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Seeking income and managing risk for our investors is at the heart of what we do. With COVID-19 impacting life and business across Australia and globally, living this philosophy has never been more important. 

Our focus on supporting our investors, borrowers, team members, advisers and brokers and property tenants has seen us navigate the many different changes required to protect their health and safety and continue to lend to borrowers and pay distributions in our flagship products With ongoing proactive management of our funds and loans portfolioand the guidance of our experienced team, we expect this to continue.    

We’ve also been keeping our investors and borrowers up to date on how we are managing their investments and loans during this time. See below for the latest update. 

Update for investors – 12 May 2021

 

April Performance for our flagship funds

The Trilogy Monthly Income Trust(Trust) has returned 5.80% p.a.* to investors for the month of April 2021. Two new loans were settled in April at a total approved loan amount of $5.53 million and an average Loan-to-Valuation Ratio (LVR) of 63.78% of the Gross Realisable Value (GRV).

The Trust’s loan book has been impacted by the changing and competitive marketplace, influenced primarily by increased residential buyer activity, leading to early repayment of loans and additional competition in the lending market – including reduced borrowing interest rates and an increasing number of lenders.

The number of new loans settled in the Trust’s portfolio this quarter has been lower than expected, due to this increased competition. In addition, a total of $56.19 million in repayments was received from existing loans in April.  These factors have resulted in a decrease in the size of the Trust’s mortgage book relative to its other assets, and therefore an increase in the liquidity of the Trust’s portfolio and the reduction in the distribution rate.

As mentioned last month, we have taken numerous steps to originate new loans, including further expansion in Melbourne, Sydney, and Brisbane with additional Portfolio Managers. To be more competitive in the property lending market, we have also reduced our borrowing rates to increase the funnel of potential loan applications, while balancing the aim to deliver Trust investors with a competitive rate of return. We have seen an increase in enquiries over the past month, leading to an increase in the number of indicative offers for new loans issued and expect to see many of these flow through to new settlements over coming months.

The Trilogy Enhanced Income Fund (Fund) has returned 3.08% p.a.* to investors for the month of April 2021. The strong stimulus measures introduced last year have helped drive the continuing recovery of the domestic economy as seen via improved unemployment figures released in April. Throughout the month there was strong demand for federal debt issuance by the Australian Office of Financial Management. This continues to signal appetite in the fixed income for high grade sovereign debt.

We are monitoring the current inflation targets of the central banks and financial institutions and the rate of change in inflation expected over the medium to longer term. Our asset allocations across the broader fixed income universe have played a significant role in generating the returns achieved to date in 2021 for the Fund.

Company Update Rate Block | Trilogy Funds

*Net distribution paid to investors calculated daily and paid monthly in arrears for the month ended 30 April 2021. Net distributions are variable each month and are quoted net of management fees, costs and assume no reinvestment. Past performance is not a reliable indicator of future performance.

Looking Forward

The latest data from the Australian Bureau of Statistics (ABS) demonstrates the continued growth in the property sector and developers’ and property owners’ desire to tap into that growth. The ABS released figures on 5 May 2021 showing a 36.3% increase in the value of total building approvals in March, a record high in seasonally adjusted terms. According to the ABS, this number was driven by a 22.9% increase in the value of total residential building and a 59.4% increase in the value of non-residential building approvals.

We are also seeing increased enquiries from developers and their brokers in relation to construction and development loans across residential, commercial, industrial, and retail projects.

Based on the building approval numbers mentioned above and feedback in the market we expect buyer and development activity in the property sector to remain strong for the remainder of the year.

We are confident that the steps we are taking to seek and secure new loans for the Trilogy Monthly Income Trust’s portfolio and the positive response we have received from the market, will, over the next few months, rebalance the assets held by the Trust and increase the level of income generated by loans in the portfolio.

If you have any questions about the topics mentioned, please contact our Investor Relations team on 1800 230 099 or email investorrelations@trilogyfunds.com.au.

Yours Sincerely,

Philip Ryan
Managing Director
Trilogy Funds Management Limited

This communication is issued by Trilogy Funds Management Limited ACN 080 383 679 AFSL 261425 (Trilogy) as responsible entity for the Trilogy Monthly Income Trust ARSN 121 846 722 and Trilogy Enhanced Income Fund ARSN 614 682 469 and other management schemes mention in this email. It does not take into account your objectives, personal circumstances or needs, nor is it an offer of securities. Information included in this communication about investment yield and returns should be considered only as part of a balanced review of all the features, benefits and risks associated with the product. Please read the relevant PDS documents in full. Application for investment can only be made on the application form accompanying the Product Disclosure Statement (PDS) dated 17 December 2018 for the Trilogy Monthly Income Trust ARSN 121 846 722 and 28 July 2020 for the Trilogy Enhanced Income Fund ARSN 614 682 469 available at www.trilogyfunds.com.au. The PDS contains full details of the terms and conditions of investment and should be read in full, particularly the risk section, prior to lodging any application or making a further investment.

Trilogy is licensed to provide only general financial product advice about its products and therefore recommends you seek personal advice on the suitability of this investment to your objectives, financial situation and needs from a licensed financial adviser. Investments with Trilogy are not bank deposits and are not government guaranteed. Investors may lose part or all of their capital or there may be periods where their returns are diminished.