Whether it is residential, commercial or industrial, the property playbook is usually the same. That’s why Qualitas (ASX:QAL) shares could offer a fresh way to gain exposure.
The traditional approach typically involves borrowing a lot of money. You build, or purchase, a building. You rent it out. You maintain the building and manage the tenants. For all of that work, you usually charge the tenants rent that might increase a couple of percent above inflation every year.
As a result, property, whether it is via listed real estate investment trusts (REITS) or standard direct property purchases, has always seemed more attractive to those seeking stable and reliable income. In the case of REITS, the stability of share prices have often reflected this conservative nature.
Property exposure without the property
Qualitas however, is an example of how a property stock doesn’t need to fit that stereotypical view of steady income and low growth.
In fact, it is an example of how a property stock doesn’t have to look like a property company with direct ownership at all.
Qualitas is an Australian alternative investment manager that is focused on the real estate sector. Yet, rather than owning and managing property, it operates a series of investment funds aimed at different niches of the real estate industry. These niches include property private equity, development financing, and property private credit.
The end result is a company that doesn’t make its money by owning and managing property directly, but by creating investment vehicles for others to own property, or help provide the finance for properties to be built.
In short, it is a property company that actually doesn’t own property itself.
And it has forged a pretty strong position. As highlighted by the most followed narrative for Qualitas from the Simply Wall St community, Qualitas now finances around one in every ten high rise developments in Australia.
Why Qualitas shares could be an attractive property growth play
Qualitas’ business model is different to the average property company.
It doesn’t borrow and purchase land or buildings. Instead, it opens and manages investment funds which use the capital to be invest in different property assets, both real property and other financial assets linked to property like private credit. In many cases, Qualitas is not the owner of property, but the lender.
Interested in seeing Qualitas’ past financial performance or valuation estimates? Check out its company page at Simply Wall St.
This also means that Qualitas offers an element of diversification other property stocks fail to provide. While the real estate market is still a key growth driver, it is less driven by the ability of tenants to pay rent and is more exposed to the property owners paying the interest on the money they borrowed.