Thinktank is diversifying its funding sources and offering investors two attractive yielding investments by raising capital via bonds in two trusts as an alternative to bank financing, its traditional source of debt.
Thinktank, which has been funding commercial property acquisitions valued up to $3 million since 2006, will target the trusts’ bonds at the wholesale investment market with a focus on self-managed super fund (SMSF) trustees.
The more conservative Income Trust will offer a 5.33 per cent effective annual return (EAR), while the High Yield Trust will offer an effective 8.55 per cent EAR. Interest payments will be made monthly, the minimum investment period is one year and there are no entry or exit fees for investments lasting the full term.
The Income Trust will offer secured first mortgage commercial debt; the High Yield Trust secured second mortgage commercial property loans subordinated to Thinktank’s warehouse facility and term funding.
Thinktank CEO Jonathan Street said that in the current low interest rate environment, investors want yield without the volatility and uncertainty of the equities market.
“With these two trusts, we saw an opportunity to offer investors diversification and stable, secure and competitive returns in a traditional yet growing commercial property sector.
“Words of mouth have seen the two trusts attract already about $20 million, creating a solid foundation for today’s public launch.”
Mr Street said that in an oversaturated and uncertain equities market, investors are continually looking for alternative sources of debt investment, and as such mortgage-secured investment bonds are ripe for their attention.
“Access to these markets enables investors to effectively ‘be the bank’, in the process getting competitive returns of between 5.33 [per cent and] 8.55 per cent without taking on ownership risks such as those found with construction or development.
“Investors also receive a similar return with Thinktank bonds compared with investments in other unsecured alternate fixed income products, e.g. unsecured peer-to-peer lending.”