DomaCom working on debt holding formula by sub funds

DomaCom working on debt holding formula by sub funds
DomaCom working on debt holding formula by sub funds

Fractional property investment company DomaCom (ASX:DCL) could soon be able to implement a mechanism where its sub-funds can hold debt, in response to feedback from investors.

The move will allow DomaCom to offer new products by leveraging residential property. 

Melbourne Securities Corporation Limited (MSC) has been selected as the new Trustee/Responsible Entity for the DomaCom Fund, it said in a media release. 

The decision to move to MSC, a specialist in fintech and an experienced trustee for property investment and debt funds, will allow DomaCom to have debt within property sub-funds.

DomaCom has decided to call a meeting of unit holders to seek approval for the appointment of MSC.  

Perpetual, the current RE for the DomaCom Fund, will continue to act as custodian, it said in a media release.

Perpetual Trust Services Limited will retire as RE at a vote of unit holders to be held towards the end of October 2017.

DomaCom chief executive Arthur Naoumidis said the company expects it to be a key driver of future growth given the strong preference from advisers and investors to incorporate debt when investing in property, particularly given the tax breaks.

“The vast majority of property investors use leverage to improve the growth returns from their investment and we expect this development will substantially grow the current portfolio of properties from the current 47 which have been purchased with full equity,” Naoumidis said.

The new move will also allow DomaCom to offer investors the ability to invest in sub-funds that will lend the capital to the property sub-funds with the investors receiving 5.06% with the security of a first registered mortgage and a low LVR of less than 50%.

The lending option is expected to be rolled out by the end of 2017.

Tags: 
Crowdfunding Domacom

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