Think fast: Retirement is fast approaching, your mutual funds are stagnant at best, the Hon. Jim Flaherty just took a big bite of your investment cash flow thanks to his recent income-trust announcement, and you just don't have the stomach to risk any more of your family's wealth playing the stock market. What do you do now?
You need a safe and reliable investment for your family, one you know will provide tax-efficient income now and through your retirement, and one that won't run out even after you do.
Historically, successful investors have relied on real estate, more than any other investment, to provide safe, reliable, and sustainable returns for their families. With the steady appreciation of commercial and residential real estate in so many Canadian cities, is it any wonder?
League Assets Corp., a real estate investment firm based in Victoria, B.C., thinks it's got your pre-retirement and retirement needs covered. In fact, League's managers have got their eye on something far surpassing that: They aim to produce, protect, and maintain your family's wealth inter-generationally. And they do it through real estate based investments.
Intergenerational Wealth is the trademarked term for the integrated services that League provides its Member-Partners. Indeed, it's this framework in combination with its philosophy of "member-partnership" that sets it apart by putting investors in charge of their family's wealth.
"My partner Adam Gant and I designed League specifically to find, acquire, improve and manage the most profitable real estate properties anywhere, and to share these opportunities in member-partnership with other like-minded investors—no matter where they call home," says chairman and Chief Operating Officer Emanuel Arruda, who started League in 2005 with Gant, the corporation's ceo. "Through League, we do for our member-partners what we do for ourselves."
League manages a private Real Estate Investment Trust (REIT) with real estate assets now totalling more than $100 million, and growing steadily. The REIT is targeted to yield a total return of at least 15 per cent compounded annually. But even more impressive is its cash-distribution rate (currently at 9.8%); the highest REIT distribution rate in Canada - two-per-cent to four-per-cent to higher than any publicly traded REIT. And, since League's REIT is private, it doesn't succumb to the fluctuations of the stock market. For many, that's a welcome relief.
For those earning a paltry four per cent to five per cent from a GIC, or a fully taxable nine per cent to 11 per cent from a mortgage investment company, League's is a most welcome alternative.
League also offers a way to turn an under-performing RRSP investment into a stable and tax-efficient source of monthly income for you and your family - without de-registering your funds and triggering a big tax bite. It's an opportunity to have something you can use now while your rrsp continues to grow.
Here's another plus: League does not take any cut or "load"off the top.
"Most syndicators will either sell their own properties to the pool to skim off some profit at the front end, or take 15 to 20 per cent of ownership for putting the deal together," says Gant. "That means if you invest $100,000, only $85,000 is actually working for you. We believe investors deserve better, so we instituted our Investment Guarantee."
Instead of taking a cut or "load" off the top, League management earns 20 per cent of the increase in the value of the properties it buys. That motivates League to buy properties that are not only doing well to begin with, but ones that have potential for significant increase in the value once physical and management improvements are made.
The workings of the investment are simple. League buys commercial, industrial, and residential properties, such as shopping plazas and apartment buildings, at below market value (typically because they are a bit tired looking or have some vacancies), improves the buildings and grounds, finds tenants for the vacant spaces, and raises rents in line with the building improvements.
The profit (minus a prudent amount to keep in reserve) is distributed monthly to the member-partners in proportion to their investments.
As the value of the buildings and rents increase, so do the members' monthly distributions along with the value of their investment.
Since the Canada Revenue Agency treats the cash flow as "distribution," it is taxed more favourably than income from interest or dividends.
While enjoying your monthly income, the value of your investment continues to grow as the value of the properties in the REIT increases. And, since it is real estate, this increase is treated as capital gains, so only 50 per cent is taxed, but not until you sell your units. Of course, if you're holding the REIT inside your RRSP, then there is no tax to pay until you start cashing out the registered plan.
"League has no sales-people," says Arruda. "We don't need them: People are referring investors to us all the time.”
Among them are mortgage brokers who can see the equity in their clients' homes going to waste. With mortgage rates still at historic lows, and League's distributions providing a steady 10 per cent plus, the income from the investment is more than enough to cover the payments on a home equity mortgage and put additional cash in members' accounts each month.
One thing League makes clear from the beginning: It doesn't gamble. Thanks to its investment guarantee, it's not in its interest to do so.
As you would expect from a company focused on creating Inter-Generational Wealth, League's managers think safety and they think long-term.
League Assets has the contacts and the good reputation to find properties they can make profitable. "For example, one shopping centre had 14,000 sq. ft. of vacancy when we started negotiations, and before we closed the deal we'd already found a tenant to fill 11,000 sq. ft.," says Gant. "Another property came with a spare parking lot. Before we closed, we found a buyer for it, which took about $1 million off the purchase price of the building we wanted. So the day we closed, we bought a higher cash flow for a lower price. Then we went to work on making improvements."
So with returns like these, a guarantee like theirs, and a reputation for doing the right thing by their investors, how do League's managers accept new members without sales people? Simple. They wrote a brochure called The Blue Book of Real Estate Syndication.
It lets prospective members learn for themselves everything they need to know about real estate investing and League's services. Read the book and, if you like it, call League.
"We're looking for people who share our goals. And we hope that they are motivated enough to read the Blue Book to determine if League is right for them," says Arruda.
For information on how the League reit can boost your monthly income while helping you achieve inter-generational wealth, and to get a free copy of the Blue Book, visit www.league.ca or call 1-877-772-8836.
