Jessica: Hi, I’m Jessica Amir for the Finance News Network. Joining me now from DomaCom is CEO, Arthus Naoumidis. Hi, Arthur. Welcome back.
Arthur: Hi, Jessica. Good to be back here again.
Jessica: Starting off with Arthur, just tell us about the company and give us a quick update.
Arthur: DomaCom is an operated platform that enables investors and advisors to pull together or syndicate or crowdfund in individual investment properties to begin with, but shortly other assets including mortgages. And so the last few years have been the formative years. So we’ve transacted 48 times. We own 48 properties around Australia in every state. Most of those properties are residential. However, we’ve acquired our first cattle farm in the Western District of Victoria last year and we’re just about to acquire our first land banking projects right in the Badgerys Creek, which is an $8 million transaction. So it’s, you know, the transactions are starting to gain pace and the size is starting to increase. So it’s been a formative year.
Jessica: And you’ve been very busy putting out announcements to the market about your distribution and partnerships. Just tell us what’s happening in this space.
Arthur: Yes. We’ve had three major announcements over the last few months. I know it sounds like it’s all happened in three months, but it’s actually been several years in the making. The first announcement really was our deal with Xplan, which is owned by Iress. As most financial advisors in Australia know, Xplan is the leading CRM or financial planning tool for financial advisors. And what this’ll do is just make it far easier for advisors to be able to use DomaCom and integrate it into their financial planning, a statement of advice and reporting. So, and like all humans, we like to do the easy thing, so this will make it easier for advisors to use us.
So that was the first one. The second announcement was our integration of the Domain listing data. And what this will enable both clients and advisors is to, you know, go onto DomaCom and select any property available for sale in Australia and commence a crowdfunding campaign or a syndication process with their friends and family or with their clients. So it’s a very powerful tool and it’s been a long time coming and it’ll benefit Doma as well.
And finally, the third announcement was the approval by trustee partners of DomaCom, which is really the first in Australia of a superannuation trustee that enables fractional property investing to occur within their funds. Over the next few months, we’ll be looking to integrate DomaCom within some retail super funds which will give options to those people who don’t have self-managed super to invest in fractional property.
Jessica: And just tell us about the recent federal court SMSF ruling and how it affects you guys.
Arthur: So what we’ve been trying to do for the last several years is see whether superannuation funds can invest in DomaCom sub-funds that own a property and then have a related party of the super fund rent that property. Unfortunately, we weren’t successful in the federal hearing in December. And so after some consideration, we’ve decided to lodge an appeal which was lodged on the 25th of January. So, we expect to hear the results sometime mid-year and we’ll see what happens but clearly, it’ll be a major result if we are successful.
Jessica: And you made some recent announcements about your capital. Can you just update the market about those transactions?
Arthur: As most people were aware, we’ve really had to do something about our capital recently. So what we’ve done is two forms of convertible notes to top up our capital base. In addition, we’ve also reduced operating cost-base. So firstly we’ve got a $1 million convertible note from the U.S. and then we’ve got another $650,000 3-year convertible note from Australian investors. And so that combined with our reduction of cost-base, which is, you know, everything from reducing operating costs to some staff reductions basically puts DomaCom a stronger position for this year. And we also have other sources of capital with regards to the ATI rebate that are announced. So yeah, so we’re in a stronger position than we were five or six months ago.
Jessica: Looking forward, Arthur, what can investors expect over the coming months and longer-term?
Arthur: This last year we’ve been trying to really solve one of our major problems that we’ve had in DomaCom that’s been inhibiting our growth and that is we haven’t been able to get debt inside the sub-funds. Most investors when they buy investment properties have a bit of debt because it makes it tax efficient. Unfortunately, we haven’t been able to find a lender that would be willing to lend to DomaCom and we’ve addressed that issue by changing the trustee at the end of last year.
So we’re now negotiating with a major bank or in fact several major banks to provide a default loan facility within DomaCom. We’re also enabling our advisors to crowdfund their own mortgages to fund the debt within the DomaCom platform. And so what we expect to happen is that the number of transactions will accelerate this year. So frankly, we’ve transacted 48 times last year without debt. Okay. So the question is how many transactions do you think we can do with debt? And we expect to do a lot more. So we’re going to work very hard to deliver what the market’s really looking for DomaCom, which is runs on the board, funds on the management. So that’s really our focus this year.
Jessica: Well, very exciting times. Arthur Naoumidis, thank you so much for the update.
Arthur: Thank you, Jessica. Good to be here.