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Q: What/who is Trilogy?
A: Trilogy Funds Management (Trilogy) is one of Australia’s leading fund managers and financiers of property-based investments. Trilogy’s goal is to increase its clients’ wealth by delivering transparent, value-added property and mortgage-based investment solutions.
Trilogy offers a range of investment and financing opportunities. These include:
Investing: Trilogy specialises in managing mortgage trusts, diversified income funds and property trusts.
Financing: Trilogy is one of Australia’s leading specialist lenders. We are leaders in property development and construction finance, providing financing options with personalised service to the residential, commercial, industrial and retail property sectors in Australia.
For more than 22 years, Trilogy’s managed funds and private investors have enabled the successful completion of hundreds of projects across the eastern seaboard of Australia. Trilogy currently funds loans ranging in value from $3 million to $25 million.
Property Management, Development and Acquisition: The Trilogy property team manages a variety of commercial and industrial property assets on behalf of our investors.
Q: When was it founded and by whom? Is the founder still there?
A: Trilogy’s origins can be traced back to the commencement of a fund management company managing mortgages and property assets associated with a law firm of which Philip Ryan was partner in 1998. In 2004, following their successes as Directors of Challenger Limited, Rodger Bacon and John Barry joined to form what is now Trilogy.
All three co-founders are still active at Trilogy with Philip Ryan in the role of Managing Director, John Barry as Executive Director and Rodger Bacon as Executive Deputy Chairman.
Q: What does Trilogy offer to investors in terms of products/investment options?
A: Trilogy specialises in managing mortgage trusts, diversified income funds and property trusts which share the common goal of providing income-focused solutions designed to help investors achieve their financial goals. These include:
Trilogy Monthly Income Trust: A pooled mortgage trust which provides investors with exposure to returns available through loans secured by first registered mortgages over Australian property. This Trust is designed for investors seeking competitive investment income and portfolio diversity.
Trilogy Enhanced Income Fund: Invests approximately 65% of investor funds into cash, cash-style assets and other financial assets. The remainder is invested in the Trilogy Monthly Income Trust to enhance returns via exposure to the pooled mortgage portfolio. The Fund is designed for investors seeking an income-focused investment and access to their money in 30 days, while the Fund is liquid.
Trilogy Industrial Property Trust: An open-ended unlisted property trust, holding industrial property assets located in key Australian regional and metropolitan precincts that have the potential to provide long-term cashflows to investors and could offer the opportunity to add value. The Trust is designed for investors seeking a long-term investment, competitive income and the opportunity for capital growth from one of the most sought-after property asset classes.
Other Property Trusts: Trilogy also has a portfolio of single asset, closed-ended, unlisted property trusts. The Trusts, which are fully subscribed and not currently available for investment, include the Cannon Hill Office Trust, Milton Office Trust, Ravenhall Office Trust and Tower Central Trust.
Q: Would it be fair to describe Trilogy as predominantly focussed on property-related assets?
A: Somewhat. Trilogy specialises in managing mortgage trusts, diversified income funds and property trusts.
The Trilogy Industrial Property Trust and current fully subscribed property trusts currently invest in commercial and industrial property assets. The Trilogy Monthly Income Trust has a diversified portfolio of property development and construction loans secured by registered first mortgages held over Australian property.
Trilogy also offers a diversified investment offering, the Trilogy Enhanced Income Fund. The Fund invests in a portfolio of cash, cash-style investments and other financial assets such as a range of short to medium bank term deposits, bills of exchange, promissory notes, bonds, fixed or floating rate debt securities as well as income securities. Returns are enhanced via exposure to the pooled mortgage portfolio of the Trilogy Monthly Income Trust.
Q: Who makes the investment decisions?
A: Trilogy has three committees which make investment decisions for the company; the Lending Committee, the Treasury Committee and the Property Investment Committee.
The Lending Committee makes all decisions regarding loans in the Trilogy Monthly Income Trust. The Treasury Committee makes decisions regarding liquidity of all funds, including the Trilogy Monthly Income Trust and the Trilogy Enhanced Income Fund. The Property Investment Committee makes decisions regarding the Trilogy Industrial Property Trust and single asset property trusts.
All committee members are highly experienced in their fields. They are delegated and approved by the Board of Directors, who have final approval on all decisions made by the Committees.
Q: How much of the Trilogy Monthly Income Trust property assets are direct property investments as opposed to loans to property construction projects?
