DomaCom is in the final stages of implementing the required legal infrastructure to create a mechanism for its sub-funds to hold debt, which will facilitate the launch of a wider product suite leveraging residential property.
The move is a direct response to feedback from investors.
To facilitate the transition, the fractional property investment firm has selected Melbourne Securities Corporation (MSC) as the new trustee/responsible entity for the DomaCom Fund.
A meeting of unitholders in the DomaCom Fund will be convened to seek approval for the appointment of MSC, with the current responsible entity for the fund, Perpetual, to continue to act as custodian.
“We believe that this will 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 efficiencies of doing so,” DomaCom chief executive Arthur Naoumidis said yesterday.
“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.”
The decision to move to MSC, a specialist in fintech and an experienced trustee for property investment and debt funds, would enable DomaCom to have debt within property sub-funds, which had not been possible for the past two years, Naoumidis said.
DomaCom will be able to offer investors the ability to invest in sub-funds that will lend the capital to the property sub-funds, with investors receiving 5.06 per cent with the security of a first registered mortgage and a low loan-to-value ratio of less than 50 per cent.
Perpetual Trust Services will retire as responsible entity at a vote of unitholders to be held towards the end of October.
DomaCom expects to roll out the lending option for its sub-funds by the end of 2017.
