts that's conducive to acquisitions happening again. As acquisitions happen again, it leads to potential pipeline for our investment business that we have. Overall, I think we're very constructive and positive on deployment for 2026.
Great, thanks. That's helpful. In relation to the $500 million deal that slipped into this half, do you deploy any color on the reasons for that delay? The multiple opportunities that you have, there are significant checks filed. You mentioned like a billion dollar plus. Are there any key hurdles that need to be achieved for you to win those deals?
I'm happy to take that one as well, Andrew, and feel free to supplement at the end. We were working on a very large, circa $500 million transaction that we flagged in May towards the end of the year. We continue to work on that transaction. It's something that has been delayed. It's a complex transaction that we're trying to bring together. I think we'll always make sure we do the thorough work required to make great investments, and the team continue to work on it. I think of that one hopefully as a delay rather than something that we didn't proceed with. In relation to the big deals we're working on, in these sorts of transactions, there's really only limited groups that can make investments of that scale in that space, of which we think Qualitas is one of the few that can do it. It's less about a competitive dynamic and more about structuring transactions and working with the borrower to see if it's something that we want to do. When you're talking about investment sizes of, you know, $500 million, a billion dollars, they're things that you think very deeply and very carefully about. That's what we're working through with the team at the moment. My view would be if we want to do those investments, we will do those investments. It's really about whether Qualitas wants to make them rather than getting beaten by competition at this point on those deals. To add to that?
The only point I would add to that is that Qualitas has the capital mandates and flexibility for us to take on those very significant investments. One of the things that we've highlighted today is that we're really opening the year with $3 billion of, and I'm going to loosely use the term dry powder, capacity for future investments. Developers and borrowers who are in need of capital know that Qualitas is a near certain place to come to in terms of an ability to deliver large-scale capital for very significant projects. Now, when you're dealing in significant projects, they're not investments that you make a decision in two weeks on and four weeks later, somebody has a check in their hand. They're investments that can literally take several weeks, if not a few months from start to finish before those investments are made and have some degree of complexity about it. The good news is that we're set up to do that by way of capital availability. We also are known to be that party in the market, that brand that can deliver. Our LP investors absolutely love that type of investment because, as they know, not many people can actually do it in the market. Certainly not the conventional financiers, the trading banks who individually would need to syndicate loans in the market in order to effect those types of transactions. It does also mean they attract favorable pricing in respect of our various mandates. It's positive all around, but the upshot is, they are investments that do take time and we carefully think about before we would look to deploy.
Okay, thanks. That's very helpful. I appreciate you've got a lot of dry powder. I guess, following up, looking a little bit further out, your Q2 capital is up 7% year -on -year. Can you just talk to the trends you might be expecting in relation to that? Tech, sort of the U.S. being less attractive. We've heard similar things, particularly about demand from Southeast Asia. Is there any sort of unfreezable in relation to that?
I think the answer was in the question, Ed, which I appreciate in a way. What we're seeing at the moment, some of the trends are firstly a continuing dominance of international capital that is looking at Australia at the moment. As I said in some of the more formal announcements, less so in conventional places like the United States, where it was always seen to be a bit of a safe haven. My sense is that large global LP investors are really looking to further diversify away from the United States. We're commonly in our discussions hearing really three main sources or destinations of interest. Europe is one of those, Japan is a second one, and Australia would be a third. Not necessarily in that order either, but they're really the three main destinations that large LP investors are looking to capture at this particular point in time. As a general comment, I would say that we are having quite significant institutional capital discussions at the moment. I feel the last three or four months we've really seen a resurgence in investor appetite for exactly what Qualitas is looking to do and our strategies that after 17 years we've got an incredible track record of delivering in credit above, you know, target returns at the high end of our credit funds. I do think that, you know, this is an on-balance statement that I'm making to you, but I do think we're entering a period of more favorable capital raising. As Mark talked about in his part of the presentation, you are seeing fewer funds, but also you're seeing greater levels of commitment to funds that are occurring in the market. I definitely think Qualitas is a recipient of that where investors look to re-up with us, and we have a really good flow of fresh potential investors. Maybe the last thing just to the comment I'd say, sometimes when I'm asked about, you know, exactly where's your money coming from, in a way it's easier to talk about where it's not coming from than where it is because I think Qualitas has really developed a great diversified spread, global spread of investors from which we're sourcing capital at this point in time.
Thanks very much for that. I'll jump back in the queue.
Thank you. Our next question today comes from Liam Schofield with Morgans Financial. Please go ahead.
Good morning, guys. Can you just touch on private credit's competitive advantage in those more traditional CRE loans? You've obviously talked extensively about what private credit brings in residential development lending. What sort of deals fall out of the sandbox, I suppose, of traditional banks in that more, you know, CRE space? Just on balance sheet capacity, can you just touch on co-invest requirements under that sort of peak draw allocation methodology? You know, how do we think about that trade-off between co-invest, underwriting, and cash going forward?
Thanks for the question, Liam. I'll take the first part of your question or your first question as to the advantage of private credit in the non-residential sectors. I think it's really what I touched on before around the types of lending that we're doing in that space, and in particular the transitional business plans. The traditional finances of that space are not easily able to do lending where there is income risk in the asset. Typically what they're looking for is reasonably long-term committed income from the asset that will then drive interest cover ratios and therefore debt sizing. I think the flexibility that we have from our capital, which we get very handsomely paid for in the returns on the investments, is the ability to work with the borrowers through transition of assets as they reposition, refurbish, and release the assets. Really that's where we get a lot of competitive deal flow for us. That's part one. The other is the dynamic in the market, as I'm sure you know, Liam, is valuations have retraced materially on assets. People who were previously comfortably levered within a traditional financier environment are in some cases no longer comfortably leveraged in a traditional financier environment. What they need is a recapitalisation. That's where we can come in and use flexible capital that gets remunerated well for dealing in those situations. That's the second type of deal flow that we're seeing in that space. I'll hand to either Philip or Andrew for the second part of your question, however.
Thanks, Mark, and thanks for the question, Liam. Just to paraphrase, you were just asking how peak draw impacts our co-investment profile. Basically, it's very positive for our co-investments. With peak draw, we're essentially saying that the fund will deploy invested capital closer to the full commitment, the full committed capital. Our co-invest is also alongside that committed capital. With peak draw, it means our co-invest can be drawn close to 90% - 100% of our co-investment will ultimately be drawn through the activation of that peak draw.
Right. Thank you, guys.
Thank you. There are no further phone questions at this time. I'll now hand back to Mr. Schwartz for closing remarks.
Thank you. Firstly, I'd just like to thank everyone for joining this call and listening to the Qualitas update. We hope that you are pleased with our results, which have shown strong and continuing growth. Our success really starts and ends with our people. It's about the talent, the commitment, the collaboration I see across Qualitas every day that makes me incredibly proud to lead this organization. To every Qualitas team member, thank you for your dedication and your excellence to our firm. To all our investors, thank you for your ongoing confidence in what we are building. This will now formally conclude the earnings call.