TOT lifts FY27 earnings guidance to 3.8cps as fully leased portfolio delivers 33% earnings jump
In its FY26 results presentation dated 12 August 2026, 360 Capital REIT (ASX:TOT) reported operating earnings per security of 3.2cps, a 33.3% increase on FY25, and upgraded its FY27 EPS guidance to 3.8cps from a prior forecast of 3.6cps. Management attributed the result to two drivers: a 100% leased core property portfolio and accretive structured preference equity investments.
The presentation detailed a forecast FY27 distribution yield of 8.8% p.a., 100% tax deferred and paid quarterly, based on the 30 June 2026 closing price of $0.41. With rising earnings supporting a growing income profile, management noted that sustained EPS growth is expected to narrow the 29.3% trading discount to net tangible assets (NTA).
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FY26 results snapshot and upgraded FY27 guidance
TOT delivered a materially improved earnings profile across FY26, with the presentation forecasting further growth in FY27. Management highlighted an EPS compound annual growth rate (CAGR) of approximately 25% between FY25 and FY27, alongside a 20% forecast increase in distributions per security (DPS) for FY27.
The payout ratio has also improved, moving from 125% in FY25 to 94% in FY26, with a forecast of 95% in FY27. The table below sets FY26 actuals against forward guidance.
| Metric | FY25 | FY26 | FY27 Forecast | Change (FY26→FY27) |
|---|---|---|---|---|
| Operating EPS | 2.4cps | 3.2cps | 3.8cps | +18.8% |
| DPS | 3.0cps | 3.0cps | 3.6cps | +20.0% |
| Payout ratio | 125% | 94% | 95% | +1pt |
| Distribution yield | — | 7.3% | 8.8% | +1.5pts |
| Gearing | 35.5% | 38.9% | 33.9% forecast | -5.0pts |
| Tax deferred | — | 100% | 100% | — |
Management framed the strategy around earnings-led growth and after-tax returns for securityholders.
Tony Pitt, Executive Chairman of 360 Capital Group & 51.2% Securityholder
“Our focus is earnings per security growth and driving after-tax returns for Securityholders.”
A modern, 100% leased portfolio anchored by government and ASX-listed tenants
The presentation outlined a $202.4m direct property core comprising three assets, complemented by $10.9m in structured preference equity and $0.7m in cash, for total assets of $214.0m. The direct portfolio is 100% leased with a weighted average lease expiry (WALE) of 6.0 years and no expiries until FY29.
The 100% portfolio occupancy reported at FY26 followed a June 2026 heads of agreement with an ASX top 100 company to absorb the final 1,332sqm vacancy at Cremorne, completing the leased position that now underpins the fund’s contracted cashflow profile.
Management emphasised the defensive quality of the income base, with 84.2% leased to Government or ASX-listed tenants and average annual rent reviews of 3.3% p.a. The portfolio is relatively modern, with an average building age of 5.7 years and a 4.8 Star average NABERS rating, supporting minimal capital expenditure and tenant incentives.
The blended investment yield sits at 6.9%, with the direct portfolio weighted average capitalisation rate (WACR) of 6.4% lifted by the higher-returning structured equity position.
| Asset | Sector | Value | Cap rate / return | WALE / term |
|---|---|---|---|---|
| 510 Church Street, Cremorne VIC | Office / healthcare | $101.8m | 6.38% | 4.5 yrs |
| 38 Sydney Avenue, Forrest ACT | Office | $68.6m | 6.25% | 8.0 yrs |
| 34 Southgate Avenue, Cannon Hill QLD | Industrial | $32.0m | 7.00% | 6.2 yrs |
| North Sydney structured preference equity | Residential | $10.9m | 16.0% | 12–18 months |
Top tenant covenants
The direct portfolio’s income is weighted towards high-quality covenants. The top tenants by income were:
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Commonwealth Government: 35.0%
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Michael Hill: 14.7%
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Dentsu: 9.4%
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Monash IVF: 7.4%
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SRC Australia: 6.2%
Understanding structured preference equity — how TOT boosts returns
A key element of TOT’s strategy is its use of structured preference equity. In plain terms, this is capital invested that ranks ahead of ordinary equity (hence “preference”), earns a fixed coupon, and sits above a first-loss buffer that absorbs any initial losses before TOT’s capital is affected.
