Mr. Murphy is the Chairman of 20|20 Investments Inc. In his role as Chairman, Mr. Murphy is responsible for corporate governance and developing the overall strategy of the business, as well as being actively involved in the audit and acquisitions committees.
Mr. Borgal is the President of 20|20 Investments Inc. In his role as President, Mr. Borgal is responsible for developing the overall strategy of the business, as well as engaging key resources, budgeting, developing the timing for each offering and the overall performance of these offerings.
Mr. Mallmann is the Chief Operating Officer of 20|20 Investments Inc. As Chief Operating Officer, Mr. Mallmann is responsible for developing the strategic plan to advance the company’s mission and objectives, and to promote revenue, profitability and growth as an organization. He oversees the company operations to insure efficiency, quality, service, regulatory compliance and the cost-effective management of resources.
The 20|20 Group of Companies (20|20) consists of three business units, 20|20 Properties Inc., 20|20 Resorts Inc. and 20|20 Investments Inc. 20|20 Properties was the first company to be launched in 2001, at which time John Murphy, the company’s founder, brought together a management team with extensive real estate syndication experience in multi-family properties. Since then, 20|20 Properties has acquired 31 multi-family building investments in British Columbia, Alberta, Saskatchewan, Ontario, the Maritimes and Arizona for our clients and has earned a reputation as a company that offers real estate expertise and product excellence. All 20|20 investment opportunities are delivered to clients through the three business units.
We use proven investment techniques to develop exceptional apartment and condominium conversion properties, as well as strategic resort investment opportunities in diverse markets across North America. This is complemented by our unique Virtual Apartment Building strategy, which supports the purchase, financing and management of investment properties, allowing clients to build a diversified portfolio of high quality real estate investments.
20|20 has built an enviable track record for maximizing returns and minimizing risk for our clients by being in the right markets at the right time and providing strategic management solutions through our exclusive partnership with asset management professionals.
The Hudson Bay Mountain Land Development Limited Partnership (Hudson LP) has identified a new parcel of land that it intends to develop for residential purposes, along with a proposed village concept of hotels, smaller lodge facilities, commercial and retail outlets, with areas cleared for lift alignment, ski runs and parking. Seasonal and year round watercourses flow through the site. The site, when developed, will provide a wide range of base area facilities that will be designed to meet the needs and expectations of HBMA’s resort clients. This will include, but is not be limited to, commercial and retail services, as well as areas for a possible fire hall, policing and medical services.
The Hudson Bay Mountain Estates Land Development Fund (Series B of the 20|20 DIT) provides you with an alternative way to invest in real estate and helps you to further diversify your investment portfolio. By investing in a land development project, you will hold a conservative investment that offers asset diversification and capital appreciation.
Proceeds from the issuance of the Series B Units will be invested by the trust in the Hudson Bay Mountain Land Development Limited Partnership (Hudson LP). The Hudson LP has been established to acquire lands located on Hudson Bay Mountain (the Mountain) in Smithers, British Columbia and to develop single family building lots and other residential lands within a master-planned housing community on the Mountain to be known as Hudson Bay Mountain Estates.
No. The Fund’s investments in the project will be carefully managed by the Manager; however, there is no guaranteed rate of return and no guarantee of your principal investment.
Yes, the investment is RSP eligible. If you have a self-directed RSP, simply advise us of the name of your plan holder and plan number, and we will assist with the transfer of investment funds for you. In the event that your plan holder will not hold this investment in your plan, we can assist you with opening a new self-directed RSP account with a trustee that will hold this type of investment in client accounts.
The asset manager, 20|20 FMI earns a 3% financing fee for organizing the offering of the Series B - HBME Fund units. The GP of the Hudson LP (which is a subsidiary of the asset manager) will earn a share of the profits of the Hudson LP. The GP’s share starts out at 0% and steps up to 90%.
The fees associated with the offering are as follows:
20|20 FMI, the asset manager of the Trust, will earn a financing fee of 3% of gross subscriptions
Sales agents will earn fees up to 8.5%
In addition, at the project level there are two affiliated entities that will earn market rate fees for their work on the development:
The development manager, HBME Development Management Inc., will earn a fee 5% of hard and soft construction costs for managing the project.
There will be an entity in charge of the sales and marketing of the HBME lots and that entity will earn a fee of up to 3% of gross selling price of the lots.
