Yorkton Group

[New2REI]

Hello,

I was walking through WEM yesterday and there was a booth set up by the Yorkton Group. They were selling land to be rezoned and developed within the next couple of years. I was wondering if anybody has heard anything positive/negative about this company or if anyone has done business with them?

Thanks,

Dineen

 

[mandmholdings]

QUOTE (New2REI @ Mar 10 2008, 12:57 PM) Hello,

I was walking through WEM yesterday and there was a booth set up by the Yorkton Group. They were selling land to be rezoned and developed within the next couple of years. I was wondering if anybody has heard anything positive/negative about this company or if anyone has done business with them?

Thanks,

Dineen

I don`t have any first hand experience; however, I would be careful with this type of investment. I would hazard a guess that the dates that they are giving you for when this land is to be rezoned and developed are purely speculative.

 

[D1M]

QUOTE (New2REI @ Mar 10 2008, 12:57 PM) Hello,

I was walking through WEM yesterday and there was a booth set up by the Yorkton Group. They were selling land to be rezoned and developed within the next couple of years. I was wondering if anybody has heard anything positive/negative about this company or if anyone has done business with them?

Thanks,

Dineen


Hi Dineen, if you want to require more information about this Company, or interested in what this Company has to offer. Please dont hesitate joining us at our Client Presentations held at Manulife Place 3rd floor, Suite 378 every Tuesday at 7:30pm and Saturday at 2:00pm.

Thanks


Danny

 

[Thomas Beyer]

QUOTE (New2REI @ Mar 10 2008, 11:57 AM) Hello,

I was walking through WEM yesterday and there was a booth set up by the Yorkton Group. They were selling land to be rezoned and developed within the next couple of years. I was wondering if anybody has heard anything positive/negative about this company or if anyone has done business with them?

Thanks,

Dineen

I do not know this firm .. but have seen their booth in WEM also.

Allow me a few comments on land development in Alberta:

a) land prices for to be developed land ("raw land") in Alberta have dropped about 50% last year ! Thus, the syndication price offered to you is possibly too high.

b) demand for new land is weak .. and Edmonton and area has LOADS of it for years to come .. so any sale of lots or plots of land will take far longer than envisioned perhaps a year or 2 or 3 ago ..

c) it is very hard to finance land development given a more conservative underwriting by banks .. so if the land you consider investing in has a mortgage on it it is EXTREMELY RISKY as the chance for re-finance or land sale when mortgage is due very low .. thus TOTAL LOSS OF CAPITAL is likely in that scenario. Thus, any return promised has to be seen in light of this very real risk.

Personally I would never ever again invest in a land development (I have in 2 .. both now bankrupt .. luckily in one I pulled my money out a year before it collapsed) unless
A) it is all in cash and
B) reserves for future development are budgeted for and outlined in syndication document
C) there is no price uplifting in land price to investors, and
D) they have reasonable fees / equity split

Ask them:
i) what did you pay per acre ?
ii) what am I the investor paying per acre ?
iii) what is the mortgage on this land, if any .. and its terms ?
iv) what happens to my investment if the land cannot be sold in the timeline envisioned, but in a timeline TWICE AS LONG ?
v) what am I buying ? a bond ? a syndicated mortgage ? a limited partnership unit ? an undivided interest ? [and if you are buying a bond / syndicated mortgage and are behind a 1st mortgage the risk of capital loss in this lending environment is EXTREMELY HIGH. Ensure you know what you are buying ! If you co-own the land without a mortgage .. that might be fine and profitable .. if essentially you are providing financing to bail out an overpriced asset with a 1st mortgage I would take a pass .. but that is just my opinion on land development in 2010 .. as I do not know this firm nor its story nor its history .. but you have to assess risk and possible reward given your own more exhaustive due diligence.]
vi) who are the principals behind this firm and what is their history / track record with land development ?
vii) have you filed with the Alberta Security Commission (I did not see a filing ..)
viii) who can invest ? Accredited investors only ? Or eligible investors too ?

related post on 8 mistakes to avoid in real estate syndications: http://myreinspace.com/public_forums/Real_Estate_Discussion/62-13817-Real_Estate_Syndications_-_A_Good_Idea_.html

 

[behardner]

QUOTE (ThomasBeyer @ Apr 17 2010, 04:35 PM) I do not know this firm .. but have seen their booth in WEM also.

