What is the purpose of the Trust?
To allow individuals to collectively invest in a diversified portfolio of residential, construction and commercial mortgage loans across Canada which preserves their capital and generates attractive monthly returns.
Why Invest with a Trust?
The objective of the Trust is to enable an individual to achieve the benefit of working with a group – preserving capital and generating attractive monthly returns. These objectives are only possible to achieve by enabling individuals to act as a part of a group. Individuals cannot achieve these results because, for example, many first mortgages are approaching a million dollars in Vancouver. In addition, in order to get consistent quality mortgage opportunities presented to an investor to pick through in order to select quality opportunities the investor needs to be able to fund one mortgage after another in rapid succession. That means the investor/lender needs a reputation with mortgage brokers as a lender who lends on quality loans when a broker brings a mortgage opportunity. The brokers will not bring quality mortgage opportunities to individuals who have money one day, but are drained the next.
Why invest in a mortgage held within mortgage trusts as opposed to stocks?
The advantages of investing in a mortgage trust are numerous: First of all unlike stock once a mortgage is registered in Canada, the Province guarantees the debt is actually registered on a specific piece of land. The Province does not guarantee the return of the lenders money, but it does guarantee that a debt is owed on a specific piece of land and the building on it. In addition the interest rate that has been agreed to, and the quantum of debt on the land and building are also clearly recorded as are the other terms which have been agreed to by the lender and the borrow. These would include such items as interest rate, date debt due, lender fees, renewal fees, and a myriad of other details about the debt. Most of the laws surrounding mortgage debt and what happens if a debtor does not pay are well understood and worked out and established in Canada. The advantage of mortgage debt over a stock investment is that one can never be sure of the financial position of the company which is selling the stock, or the solidity of their business, which in effect is what backs up the stock. And while real estate values can fluctuate, the loan-to-value in general does not change quickly unless there is a catastrophic event, such as a 1930s style depression. Even in that kind of event, it is likely all other investments, such as stock investments, will fall in value as well. The difference is the mortgage lender has an opportunity to take title to the property, or sell it for his outstanding interest and principal, or whatever part of that total debt is available; whereas, the stock holder does not. For that reason, mortgage investing is generally considered more secure than stock.
What is the difference between a Mortgage Trust and a Mortgage Investment Corporation?
Mortgage Trusts of more than 150 participants, unlike Mortgage Investment Corporations can hold the assets long term, if they so desire. Mortgage Investment Corporations are prohibited from doing so. It is the reason we have selected a mortgage trust vehicle in which to hold the mortgage assets on behalf of the investors.
Does the investment qualify for registered plans such as RRSPs, LIRAs, RRIFs, RESPs and TFSAs?
Which units are being offered?
• Preferred Series P Units
• Profit Participating Series A Units
What is the difference between Series A and Series P Trust units?
• Preferred Series P Unitholders are entitled to receive a Preferred Return set at 6% to December 31, 2016, which will be automatically reset annually thereafter at the 2-year Government of Canada Bond yield, plus 480 basis points, and do not share in the balance of any Net Revenue. This return is paid to Series P Unitholders in priority to Series A Unitholders.
• Profit Participating Series A Unitholders are entitled to receive the monthly Base Distribution, targeted at 8% per annum and the balance of the Net Revenue
• In a liquidation event, Series P Unitholders will be entitled to be paid in priority over any distribution or payment to Series A Unitholders and Tri City Capital Corporation.
What is the price per unit?
What is the minimum purchase?
$10,000 which is the equivalent of 10 units of a Series
What will be the maximum loan-to-value ratio of any one loan in the Trust?
No loan will exceed 75% loan-to-value ratio, except in rare circumstance and by unanimous approval of the Credit Committee.
What is the subscription process?
• A completed subscription form is signed and submitted to the Trust Manager.
• Two copies of signed Risk Acknowledgement Forms 45-106F4 and Appendix A to BC Instrument 32-513 accompany the subscription form.
• Either a certified cheque payable to Tri City Group Monthly Income Mortgage Trust or a wire transfer payable to Tri City Group Monthly Income Mortgage Trust is submitted to the Trust Manager.
• Payment can be made from a self-directed RRSP, or other registered plan, by the trustee of a self-directed plan.
Who should invest in mortgage trusts?
Mortgage trusts are appropriate for investors seeking a capital preservation strategy with higher yields and a consistent stream of income which is generated based on mortgage security over specific pieces of property.
Who may subscribe to Series A or P Units?
• A BC, AB, SK, MB, resident having received and read a copy of the offering memorandum and is prepared to sign the risk acknowledgement form.
• An accredited investor as defined in National Instrument 45-106.
• A close friend, family member, business associate or affiliate of a director, executive officer, founder or control person of the Trustee, provided that no sales fee is paid to such person
How do unitholders redeem their investment?
• Notice seeking redemption must be delivered to the Trust no later than the 15th day of the month before the quarter end.
• Payment of redeemed units will be made 60 days after the end of the preceding quarter in which the redemption notice was received, with the exception of December 31st where payment of redeemed units will be made 90 days after year end.
What is the principal’s investment in the Trust?
Tri City Capital Corp, a company controlled by the principal, Michael Goodman, has invested $1 million to purchase 1,000 Series A units. Since Tri City Capital Corp. has invested in Series A Units, all Preferred Series P Unitholders will get their distribution prior to Tri City Capital Corp. getting any of its distribution. This presumes there is enough interest and fees to pay the Preferred Unitholders. In addition, the $1 million investment will act as a buffer to all unitholders in the event of a liquidation event where the Trust has to close down. In such an instance, Series P Unitholders will be paid first.
What types of expenses does the Trust incur?
The Trust’s expenses include advertising and promotion, selling, administration, and overhead incurred to operate the Trust.
What is the Trust’s distribution policy?
Distributions will be paid monthly in arrears on the 15th day following the end of the month. The December 31st distribution will be paid on the 60th day following the end of the quarter. At the investor’s option to be exercised on an annual basis, distributions can either be paid in cash or in a reinvestment into additional Series A units.
How is the Manager remunerated?
Management fees are 1.25% of Net Asset Value. This is one of the lowest management fees in the industry. The Manager also receives 30% of all returns above the 8% paid to Series A Unitholders as a performance incentive; the other 70% is paid to Series A Unitholders.
What is the redemption fee schedule?
Investments will be redeemed at:
• 94% of the Subscription Price during Year 1
• 95% of the Subscription Price after Year 1
• 96% of the Subscription Price after Year 2
• 97% of the Subscription Price after Year 3
• 98% of the Subscription Price after Year 4
• 99% of the Subscription Price after Year 5
• 100% of the Subscription Price after Year 6