FAQs

FAQ

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• What are the typical rates of return in a Trez Capital mortgage fund?

  While there is no typical rate of return on a mortgage fund, Trez Capital’s aggregate Canadian mortgage fund strategies have averaged in excess of 9% per annum*. On a relative basis we attempt to achieve a return approximately 500bps over Government of Canada bonds.

  Although historical performance is not an assurance of future returns, at Trez Capital, we constantly monitor economic trends and attempt to align our lending practices to maximize returns and minimize the potential for loss of principal. At times, including most recently during this past recession, we will shift our portfolios to more defensive positions, as our pursuit of return ranks second to our objective to preserve your capital.

  *Past performance is no indication of future returns.

• What are the risks involved?

  Regardless of the type of mortgage transaction, investment success requires an in depth understanding of the underlying real estate on a case-by-case, market-specific basis. We underwrite a multitude of real estate and security risk factors including the borrower’s track record, the economics of the project being funded, professional third party assessments, micro and macro market factors, security of each loan beyond the project and probable exit strategies. This formula of funding well-secured first and second mortgages has provided consistent rates of return to investors since our firm’s inception. We have implemented governance practices such as the separation of loan origination, underwriting and risk management functions to ensure an unbiased assessment of risk.

  In addition, our investment approach is oriented towards the traditional real estate in major urban markets. Assets in these markets tend to be the most liquid, have the best understood property values and the greatest selection of exit strategies.

  Mortgage investment funds are not risk free. Investments in mortgages are subject to risks including liquidity, fluctuations in real property values, occupancy rates, operating expenses, interest rates and other factors. Mortgage investment funds are not suitable for investors who cannot afford some measure of risk in connection with their investments. Before investing, you should always read the offering documents carefully.

• Who is qualified to invest?

  For Bison Prime and Bison Income Trust II, if you make an investment of $150,000 or more, you are qualified to invest regardless of the province you reside in.

  1. If you reside in British Columbia, Nova Scotia, Newfoundland or New Brunswick, you must complete a risk acknowledgment form.
  2. If you reside in Ontario and you invest less than $150,000, you have to be an accredited investor to invest. An accredited investor is someone who has a net worth exceeding $1 million (either individually or jointly with a spouse), or earn at least $200,000 a year individually or $300,000 jointly with a spouse. You must complete an accredited investor form.
  3. If you reside in Alberta, Manitoba, Northwest Territories, Nunavut, Prince Edward Island, Quebec or Saskatchewan, and you invest less than $150,000, you qualify as an eligible investor by satisfying one of the following:
     1. Net worth exceeding $400,000 (either individually or jointly with a spouse),
     2. Net income before taxes exceeding $75,000 a year individually or $125,000 jointly with a spouse.
     You must complete a certificate of investor form.

• What is the price per unit?

  All open ended fund units are issued at $10.

• Is there a minimum investment requirement?

  Yes. There is a minimum requirement of 200 units ($2,000). Residents of Ontario must either be accredited investors or purchase units with an aggregate acquisition cost of $150,000. Residents of Alberta, Manitoba, Northwest Territories, Nunavut, Prince Edward Island, Quebec or Saskatchewan must either be eligible investors or purchase units with an aggregate acquisition cost of $150,000.

• How will interest be paid from the open ended mortgage funds?

  Our open ended mortgage funds distribute 100% of net income annually, with $0.15 per unit distributed quarterly with the residual (annual top-up) distributed upon completion of an annual audit. Investors who have invested for less than a full year will receive a prorated top-up, and those who invested in the dividend reinvestment plan will receive a slightly higher top-up due to the effects of compounding. There is no top-up distribution for investors who withdraw before the yearend (December 31).

  TG Income Trust II has a fixed rate of return that is distributed through equal quarterly distributions.

• When will interest be paid?

  A fixed amount of distributions from the open-ended mortgage funds are paid quarterly, followed by a top-up distribution upon completion of the fund’s annual audit. The regular quarterly distributions are paid on the 15^th day (or the following business day if the 15^th is a bank holiday) following the end of the quarter to which the distribution is related. Depending on the financial institution, the distribution may require an additional day or two to appear in your account.

• Can I reinvest my distributions rather than receive them in cash?

  Yes. A dividend reinvestment plan (DRIP) is available to those who wish to purchase additional units of a fund instead of receiving a cash payment. This arrangement is most suitable for investors who are looking for the total growth of a portfolio rather than the income it generates, being most appropriate for investments held within registered plans (RRSP, RESP, etc.)

• How will distributions be taxed?

  Distributions will be taxed as interest income from Canadian sources. Bison Prime, Bison Income Trust II (C1 and C2 subtrusts), and TG Income Trust (I and II) issue T3s*, whereas Stanford and Harvard issue T5s**.

  * The T3 Statement of Trust Income Allocations and Designations is used to report the total amount that was distributed to Canadian resident investors holding mutual fund trust units in non-registered account(s), including interest, dividends, capital gains, and return of capital. If you live in the province of Quebec, you also require a Relevé 16 slip. Please note that if you invest in several mutual fund trusts, all the trust income distributed to you is aggregated and reported on a single T3 or Relevé 16 slip.

  ** A T5 slip is a government form to report dividend payments. Your Income Tax guides will indicate how to report this type of income.

• How can I withdraw when I need my money?

  Units are retractable at the demand of unitholders with 30 days notice, subject to a retraction penalty (please refer to the Fund Offering Memorandum).