Allow me a few comments on land development in Alberta:

a) land prices for to be developed land ("raw land") in Alberta have dropped about 50% last year ! Thus, the syndication price offered to you is possibly too high.

b) demand for new land is weak .. and Edmonton and area has LOADS of it for years to come .. so any sale of lots or plots of land will take far longer than envisioned perhaps a year or 2 or 3 ago ..

c) it is very hard to finance land development given a more conservative underwriting by banks .. so if the land you consider investing in has a mortgage on it it is EXTREMELY RISKY as the chance for re-finance or land sale when mortgage is due very low .. thus TOTAL LOSS OF CAPITAL is likely in that scenario. Thus, any return promised has to be seen in light of this very real risk.

Personally I would never ever again invest in a land development (I have in 2 .. both now bankrupt .. luckily in one I pulled my money out a year before it collapsed) unless
A) it is all in cash and
B) reserves for future development are budgeted for and outlined in syndication document
C) there is no price uplifting in land price to investors, and
D) they have reasonable fees / equity split

Ask them:
i) what did you pay per acre ?
ii) what am I the investor paying per acre ?
iii) what is the mortgage on this land, if any .. and its terms ?
iv) what happens to my investment if the land cannot be sold in the timeline envisioned, but in a timeline TWICE AS LONG ?
v) what am I buying ? a bond ? a syndicated mortgage ? a limited partnership unit ? an undivided interest ? [and if you are buying a bond / syndicated mortgage and are behind a 1st mortgage the risk of capital loss in this lending environment is EXTREMELY HIGH. Ensure you know what you are buying ! If you co-own the land without a mortgage .. that might be fine and profitable .. if essentially you are providing financing to bail out an overpriced asset with a 1st mortgage I would take a pass .. but that is just my opinion on land development in 2010 .. as I do not know this firm nor its story nor its history .. but you have to assess risk and possible reward given your own more exhaustive due diligence.]
vi) who are the principals behind this firm and what is their history / track record with land development ?
vii) have you filed with the Alberta Security Commission (I did not see a filing ..)
viii) who can invest ? Accredited investors only ? Or eligible investors too ?

related post on 8 mistakes to avoid in real estate syndications: http://myreinspace.com/public_forums/Real_Estate_Discussion/62-13817-Real_Estate_Syndications_-_A_Good_Idea_.html


What happens if the company goes bankrupt but the investors in the land syndication have their own land title to the land they bought into ?

 

[Thomas Beyer]

QUOTE (behardner @ Apr 19 2010, 12:56 PM) What happens if the company goes bankrupt but the investors in the land syndication have their own land title to the land they bought into ?
A firm goes bankrupt usually because a mortgage or some payments have not been paid. In most cases a mortgage is on (your) title and as such you will lose unless you decide to buy out ALL other investors and the entire mortgage, as in land deals there is usually one large blanket mortgage.

Unclear how you can have title. Possibly you and 400+ others are registered on title as a beneficial owner or as having an undivided interest (which is a fancy term for being a beneficial owner)

Thus, before you invest with any firm check their financials, their track record and the history of the owners/operators.

 

[behardner]

QUOTE (ThomasBeyer @ Apr 19 2010, 05:58 PM) A firm goes bankrupt usually because a mortgage or some payments have not been paid. In most cases a mortgage is on (your) title and as such you will lose unless you decide to buy out ALL other investors and the entire mortgage, as in land deals there is usually one large blanket mortgage.

Unclear how you can have title. Possibly you and 400+ others are registered on title as a beneficial owner or as having an undivided interest (which is a fancy term for being a beneficial owner)

Thus, before you invest with any firm check their financials, their track record and the history of the owners/operators.


Thanks alot Thomas very good information! Yes you are right I have an undivided interest and that is what my land title says. The area that the Yorkton Group holds the land in seems like a no brainer since Edmonton is now part of the Industrial Heartland and our city joined for the sole purpose of developing the land into the Horse Hills Energy and Technology Park. I guess we will wait and see how things pan out over the next 5 years! Thanks again for the great info.

