FUND PROFILE
Overview
Blue Stripe Financial (BSF), founded in 2017, is the newest member of the Amur Financial Group of companies. Relative to the other funds managed by Amur Financial, Blue Stripe provides a more aggressive lending approach. Blue Stripe’s investment objective is to achieve long-term capital appreciation through investments that offer high return potential. Intended for investors who are willing to accept an increased degree of risk, Blue Stripe seeks to invest in higher ratio mortgages over shorter terms & reduced amortizations.
History of Fund
In 2015 the Directors of Amur Financial investigated entering the unsecured lending segment (similar to MOGO, EasyFinancial, Progressa, Borrowell, the list goes on…). The conclusion arrived at by the Directors was to lend to the same borrowers but to include their house as a part of the transaction – in other words, why lend unsecured when we can lend to the same borrowers secured? The Directors “beta” tested this investment hypothesis by creating a small portfolio of loans ($350,000) to focus on this segment. Since inception (November, 2015), this portfolio has taken no losses and has yielded in excess of 14%.
Fund Details
| Fund Type: | Mortgage Investment Corporation (MIC) |
| Inception Date: | 2015 |
| Minimum Investment: | $10,000 |
| Annual Return (2016): | 14.30% (unaudited) |
| Weighted Average LTV: | 79.8% |
| Registered Investment Qualified: | No (expected in 2018) |
| Auditor: | MNP, LLP |
| Mortgage Type: | Residential / Primary Residence |
| Geographical Diversification: | BC, AB and ON |
| Funds Under Management: | $1,450,000 |
| Total Number of Mortgages: | 59 |
| Average Mortgage Size: | ~$24,575 |
| Financial Service Provider: | Alpine Credits Ltd |
| Financial Service Fee: | 2% and 20% Income Participation over 12%; 0% if Annual Return is less than 8% |
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Investment Objectives
- To earn the preferred shareholders a net return of Prime + 8.00%.
- Maintain a weighted average LTV of less than 90% of the total mortgage portfolio.
- To keep an average mortgage size not exceeding $25,000.
Key Investment Policies
- Home ownership length must be a minimum of 2 years.
- Loans are to be urban only on client’s primary residence.
- The term on any mortgage is not to exceed 5 years, amortizations not to exceed 15 years.
- Property valuation is based on a “Lender Report” in Ontario & tax assessments in British Columbia /Alberta.
- Property Appraisals are required for all loans exceeding $40,000.
- Credit history to determine (i) size of loan and (ii) LTV maximum.
- Verification of income is required.
Tax Treatment
The fund falls under Section 130.1 of the Canadian Income Tax Act. It is a flow through investment and as such, pays no taxes at the corporate level so long as it distributes 100% of its annual net income.
The fund distributes 100% of its annual profits to its shareholders in the form of dividends. These dividends are treated as regular income for income tax reporting. An investment in the fund is only available in non registered form with RRSP, RRIF, RESP and TFSA eligibility in 2018.
