mortgagee

What is the corporate structure for each Syndicate ?

For example, every time a new syndicate is formed the company HK secretarial service will register a new entity. New syndicates are named similarly to the principal: Mortgagee Club One Limited. During the registration process, the company HK secretarial service will facilitate the issue of 10,000 ordinary shares.

How are my funds used ?

100% of funds contributed to a syndicate (example: Mortgagee Club One Limited) is pooled with ten other member contributions to acquire real estate investments. As with any real estate purchase, legal fees, bank fees, valuation fees and, Government stamp duty and taxes will paid using the members funds contributed.

The Australian law firm acting for the syndicate members will be provided the funds to facilitate settlement and, upon completion of the transaction will provide a detailed statement of account with any residue funds returned to the syndicates bank account.

Every step in the acquisition, finance application, settlement and completion of the transaction is communicated to shareholders as some of the milestones requires shareholder approval and the completion of legal documentation.

Can I sell or transfer my share in the syndicate ?

Yes, the share certificates are title to the syndicate and can be sold or transferred to another person or company or, internally to another syndicate member. Company secretarial and Government fees will apply.

Can I sell or transfer my share in the syndicate ?

Yes, the share certificates are title to the syndicate and can be sold or transferred to another person or company or, internally to another syndicate member. Company secretarial and Government fees will apply.

What reporting will i receive ?

Bi annually, every six months a statement of income and expenditures will be emailed to every syndicate shareholder. Every 12months on the anniversary of the syndicates acquisition or real estate, a valuation report will be obtained to verify the capital growth and the market rental.

How will capital appreciation be assessed ?

Annually, on the anniversary of the syndicates formation, the Group Manager will order a valuation report from a certified bank valuer to establish the capital appreciation of the syndicates assets.

What rental returns are expected ?

Depending on the type and location of the real estate investment, rental returns are expected to range from 4-9%.

How is an investment property considered for purchase ?

Mortgagee Property Limted is the Group Manager of each syndicate and conducts vigorous due-diligence to source Australian real estate that is offered under financial duress or mortgagee in possession. Within the matrix of stress tests a property opportunity will need to pass, ensures that recommended real estate offered to the syndicate and its members has the best potential for capital growth and sustainable rental growth.

Do syndicate members have the ability to vote ?

Each syndicate member (shareholder) is required to vote on real estate opportunities recommended for purchase by the Group Manager.

What is the loan the syndicate uses to purchase real estate ?

The offshore loan instrument is a banking facility offered via private banking within Australia’s largest banks, the bank finance is critical to the success of the syndicates real estate wealth creation goals.

What real estate is targeted for club members ?

The Mortgagee Property Club only targets Australia real estate opportunities under urgent financial duress to ensure members obtain the best possible opportunities. To understand the process and functions of Mortgagee Property Limited and the website www.mortgageeproperty.com, banks, financiers, receivers, individuals and developers contact us on a daily basis for urgent assistance in disposing of real estate. During the feasibility and assessment processes, real estate that is determined a ‘significant investment opportunity’ will be withheld from the website and general public and, offered exclusively to club members for consideration.

What are the threats to the syndicate and members ?

The only perceivable threats identified include a significant drop in the Australian currency. The syndicates real estate assets are financed via an offshore loan, drawn down in $HK currency. Therefor, the serviceability of the $HK loan is funded solely via the $AU rental income.

A severe drop in the Australian dollar will effect the serviceability of the $HK finance. As of March 2016 the Australian dollar is trading at approx. $0.70 (AUD > USD), an increase in the Australian dollar benefits the syndicate and, a drop will reduce the rental income serviceability. A variance fall in the Australian currency of 20% (whilst extremely unlikely) would reduce the rental income serviceability by 20%.

Given that the rental comes are positive and account for these circumstances, the syndicate will always be able to maintain its ability to service loan facilities. Global economists maintain that the Australian dollar in the global market is stable at .70 and as the Australian economy improves the currency exchange rate is expected to rise.

What is the staff policy of Mortgagee Property Limited ?

The key to delivering extraordinary business lies in developing leadership and teamwork at every level of the Mortgagee Property organisation. Building on the most trusted practices of management, we will instil an in house philosophy for achieving new and higher levels of service. We will utilise various workforce mobilisation techniques to encourage our staff to move far beyond compliance to an authentic feeling of ownership that promotes full participation and cooperation. We will create a culturally diverse environment where the committed action of each employee will be recognised and applauded, producing staff leaders who yield incredible results in customer service and professionalism. Mortgagee Property will thrive on open communication, offering clarity to questions and immediate feedback on job performance.