A: All of the Trilogy Monthly Income Trust’s property assets are loans secured by first mortgages over property development, construction, and refinancing of completed stock or cash-at-hand or fixed-interest debt. The Trust does not make direct property investments.
Q: What would happen if these construction loans soured?
A: The Trilogy Monthly Income Trust only accepts loans on a first registered mortgage basis. In the event that a borrower defaults or is in arrears, then the property used as security may be sold and the proceeds used to repay the Loan made by the Trust along with any outstanding interest and costs incurred.
Q: Do investors in Trilogy’s funds need to be classed as “sophisticated investors” or are they open to the retail market?
A: The majority of Trilogy’s investment offerings are open to both retail and wholesale investors.
Trilogy also provides bespoke investment opportunities for high net worth investors who operate as wholesale, sophisticated or professional investors as defined under the Corporations Act 2001. These investors, which could include self-managed super funds, family trusts and family offices, have access to a dedicated Trilogy relationship manager to help tailor their investments across our products. They may also be entitled to a rebate of management fees charged by Trilogy on certain investment offerings.
Q: Some other funds have “lock in” provisions. Are there any restrictions on investors with regards to investors withdrawing funds from Trilogy investments?
A: For each investment offering, a specified notice period is required for withdrawals relevant to the investment’s liquidity. The withdrawal requirements for each investment are outlined in the Product Disclosure Statements and the Constitution of each respective scheme.
Trilogy Enhanced Income Fund: For the Trilogy Enhanced Income Fund, Trilogy aims to give investors access to their money in 30 days, while the fund is liquid. Note, the Constitution allows a period of up to 6 months to treat the fund as liquid.
Trilogy Monthly Income Trust: For the Trilogy Monthly Income Trust, a four-month notice period is required for withdrawals but they may be processed and paid in a shorter time at the discretion of Trilogy. The four-month notice period is in addition to the minimum holding period of two months applying to the initial investment, i.e., Investors should be prepared to hold units for at least six months from the date of issue of the units. Note the Constitution provides for a maximum period of 15 months to process withdrawal requests and still treat the fund as liquid.
Trilogy Industrial Property Trust: Like many unlisted property schemes, the Trilogy Industrial Property Trust is a closed-ended scheme with certain liquidity events and investors may only exit upon a Withdrawal Offer from the Responsible Entity. Trilogy intends to make Withdrawal Offers once every four years from settlement of the purchase of the Initial Property portfolio which occurred in April 2018.
Other Property Trusts: Like most unlisted single property schemes, Trilogy’s closed-ended property trusts are illiquid schemes. As such, unit holders cannot withdraw their investment during the term of the Trust.
All investments, including those with Trilogy, involve risk which can lead to loss of part or all of your capital or diminished returns.
Q: Which fund is the largest in Trilogy’s stable?
A: Trilogy’s flagship fund is the Trilogy Monthly Income Trust with 87 loans and more than $425,000,000 in funds under management as at 30 November 2020.
Q: How has it performed over the last 12 months and over the past five years?
A: The Trilogy Monthly Income Trust has delivered competitive returns to its investors since inception in 2007. Since inception, the Trilogy Monthly Income Trust has paid a distribution every month, honoured all withdrawal requests, and maintained a unit price of $1.00. As at 30 November 2020, the Trust has delivered a historical average net distribution rate of 6.58% p.a. over the past 12 months and 7.56% p.a. over the past 5 years and 7.72% p.a. since inception. Past performance is not a reliable indicator of future performance.
Q: How does Trilogy measure whether those returns are “up to scratch”?
A: There is no benchmark for returns for the Trilogy Monthly Income Trust (Trust). The returns provided by the Trust are a combination of loan and associated repayments from the mortgage book and fixed interest returns. The returns are also determined relative to several external factors, including how interest rates are set and the returns provided by others in the market. Trilogy believes the distribution rates provided by the Trust are competitive.
There is a benchmark for returns for the Trilogy Enhanced Income Fund (Fund). The target benchmark rate for the Fund is the Official Cash Rate plus 1.50% p.a. assuming reinvestment of distributions but before fees, expenses and taxes, over a rolling 12-month period. However, it is important to note that this is a benchmark only. Trilogy also actively monitors the Fund’s exposures and fixed interest allocation returns to ensure competitive returns are provided to investors. If we do not see a risk-adjusted return, we will take action to resolve this.