The development manager will be reporting to the GP of the Hudson LP on a monthly basis. The Trust will be reporting to its unit holders on a quarterly basis.
You will receive quarterly management reports that will note the activities of the Fund including any properties acquired and the Fund’s operating results. As well, you will be provided with annual audited financial statements and quarterly financial statements for the Fund from the 20|20 DIT.
We project that the investor gets all of his capital back and a 12%/yr return on that money by month 16 of the project.
After the investor has gotten his capital back and earned his 12%/yr, the profit split changes from 100% to the investor and 0% to the GP to 80% to the investor and 20% to the GP. This profit split holds until the investor has earned 21%/yr.
Because the investor is receiving a profit share after he has received all of his capital back, we have to pick a calculation date in order to figure out the point at which he has earned 21% on his money. In order to be fair we use the date at which we paid him back all of his capital BUT we do a Net Present Value (NPV) calculation of the money he has received after that point to reflect the time value of his money. In our projections we have used a VERY conservative 10% discount rate (more than double the T-bill rate) and use the NPV dollar amount to figure out exactly when he has earned 21%/yr on his money.
After the investor has earned a 21%/yr return on his capital, the profit split changes to 50% to the investor and 50% to the GP until the investor has earned 28% on his capital. As before, in order to figure out the exact dollar amount at which the investor has earned a 28%/yr return on his capital we do the same calculation as above.
After that point the profit split changes to 10% to the investor and 90% to the GP for the balance of the project. Our projections indicate that the investor should earn a substantial amount of money after passing this 28%/yr mark.
Prospective investors should not confuse the 12%, 21% and 28% thresholds with the projected return. The 12, 21 and 28% thresholds are important because they are the points at which the profit splits change. Achieving a 28% return for the investor is our goal, and therefore the target return, because it is only after that point that the profit split swings strongly in favor of the GP.
A simple calculation of the projected ROI over the 30 month period (projected profit /investment) is not accurate because it makes no allowance for the fact that the investor is projected to receive all of his money back in month 16. This is a very important point first because the investor has all of his money out and no longer at risk after 16 months (and he has earned a 12%/yr return on it at that point), and second because the investor can reinvest that money somewhere else and earn a return on it while he continues to earn profits on our investment.
Our 35.6%/yr projected return figure accurately reflects these factors. By any measure this project offers a very high yield which can be earned inside an RRSP and returns the investor’s capital very early in the process and places no cap on the potential returns they can earn. Net Present Value Definition:
The net present value is the difference between the present value of all future cash flows and the cost of the investment. In the return calculations a 10% discount to Net Present Value is included. Net Present Value = Sum of the Present Value of the Net Cash Flows – Investment Cost.
As a Series B - HBME Fund Unit-holder, you will receive distributions on a quarterly basis relative to the number of units you hold, in an amount equal to the Manager’s estimate of net income and net realized capital gains of the Trust, less estimated non-capital losses carried forward, if any, for each quarter as lots are sold. For each year ending December 31, the distribution will be an amount equal to 100 percent of the Trust’s net income and net realized capital gains, less non-capital losses carried forward, if any, for the year, less the amounts distributed for the three previous quarters.
The Trust’s net income available for distribution will be distributed on a quarterly basis once all associated costs, including creating a reasonable working capital and a capital improvement fund, have been paid. Our projections indicate that the first proceeds from lot sales will be available for distribution after month 16 of the project.
It is theoretically possible for the LP to make an operating loss in the first year. The LP will be capitalizing the costs of the development in order to match revenues and expenses as much as possible, but it is still possible that there could be an operating loss.
Unit-holders must be residents of Canada. If a Unit-holder becomes a non-resident, the Manager may require redemption of Units or a transfer by the Unit-holder to an affiliated resident.
No. There is no “income” or “net worth” test for potential investors in BC. You simply have to acknowledge having received and read the Offering Memorandum.
Note: This also applies to residents of New Brunswick, Nova Scotia, Newfoundland and Labrador, and the Yukon Territory.
On an investment below $10,000, you simply have to acknowledge having received and read the Offering Memorandum.
On an investment of $10,000 and above, you will have to meet the test for an “eligible investor”. An eligible investor is a person whose:
Net assets, alone, or with your spouse, exceed $400,000, and whose
Net income before taxes exceeded $75,000 in each of the two most recent calendar years and reasonably expects to exceed that income level in the current calendar year, or
Net income before taxes alone, or with your spouse, exceeded $125,000 in each of the two most recent calendar years, and reasonably expects to exceed that income level in the current calendar year.
