Points of Interest of Sierra Mortgage Fund Ltd. Offering Memorandum (“O/M”):
This is intended as a guide to direct your attention to certain sections of the O/M, based on frequently asked questions we have experienced. The O/M has been provided to you with the anticipation and instruction to be read in its entirety.
- Minimum Subscription Amount: $100.00
- We will invest only in first or second mortgage loans (which can include inter alia first, second or third mortgage charges over more than one property) secured primarily against residential real estate, which includes single-family residences, townhouses and apartment condominium units and multi-family rental dwelling buildings, although mortgage loans secured against raw land, commercial, industrial and other non-residential real estate uses will also be considered; (sec. 2.3.1a of O/M)
- Construction mortgage loans will be restricted to single-family residential properties (sec. 2.3.1b of O/M);
- We will not invest in a mortgage loan unless such investment has been approved unanimously by all 4 members of the credit committee, which is currently comprised of the 3 Directors of the Company and one shareholder at large (the “Credit Committee”) or, unanimously by no less than 3 of the 4 members if all 4 members are not available within 24 hours of the time of the loan submission. In the event that the shareholder at large member of the Credit Committee is unable or unwilling to act in that capacity, the Company may determine to replace that member of the Credit Committee or, to proceed with a Credit Committee comprised of the 3 Directors of the Company;; (sec. 2.3.1e of O/M)
- Mortgage loans will be made against real estate located in established areas primarily in the Okanagan, Thompson and Shuswap regions of British Columbia, however, investments may be extended to other established areas within British Columbia or Alberta; (sec. 2.3.1f of O/M)
- An investment in a mortgage loan will not be made unless, at the date the investment is approved by the Credit Committee, the amount secured by such mortgage investment, plus the amount owing under any prior financial charges, generally does not exceed 75.0% of the appraised value of the property or properties securing the mortgage; provided that the appraised value may be based on stated conditions including without limitation; completion, rehabilitation or lease-up of improvements located on the property or properties, which activities we will monitor on an on-going basis; (sec. 2.3.1j of O/M)
- No single investment, or related group of investments, involving one property or development, or involving several properties or developments owned or controlled, directly or indirectly by one borrower and its affiliates, will generally exceed the lesser of $600,000.00 or 15.0% of the book value of the assets of the Company; (sec. 2.3.1l of O/M)
- Each and every property forming security for any mortgage loan will be inspected by at least one member of the Credit Committee or, in the event a property is located outside of our primary lending area, by an individual approved by the Credit Committee, prior to the advance of any funds; (sec. 2.3.1m of O/M)
- Our long term objectives are to continue the steady growth of our issued and outstanding share capital along with the number of our shareholders and to provide those shareholders with a sustainable income, while maintaining preservation of capital and liquidity for our shareholders as our guiding principles. (sec. 2.5 of O/M)
- ……once mortgage loans are secured and funded, the Company pays a management fee to the Manager of 2.0% per annum calculated and paid monthly on the average balance outstanding under the loan portfolio. (sec. 2.6b Note 2 of O/M and further clarification in sec. 2.8.1 Details can also be found in Note 9 of the Financial Statements)
- 3.2 Management Experience – further details can be found in our brochure
- 4 Share Structure, Note 1 with further clarification on voting rights in section 5.1.1
- ……The Redeeming Holder must give written notice to the Company of their intention to redeem and each notice must indicate the number of Shares to be redeemed (the “Notice”). The Company shall redeem the Shares specified in the Notice on December 31 in the calendar year in which Notice is given, if the Notice is given prior to or on June 30 of such calendar year or, if Notice is given after June 30 of such calendar year, on June 30 of the following calendar year (each of such days being a “Redemption Date”), by payment of the Redemption Price. The Company may waive notice of redemption by instrument in writing (sec. 5.1.2 of the O/M) plainly stated, redemptions are honored twice annually, June 30 and December 31 each with a minimum of 6 months’ notice required.
- sec. 6.1 and 6.2 of the O/M Income Tax Consequences and RRSP Eligibility
- Subscribers will be required to include any taxable dividends (other than a capital gains dividend) received on their Class “A” Shares in a taxation year in income in the year as interest income. (sec. 6.2 of O/M)
- As a shareholder of the Company you will receive a brief quarterly financial report, prepared by management, along with the quarterly distribution of dividends. You will also receive audited financial statements of the Company annually in accordance with the Corporation Act. You will not be given notice of nor be entitled to attend general meetings of the holders of the outstanding Common shares of the Company. However, you will be given notice of and be entitled to attend informal annual information meetings of the holders of Class “A” Redeemable Preferred Shares. (sec. 9.1 of O/M)
The official office hours of Sierra are Monday to Thursday 8:30 – 4:00 excluding holidays but we are available by phone anytime 250-558-1111. Whether a current shareholder or inquiring investor, you are encouraged to drop by or call anytime to learn more about Sierra.
*Disclosure: This information does not constitute an offering to sell or a solicitation to buy securities referred to herein. The offering is made by Offering Memorandum only and all information herein is qualified in its entirety by the Offering Memorandum.