QIC Property Fund

This report does not constitute a rating action. Overview Key strengths Key risks High-quality shopping center portfolio with geographic diversity across Australia's east coast. Exposure to discretionary consumer spending and tenant demand cycles, including a shift to e-commerce. Long-term investment mandate that supports income stability Uncertain financial policies due to potential increase of target gearing range to 25% to 35% from 10% to 20%. Management links with Queensland Investment Corp. Mixed consumer sentiment because of subdued and volatile economic conditions. . We believe the fund will maintain a look-through gearing (net debt/total tangible assets) around the mid-point of its 10%-20% target operating range (10.2% as at Sept. 30, 2021) after completing a proposed A$300 million unitholder buyback in November 2021.

...QIC Property Fund's (QPF's) current conservative financial policies differentiate it from peers, but these policy settings could change. We believe the fund will maintain a look-through gearing (net debt/total tangible assets) around the mid-point of its 10%-20% target operating range (10.2% as at Sept. 30, 2021) after completing a proposed A$300 million unitholder buyback in November 2021. In our view, QPF's current gearing level ranks favorably among rated Australian peers. However, QPF could revise its target gearing range to...

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