The Atlantic Pacific Mortgage Fund (the Sub-Fund) primarily invests via DomaCom Loan Fund in underlying mortgages which invest in loans secured by first registered mortgages, and General Security Agreements over cash or term deposits.
The Sub-Fund seeks to participate in the opportunities associated with first mortgages to enhance returns on the defensive component of portfolios. The capital invested will remain illiquid until the underlying loans mature, and the capital is then repaid to the Sub-Fund.
The Sub-Fund seeks to mitigate risks by only investing in underlying Mortgages which apply the following policies:
- Mortgages are limited to residential, and commercial property
- Maximum Loan to Value Ratio (LVR) of 60%. The Sub-Fund Investment Manager at its discretion may impose lower maximum LVRs where it believes that a lower rate is required to further mitigate the investment risk.
- Geographic diversification across first registered mortgages will be limited to major cities of Australia
- Maximum loan term of 5 years for any individual mortgages
- Interest cover ratio is required to exceed a minimum of 1 times interest cover
All prospective mortgages are subject to approval by a credit specialist appointed by the Sub-Fund Investment Manager and independent of the DomaCom Loan Fund.
Investors with pledges toward this campaign will receive offers to invest in the Atlantic Pacific Mortgage sub-fund when there is sufficient pledges to fund direct mortgage opportunities. Please be aware you will not be earning the targeted return until the funds have been invested against direct mortgage opportunities.
There is a Performance Fee as per below in this investment.
20% (inclusive of GST) above the targeted return of 4% p.a. after fees.
80% (inclusive of GST) of the out-performance is paid to the investors. Calculated on a monthly basis and paid at the end of the month.
If you would like to invest in the Atlantic Pacific Mortgage Fund you can join this crowdfunding campaign by completing the application and lodging your investment funds through this General Advice page. Please ensure that you first read the DomaCom Fund’s Product Disclosure Statement (PDS). For a copy of the current PDS, please click here or call your financial adviser.
When you have lodged your bid and the campaign is filled, you will also receive a Supplementary Product Disclosure Statement (SPDS) outlining the specific offer to invest in the Atlantic Pacific Mortgage Fund which will contain all the information required for you to make a decision. You are not bound to proceed with your bid amount for this Atlantic Pacific Mortgage Fund crowdfunding campaign until you accept the offer contained in the SPDS (which will include the specific details for the properties).
If you are new to DomaCom, click on the Apply button to begin your application. If you are an existing DomaCom Fund investor, you can login to access your account and all the other public crowdfunding campaigns by clicking the Investor Login button.
Risks with regard to Loan Sub-funds
Refer to the section 7 of the PDS titled Risks of investing in the DomaCom Fund and the sub section 10.3 of the PDS Risks of Investing in a Loan Sub-Fund such as this sub-fund.
- Loan Sub-Fund not established – If there is insufficient Investor interest in the Loan Investment, or if the Borrower is not successful in purchasing the Security Property the Loan Sub-Fund will not be created.
- No guarantee of returns – Returns are not guaranteed and Investors may lose money some or all of their income return and capital.
- Liquidity risk – An Investor cannot withdraw from the Loan Sub-Fund until the Loan Sub-Fund is wound up. DomaCom does intend to offer a facility through which Investors can seek to sell their Units to another party, however there is no guarantee of this.
- Damage or loss to Security Property – There are a range of events that can damage the Security Property including acts of God (fire, flood, earth quake and other natural disasters) through to accidents, negligence, and failures of maintenance. The Borrower’s insurance may not cover or may not fully cover such losses which can impact its ability to repay the Underlying Loan.
- Underlying Loan Servicing Risk – There may be insufficient income generated from the Security Property to meet the borrowing costs. The costs associated with Security Property may exceed its income. The Borrower will seek to ensure that there is sufficient income to meet expenses including holding a cash reserve equivalent to 4 months’ rent at the time of establishing the Underlying Loan and also ensuring that that the Interest covered ratio is sufficient to cover the interest expense.
- Tenancy Risk- The Borrower’s ability to service the Underlying Loan is predicated on the Security Property being tenanted and the tenant paying the expected rent. If the tenant does not pay the rent due, or if the Security Property becomes vacant, the ability of the Borrower to pay for the Underlying Loan may be impacted.
- Asset Risk – The property is to be acquired cannot exceed an independent property valuation of of more than a loan to valuation ratio of 60%. The value of the Security Property would need to fall by 40% to put at risk the repayment of the Underlying Loan.
- Interest Rate risk – The interest rate has been set at a rate and is fixed for a term. During this time there is a risk that interest rates could rise, resulting in investors receiving a lower return on their investment than an alternative lending product.
- Non-recourse lending – Investors should be aware that the Underlying Loan is secured with a first ranking registered mortgage over the income producing Security Property that is held by the Borrower. In addition, the Underlying Loan is secured through a general security agreement against all the assets of the Borrower specific to the Property Sub-Fund. If the Borrower defaults, there will be recourse to all the assets of the Borrower (limited to the assets of the Property Sub-Fund that holds the Secured Property) however, there will be no recourse to any other assets of the DomaCom Fund, nor any recourse to the assets of the Trustee, the Manager, or the Custodian.
- Economic risk– There is a risk that the general economic conditions in Australia may change in relation to interest rates, employment rate and economic growth that could in turn have an impact on the property market and specifically the value of the Security Property and the Borrower’s ability to repay the Underlying Loan.
- Timing risk – There is a risk that the Loan Sub-Fund may not proceed if the proceeds in relation to the Property Sub-Fund are not raised for the equity component. If this situation were to occur the Loan Sub-Fund would not proceed, and the capital raised would be returned back to the investors.
- Security Property Sale risk- There is a risk that the Security Property may not be able to be sold at the conclusion of the term of the Property Sub-Fund. This may cause delays in the repayment of capital to the Loan Sub-Fund beyond the Loan Sub-Fund’s term.
Fees and Costs
Refer to section 13 of the PDS for Fees and Other Costs
The Management Fees for managing your investment
- Cash held in your Cash Account 0.22% p.a.
- Property Sub-Fund 0.88% p.a. of the Gross Asset value of your investment
- Loan Sub-Fund 0.33% p.a. of the Gross Asset value of your investment
- Investment Management Fee 1%
- Adviser Syndication Fee 1%