Pro funds Syndicated Mortgages

dpeacock

Frequent Forum Member
REIN Member
In a nutshell, does anyone know about Profunds Mortgages in Burlington Ontario?
They advertise high returns, 8-16% per year with a 20 year track record.
Risks?
Thank you.


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Matt Crowley

Senior Forum Member
Registered
There are good debt investments out there, I doubt this is one of them. A lot of focus on "ROI" "buyout"... targeting very unsophisticated money.

They are missing the key points for their underwriting:
- track record of developer
- who is on the team? actually on the team, not a bunch of consultants!
- do the people on the team have experience in this asset type, business plan?
- comparables of similar investments trading, product plan
- how many fixed contracts are in place?
- is the land / building at initial cost or was it resyndicated at a higher rate?

If you want to do private investments, I'm all for it. Excellent investments out there. To educate yourself, the best site hands down is Crowdstreet (https://app.crowdstreet.com/). Check out their investor education but also their property deals. See the whole investment summary they provide you and what matters. Great format. Yes, U.S. site but there are opportunities similar in Canada and these are the questions you need to be asking.
 
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Thomas Beyer

Senior Forum Member
REIN Member
More on how to evaluate a MIC here and what options existed in 2014 here http://www.baystreet.ca/articles/research_reports/fundamental_research/MIC-Report-June-2014.pdf

Most MICs today are single digit. Anything over 10 or 12% is very high risk but the odd speciality pool exists investing in development deals.

I am on the investor committee of a $100M fund that invested into factoring receivables and just blew up. $100M. Gone. They raised money to April this year. Canadian security legislation, the legal system and low low staffing at commercial crime RCMP units make Canada very vulnerable to fraud artists or merely incompetent or cleverly cunning, yet shady operators. Commercial crime pays in Canada. Invest only if you can afford to lose everything. In other words, do not invest more than 5 or 10% into any one investment.
 
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Matt Crowley

Senior Forum Member
Registered
You are on the investor committee for Securecare? Didn't they lie about the loans being "insured"?
 

Thomas Beyer

Senior Forum Member
REIN Member
You are on the investor committee for Securecare? Didn't they lie about the loans being "insured"?

Correct. I am on the SecureCare investor committee and many of the collateral pools administered by TFS were not insured, or apparently improperly insured. Several (alleged) contractual breaches by the collateral administrator, TFS which was hired by SecureCare, and is co-owned by the main SecureCare operator, Peter Johannes. His $3M fee was supposed to be sub-ordinated to the bond recipients as per the OM but was not and as such is owing. A settlement is a distinct possibility ( currently being negotiated ) as is a multi-year lawsuit.

More here https://www.grantthornton.ca/services/reorg/bankruptcy_and_insolvency/SecureCare

Missing in Canada is not only a better staffed commercial crime unit at the RCMP but also a financial press, blogs, TV shows or newspapers that investigate or write about these type of financial operators. Walton Group ( see here http://documentcentre.eycan.com/Pages/Overview.aspx?SID=1400 ) now in receivership, or also OmniArc ( http://documentcentre.eycan.com/Pages/Main.aspx?SID=381 ) for example and of course many many more in the 2008/2009 timeframe during financial crisis.

The spectrum is long and grey, from unforeseen black swan events, to sheer bad luck, to excessive fees, to poor asset choices, to excessive leverage, to management turnover, to incompetence, to negligence, to gross negligence or to outright fraud, and often not easy to discern, even after a few years of document production and deep insight, let alone upfront when investing.

I thought when I invested some RRSP money into SecureCare in 2015 that factoring is a relatively mature industry where 10%+ returns are very doable. TFS contractually obligated itself to pay 14% to SecureCare and out of that it would pay its fees to EMDs like Pinnacle, Triview or Raintree and it’s own operating costs. So all very believable. But then, a mere 4 months after they raised the last $ all collateral pools under management are worth almost nothing ? Strange, eh ? A coincidence ? Fraud ? Poor investment acumen ? Negligence ? Gross negligence ? All TBD possibly in an understaffed & very expensive and time consuming court of law unless a satisfactory settlement can be achieved by early next year. TBD.
 
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Matt Crowley

Senior Forum Member
Registered
Thanks for sharing Thomas. A couple ugly blowups for sure.

How did the committee get around the conflicts of interest between TFS and SecureCare? If TFS is owned by Peter?
 

Thomas Beyer

Senior Forum Member
REIN Member
Thanks for sharing Thomas. A couple ugly blowups for sure.

How did the committee get around the conflicts of interest between TFS and SecureCare? If TFS is owned by Peter?

Peter Johannes owns some shares in TFS but not a lot. I am unclear as to history between TFS and him but I have no doubt there is a relationship. Potential misrep in the audited 2015 OM that was used to raise money until April 2017 when they had to produce a new OM but didn’t and thus stopped fund raising.

Possibly negligence in my opinion but beyond the current mandate of the investor committee. As stated a settlement is being negotiated. But a lawsuit is a distinct possibility if settlement is insufficient. More via the above grantthormton website.


Thomas Beyer, Asset Manager, Investor, Community Improver, Author, Father, Mentor www.prestprop.com
 
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