What's the value of a typical syndicate ?

A syndicate will comprise of 5-10 shareholders that have been issued an equal portion of shares each. The 5-10 shareholders would have all contributed a minimal of HK$300,000 each to fund the syndicate. Therefore the paid up capital of the syndicate at a minimal would be valued at HK$3,000,000. This amount of equity will facilitate a 50% loan to secure approx. AUD$1,000,000 of Australian real estate.

Can I increase my contribution and shareholding in a syndicate ?

Whilst there is a minimal contribution of HK$300,000, there is no limit to the amount an individual wishes to contribute. Many private investors will invest multiples of HK$300,000 for a greater shareholding in a typical syndicate. For wealthy investors that desire to invest significantly larger amounts, high net worth syndicates will be formed.

Are there larger syndicates of high net worth investors ?

Yes, there are many of our wealthy clients that have invested HK$1,500,000 to HK$6,000,000 to secure large portfolios of mortgagee property investments in specially formed syndicates.

What are the initial costs ?

In addition to the minimal equity contribution of HK$300,000 per allocation of 1,000 shares in a typical syndicate, the administrative cost of HK$15,000 must be paid by the new member plus, the stamp duty fees which is subject to the final calculation from the Hong Kong Government. Optional additional costs include: HK$800 for a True Copy of the Share Certificates. HK$3,500 per hour for independent legal advice by a Hong Kong based principal lawyer (if requested).

What are the expected returns ?

As described above, a typical syndicate will have the capacity to acquire AUD$1,000,000 of Australian real estate. We expect that our selection of mortgagee in possession property can be acquired at an estimated 10-30% below the current market valuation with an estimated rental yield of 6-10%.
Whilst we are optimistic about our projected returns, syndicate members should be ultra conservative with their expectations and assume combine yields (rental and capital growth) between 10% and 20%.

How are the profits from the syndicate calculated ?

The annual rental income is used to service the bank loan, pay the rental management fees, group managers fees and any other property related expenses. Every month the rental income is deposited into the syndicates bank account and pooled for 12 months, paying its bills throughout the year.

How and when is the profits from the syndicate distributed ?

Annually, on the anniversary of the syndicates formation an annual report will be produced by the Group Manager and company HK secretarial service, accounting for the cash flow report, valuations and distribution of profits. As per the syndicates shareholder register requirements, each shareholder has nominated a bank account to receive the shareholders portion of the syndicates annual profits.

Future forward acquisition of additional real estate assets ?

It is expected that each syndicate will reach a capital growth rate that allows for the acquisition of additional real estate, self funding without member contributions. The syndicates capacity to borrow 50% (LVR) of its property assets will in time, provide the opportunity to refinance, to facilitate the purchase of additional real estate assets.

What are the syndicates financing needs and use of funds ?

Within the corporate governance of the syndicates and maintaining a strong real estate portfolio, a maximum (LVR) Loan to Valuation Ratio of 50% will be maintained to ensure members assets are not exposed to market, finance and rental fluctuations.

With the seed funding of HK$300,000 (minimal) from each new syndicate member, the Group Manager will procure 50% financing via the loan facilities available. When a syndicate is fully formed and funded with the seed contributions from 5-10 investors (typically 10 members x HK$300,000) distressed real estate opportunities will be presented to the syndicate members for consideration.

Upon approval from the members a contract of sale will be entered into and a finance application lodged. Settlement will take place as per the terms and conditions of the sale agreement and the Group Management agreement entered into.

What is a members exit strategy ?

We realise that circumstances change and that having an instrument to exit the syndicate is a critical issue for our investors. With liquidity in mind, we have identified several different exit strategies.

Sale of the shares to another syndicate member

Sale of shares to the syndicate group, equally increasing the remaining members shareholding.

Sale to another external investor, company or institution.

These strategies are proposed to provide liquidity to the investors and keep the focus of the Syndicate on creating value.

Sale to an Industry Player. Other firms may be looking to diversify their assets or enter into a new market. Many companies elect to engage in acquisitions to add real estate portfolios verses to build them from scratch.

There are several advantages to this exit strategy with an acquisition facilitating a complete exit that has flexibility in regard to the payout option, allowing investors to choose their level of return risk.

Buyback of Shares. Another option is for the syndicate members to buyback shares from the exiting investor/s. Exiting investors could receive a negotiated sale based on a valuation of the portfolio. The advantage of this strategy for remaining members is to maintain full ownership control, while providing liquidity to the syndicate.

