Rental Management Investment Trust (RMIT) has been established as a “feeder investment trust” for the Rental Management Australia Fund (RMA Fund) offering investors the opportunity of participating in a stapled security comprising of the Rental Management Australia Group Limited (RMA Group) and the Rental Management Australia Trust (RMA Trust). RMIT will be an ASX listed investment trust investing in the unlisted RMA Fund. The Fund appears to have found a robust combination that will pay a significant quarterly return for RMIT investors of 9.25% per annum.
RMIT has lodged a Replacement Product Disclosure Statement with ASIC which offers units at $1.00 each plus one free attaching 2 year option exercisable at $1.00 on or before 31 October 2014. There is no maximum amount to be raised under this Offer Document. However, there is a minimum investment of $2,000 required per investor, with additional investments able to be made in $500 increments. Offer closing date is 07 December 2012.
Mr. Stuart Bell, who is the company Chief Investment Officer, explained the key components of the offer. Mr. Bell stated “the proposition is based around rental managements which are scarce Australia wide and currently produce both high fees and high rents.”
The RMA Fund is a residential property management specialist that aims to become the largest residential property management business in Australia through acquisitions and organic growth. Mr. Bell explained “as well as offering a great return the main point to appreciate is the fact that the investment is secured, secured insofar that all the money raised will be utilised towards buying rentals and increasing the asset base and, in so doing, it offers a strong asset backing for the units in the trust.”
The fund will acquire, manage and expand property management businesses, providing regular income distributions and the potential for capital growth. Residential property management is the service of looking after an investment property on behalf of the owner to generate a return. The basic elements of the service include, finding suitable tenants, collecting and distributing rent to the owner, maintaining the property and ensuring it is well looked after on behalf of the owner.
Mr. Bell stated that the RMA Group owns property management businesses with 1,200 rental property agreements (RMA’s) and has conditional contracts to acquire Run Property Group, an ASX listed property Management Company with businesses in Queensland, Victoria and New South Wales.
For each $5.00 invested by RMIT in the RMA Fund, the RMIT receives four (4) Units in the RMA Trust and one (1) Share in the RMA Group, stapled together to form one (1) Stapled Security in the RMA Fund. The Shares in the Company and the Units in the Trust cannot be transferred separately.
All funds invested in the RMA Trust will be lent to the RMA Group pursuant to a secured loan agreement. The loan is secured by a fixed and floating charge over the RMA Group in priority to unsecured creditors although it will rank behind other secured creditors to whom it has given priority, such as a bank.
Under the secured loan agreement, all of the expenses of the Trust are paid for by the Company. The Trust proposes, in the ordinary course of events, to distribute all income it receives to the Unitholders. Interest is payable to the Trust by the Company at the rate of 12.5% per annum paid quarterly in arrears, which equates to a 10% pa return to the Fund Security Holders. RMIT will receive the 10% return on all of its investments in the RMA Fund from which it will deduct expenses of 0.75% and will distribute the net return of 9.25% to its Unitholders. Since the inception of the RMA Fund on 17 February 2012, three distributions have been made to Security-Holders reflecting an annualised return of 10%.
Any dividends paid by the RMA Group will be in addition to distributions from the Trust. The Fund is an open-ended investment and as such has no expiry date.
The Responsible Entity of the RMIT is Theta Asset Management Limited and its Custodian is Australian Executor Trustees Limited.
The Fund intends to continue to expand and develop its property management businesses by acquiring businesses that provide sound income streams and through organically growing the number of properties under management within each of the Group’s branch offices.
In conclusion Mr. Bell explained that “this property management investment has been carefully positioned to take advantage of lessons learnt through the observation of similar enterprises and draws parallels with the operational success of the Westfield Trust and their management company and the similarities in the stapled structure.”
For more information please contact:
0418 952 250