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Hot small cap grows profit by 189%

Small cap 360 Capital Total Return Fund (ASX: TOT), which is now called 360 Capital REIT, reported its financial results for the six months to 31 December 2019. 

It reported a statutory net profit of $8.9 million, which was up 189% compared to the prior corresponding period reflecting the gain on its URB acquisition. Statutory earnings per share (EPS) was 11.5 cents, up 150% on last year. 

Its operating profit of $3.5 million was down 11% because of the URB acquisition and higher cash balances. Operating EPS dropped 25% to 4.5 cents. 

The property business’ distributions per security was 4.5 cents, in line with forecasts. Its net tangible assets per security was $1.17 pre-AASB9 loss allowance. 

During the period it completed the merger with URB Investments Limited, increasing the market capitalisation from $84.9 million to $148.7 million. It also completed a institutional placement of $10.8 million in October 2019. 

It achieved an average internal rate of return (IRR) of 16% on exited loan investments. It also disclosed that it increased its loan book to $101 million of first mortgage real estate debt at an average interest rate of 9.8%. 

Another highlight was that it acquired 23 apartments in Gladesville, NSW at 20% below the valuation and it has commenced a sales campaign. An initial four sales translated to a return on equity of 31% over a 3-month investment horizon. 

It is forecasting FY20 operating earnings of 9 cents per security and distributions per security of 9 cents per security. 

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.