What is my security ?

The share certificates issued by the company HK secretarial service is your title right of ownership as a shareholder of the syndicate and its assets. In addition, the HK secretarial service is responsible for maintaining a register of members (share register) and share holders are registered with the Hong Kong Companies Registry http://www.cr.gov.hk/en/home/

What is a share certificate ?

In corporate law, a share certificate (also known as certificate of stock) is a legal document that certifies ownership of a specific number of shares or stock in a corporation. This record is called the register of members (the register). Also called the ‘share register’, the register will contain information about each members (shareholders) of the company syndicate and the shares existing in the company. The register will contain the following information about each member:

- their name and address,

- copy of the members passport,

- the shareholders nominated bank account,

- the date on which their name was entered in the register, and

- the number of shares held by the member.

Who are the Directors ?

The Director / Secretary of the legal entity of each syndicate (example: Mortgagee Club One Limited) is Scott O. Talbot the founder and CEO of Mortgagee Property Limited (the Group Manager). Each shareholder of the syndicate will be invited to become a Director of the company, whilst not mandatory it is recommended. In addition, an external (non shareholder) Director maybe selected based on their expertise in providing corporate governance to each syndicate.

What fees are payable to Mortgagee Property Limited ?

The operating agreement between Mortgagee Property Limited (Group Manager) and the syndicate company that governs the workings, services and fee structure provides for a 10% fee for managing all aspects of the real estate portfolio. Invoiced every six months, the Group Managers fees will be invoiced to the syndicate company that will include 10% of the gross rental income and 10% of capital appreciation every 12 months.

The operating agreement includes full disclosures and spells out duties and responsibilities of Mortgagee Property Limited (Group Manager) and the syndicate company formed.
For example:

On an annual rental income of AU$35,000 the Group Managers fee would be $3,500, plus
On an annual capital growth of AU$50,000 the Group Managers fee would be $5,000

What are the Members duties and responsibilities ?

The members are required to report to the company secretarial and the syndicate Director any circumstances that may adversely effect the members equity share in the syndicate. This may include, financial duress, insolvency, criminal investigations, ill health or intentions to transfer or sell the members shares.

The members are required to approve acquisitions of real estate opportunities submitted and recommend by the Group Manager.

In the event that a majority of the syndicate members approve the real estate acquisition and a member declines the proposed real estate, the member will have the option to exit the syndicate at market value of the assets held by the syndicate.

The exiting member will be liable for company secretarial and HK government fees. Syndicate members, at the request of the financier may be required to provide the bank a personal financial statement to complete the syndicates finance application.

What are Directors duties and responsibilities?

The Directors of the syndicate are responsible for the corporate governance of the syndicate and acting in the interest of and for the benefit of shareholders. In addition, overseeing the functions and performance of the company HK secretarial services to ensure the company is compliant with reporting, government rules and regulations.

What is the Corporate Governance of Mortgagee Property Limited ?

As each syndicate experiences growth and new opportunities, it will continue to adhere to its adopted Corporate Governance and Risk Management policies. The Directors and senior management will continuously identify the general areas of risk, including;

Always be responsible to our members interests when making all business decisions.

Attract a broad management structure of experienced personnel, proficient in all aspects of Australia real estate and finance working on a hands-on basis to ensure agility and performance.

Employ a highly skilled staff with extra resources sought from external consultants, thus enabling syndicates to maintain a strict focus and yet be sufficiently flexible to adjust that focus within various market segments.

Continue to train, motivate and encourage all staff, and thereby retaining them.

Identify strategies for flexibility, for risk management, or for diversification.

Seek new possibilities for effective action in everyday matters to achieve higher standards of excellence and to think and act beyond existing views and limits.

Be dedicated to producing sustainable change and break through business results that gives our syndicate members a competitive return.

Uncover and examine the blind spots or context holding back the company or the services provided by staff.

Identify an expanding panel of reputable contacts and consultants from whom future opportunities are sought.

Minimise financial risk with low gearing and a strong balance sheet.

Mortgagee Property Limited recognises the need for directors and employees to observe the highest standards of behaviour and business ethics when engaging in all activities. The Group will maintain a reputation for honesty and integrity. To this end, the board will adopt a Code of Ethics that sets out the principle standards that all employees are expected to comply within the performance of their respective duties.

An essential element of that Code will be the requirement that all employees act in accordance with the law and with the highest standards of service and propriety. The Code and its implementation will be reviewed each year.