Note: This also applies to residents of Saskatchewan, Manitoba, Prince Edward Island, the Northwest Territories and Nunavut.
Yes. You will need to meet the test for an “Accredited Investor”, which for most people means you will have to be an individual whose:
Net income before taxes exceeded $200,000 in each of the two most current calendar years, or whose net income before taxes, combined with that of your spouse exceeded $300,000 in each of the two most recent calendar years and who, in either case, reasonably expects to exceed that net income level in the current calendar year.
Note: For an expanded explanation of an “Accredited Investor”, please contact your Investment Account Manager.
An Offering Memorandum for the Series B - HBME Fund Units (the Series B - HBME Fund) will be provided together with a Risk Disclosure Statement for you to review in detail. Thereafter, a Subscription Agreement together with a cheque or transfer of funds from a self-directed RSP will be required to complete your purchase.
The money invested will be returned from the lawyer’s Trust Account should the minimum offering not be achieved. Interest on the monies will be based on short-term bank deposit rates at that time.
You must purchase a minimum of eleven units and with a subscription price per Series B - HBME Fund Unit of $900.00, which is equivalent to a $9,900.00 investment. There is no maximum number of units that may be acquired.
Series “B” Investors will be provided a 7 day exclusive priority purchase window in the release of the first phase lots in Hudson Bay Mountain Estates. This priority period will run concurrently with the local Smithers registrants but Series B - HBME Fund investors will nevertheless have priority over other 20|20 Group clients and the general public.
In addition, Series “B” investors may use their investment in Series “B” units by pledging those units as security for deposits required beyond any hard deposits necessary to meet a lenders prerequisite for construction financing/funding.
Online links provide access to forms; detailed step by step instructions and fee schedules are readily accessible through Investment Account Manager and online.
New Account Application Form
Transfer Authorization
Letter of Indemnity
Unit-holders of Series B - HBME Fund Units who wish to redeem their units may do so, subject to providing notice to the Trustee. Unit-holders may only redeem Series B - HBME Fund Units in increments of not less than $5,000. Redemptions will be subject to provincial securities laws and certain other conditions as outlined in the Offering Memorandum.
The Trust is investing in a real estate development opportunity where funding for a minimum of 16 months is required for proper execution. The redemption penalties are designed to discourage investors from redeeming units and / or investing if they can’t commit to the full time frame. The 5-year redemption period is standard in all 20|20 Diversified Income Trust offerings.
The Declaration of Trust restricts transfers of the Series B - HBME Fund Units except if required as a result of a Unit-holder becoming a non-resident of Canada. Units will not be listed on any stock exchange. In addition, provincial securities laws restrict your ability to transfer your units. This is an illiquid investment
You will receive income from operations and capital gains (or losses) from the sale of assets by the Trust. The Trust flows through all of the income it earns to the Unit-holders since the Trust only pays tax on income earned if it fails to allocate any of this income to the Unit-holders. You will be taxed at your marginal tax rate on income you receive from the Trust. Of course, if you hold the Trust units inside your RSP, then any tax is deferred.
The distributions from the Series B - HBME Fund units will most likely be income and not capital gains. The Trust is a flow through vehicle and it is investing in a LP which is also a flow through vehicle. The lands the LP will own will be inventory so as it sells lots it will be making income off those lots, not capital gains. The character of the income is preserved as it flows up to the Trust and out to the unitholders. The only scenario in which the LP is likely to make a capital gain would be where it does a bulk sale of its land inventory at a profit and in that scenario the gain would flow up and out to the unitholders
Remember the character of the distributions from the Series B - HBME Fund units are only relevant if an investor chooses to hold them outside of an RRSP.
The tax commentary in the Offering Memorandum was prepared by the Trust’s tax advisors PricewaterhouseCoopers (PwC) and to the best of our knowledge is accurate and reliable advice. The Trust is a mutual fund Trust which is a very common corporate structure with well-established tax characteristics. The Manager believes there would be no marginal value in attempting to obtain an advanced tax ruling from CRA. Furthermore, the current practice of CRA is to avoid issuing advance tax rulings whenever possible, even in situations where the tax treatment of a particular issue is well-established.