The presentation used the North Sydney investment as the worked example. TOT made an initial $10.0m investment into 360 Capital Private Equity Fund 1 (PEF1), a special purpose vehicle (SPV) holding brand-new, completed apartments located 6km from the Sydney CBD. The position earns a 16.0% p.a. preferred coupon, with a 20% profit share above a hurdle that is not included in forecasts. At 30 June 2026, $10.9m was outstanding, including capitalised coupon.
The investment is described as self-liquidating, meaning it repays as the underlying apartments settle. Repayments were forecast to commence from August 2026 and to be fully repaid by December 2027, with six apartments already sold or exchanged.
The mechanics can be summarised as follows:
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TOT invests preference capital ranking ahead of ordinary equity, with a first-loss buffer sitting beneath TOT.
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The investment earns a 16.0% p.a. coupon, capitalised monthly.
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Capital is repaid as underlying apartments settle (self-liquidating).
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A 20% profit share above hurdle sits as upside not included in forecasts.
Management noted the strategy caps such investments at up to 25% of the balance sheet, targets 15%+ returns, and recycles capital within 12–18 months, enhancing EPS while retaining the defensive core portfolio.
Financial position and capital management
TOT reported FY26 total revenue of $15.5m, up 14.4%, with operating profit of $6.9m, up 33.3%. Statutory net profit rose to $6.3m, an increase of 382.2% off a low FY25 base that had been affected by non-operating items.
On the balance sheet, NTA per unit was unchanged at $0.58, while gearing stood at 38.9%, at the top of the fund’s 30–40% range. Gearing is forecast to reduce to 33.9% by June 2027 from distribution reinvestment plan (DRP) proceeds.
The debt facility limit was increased to $100.0m (from $90m in July 2026) and extended to August 2031. The facility sits well inside its covenants, with an interest cover ratio (ICR) of 2.6x against a 1.5x covenant, and a loan-to-value ratio (LVR) of 41.7% against a 55% covenant, currently 100% floating rate.
The DRP has been activated for FY27, with forecasts assuming 60% participation. TT Investments currently intends to take up its FY27 DRP in full.
A persistent discount to NTA
TOT trades at a 29.3% discount to NTA, based on the $0.41 close against NTA of $0.58 per security. Management’s view is that no value is currently attributed to TOT’s 100% tax-deferred distributions, and that sustained EPS growth is expected to narrow this discount.
Against peers, TOT’s market capitalisation of $89.6m sits below the peer average of $334m. Its discount to NTA is narrower than the peer average of 36.8%, while its forecast distribution yield of 8.8% is broadly in line with the peer average of 9.1%.
FY27 priorities and outlook
The presentation set out the fund’s forward priorities as it looks to build on FY26 momentum. Key focus areas outlined by management include:
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Leasing: Early re-lease discussions have commenced with Dentsu (Levels 7 & 8, 510 Church Street, expiring FY30).
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Capital management: Maintaining the DRP to fund further structured equity, monitoring interest rates, and targeting the bottom end of the 30–40% gearing range on exit of the existing PEF1 position.
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EPS growth: Deploying capital into 15–20% p.a. structured equity transactions as PEF1 self-liquidates.
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Trading performance: Closing the NTA discount via EPS growth, increased investor marketing, quarterly updates, and potential REIT or unlisted fund M&A.
On guidance, management confirmed its upgraded FY27 forecast EPS of 3.8cps (up 18.8%) and DPS of 3.6cps (up 20%), at a 95% payout ratio, forecast to be 100% tax deferred and paid quarterly.
Management also pointed to alignment as a feature of the investment case, noting that directors own 51.8% of TOT following the June 2026 DRP issuance, aligning management interests with those of securityholders.
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