 

[Thomas Beyer]

QUOTE (behardner @ Apr 20 2010, 11:15 AM) .. I guess we will wait and see how things pan out over the next 5 years! Thanks again for the great info.
Is there a mortgage that has to be serviced, from cash at hand and/or money raised ?

Do you get these annual financials to see ?

 

[behardner]

QUOTE (ThomasBeyer @ Apr 20 2010, 03:32 PM) Is there a mortgage that has to be serviced, from cash at hand and/or money raised ?

Do you get these annual financials to see ?


You know what Thomas your definately a more experienced investor than me. I do not know exactly but I will find out and let you know, and I will definately get back to you, this is year three for me as far as investing in real estate and so far so good, but as far as land syndications go you have just taught me something new with your question. I will get back to you!

 

[Thomas Beyer]

QUOTE (behardner @ Apr 20 2010, 11:15 AM) ...The area that the Yorkton Group holds the land in seems like a no brainer since Edmonton is now part of the Industrial Heartland and our city joined for the sole purpose of developing the land into the Horse Hills Energy and Technology Park. ..
true .. if
a) they have enough financial depth to pay mortgages, if any exist .. and
b) if they didn`t pay too much for that land and
c) if they didn`t take too many upfront fees and
d) if all development and hold cost to get to that future sub-division and sales event are at hand or are being raised through add`l equity or debt !

 

[behardner]

QUOTE (ThomasBeyer @ Apr 21 2010, 11:33 AM) true .. if
a) they have enough financial depth to pay mortgages, if any exist .. and
b) if they didn`t pay too much for that land and
c) if they didn`t take too many upfront fees and
d) if all development and hold cost to get to that future sub-division and sales event are at hand or are being raised through add`l equity or debt !


Hi Thomas sorry it took a couple days to reply. I have got some info for you regarding your questions the last week with the structure of Yorkton Group`s land investments.

-No mortgage has to be serviced on the land, the land is payed in full and does not have to be financed by cahs at hand or money raised.

- Yes you can see the financials for their current land investment

Hope this helps, and once again sorry it took me a few days to get back to you.

 

[MonteDobson]

QUOTE (behardner @ Apr 26 2010, 11:18 AM) Hi Thomas sorry it took a couple days to reply. I have got some info for you regarding your questions the last week with the structure of Yorkton Group`s land investments.

-No mortgage has to be serviced on the land, the land is payed in full and does not have to be financed by cahs at hand or money raised.

- Yes you can see the financials for their current land investment

Hope this helps, and once again sorry it took me a few days to get back to you.
Hi there,

I have a couple of more points to add.

What was the original purchase price of the land?
When was it purchased?
How much of a "lift" are they adding from the original purchase price to what they sell it to investors? (ie. many companies will by it for $X, lift it a few million dollars (which is their profit) then sell to unsuspecting investors for $Y who are taking all the risk and think they are getting a great deal.

 

[DineenJJ]

Wow I posted this question SO long ago! Glad it`s made it`s way around to add some insight into land banking.

Thomas, great post and very insightful questions to ask when assessing not only land but a variety of real estate deals.

Behardner, what is the Yorkton Group`s track record? How much land have they syndicated? Have investors seen any historic returns?

 

[behardner]

QUOTE (DineenJJ @ Apr 26 2010, 06:17 PM) Wow I posted this question SO long ago! Glad it`s made it`s way around to add some insight into land banking.

Thomas, great post and very insightful questions to ask when assessing not only land but a variety of real estate deals.

Behardner, what is the Yorkton Group`s track record? How much land have they syndicated? Have investors seen any historic returns?

Dineen,
to answer your question, I don`t have the sheet right infront of me but off the top of my head the track record was actually not too bad. The sheet I picked up from them showed about 10 past investments ranging from condo to land syndications, the lowest return was more then 100% and the highest was actually over 1000%. Obviously that is a best case scenario but, they did have a good track record from what I seen, and they do own the properties outright which is a definate bonus!