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Post by maryanne on Jan 27, 2020 16:27:07 GMT
Only 45% properties are to be listed within 6 months, the fate of 34% to be listed for sale or develop (Sudbury and Perth among those) will be decided by the proposed Investment Advisory Committee . Now, being listed for sale within 6 months doesn’t mean sold within 6 months. HE performance stats on selling properties are not brilliant: - Between June 30, 2018 and June 30, 2019 (1 year): HE sold only 4% of the HRAC properties with the most part of proceeds going into loss increase
- In the last 6 months of 2019, HE it sold 2.75% of the HRAC properties
How many years do they need to sell all the HRAC properties at the speed of 4-5% per year?Scary, we are locked in for the next 20-25 years with half of our investment. No dividend on that part and the proceeds of any sales will go in maintenance / development / commission etc. In meantime the part of our money still invested in mortgages is going to fund HRAC projects. This seems to be the end game: our investment will be transformed in real estate properties. Want proof: at the end of 2019 we already reached the point where we have more assets in HRAC properties than in mortgages
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Post by Moderator on Feb 27, 2020 15:19:24 GMT
The Ombudsmen for Banking Services and Investments is the best way for individual investors to get compensated for an investment loss or for another issue related to their shares, such as suitability of investments or in our case suspending the right at redemption. It is also Free. HE Investors have countless reasons to complain to the Ombudsman, starting with the non disclosure of the real risks and misrepresentation of the investment objective at investing time, then suspending indefinitely the redemption and forcing us to invest in real estate development business that is totally unsuitable for some investors. More recently it was revealed that HarbourEdge conducts business outside the purview of HMIC, mixing outside corporations in which Director(s) have ownership / interests. A good place to start is here: Ombudsmen for Banking Services and Investments Make sure to make the complaint related to the arm of HE that sells investment, that is HarbourEdge Asset Management Corporation. Send me a message if you need help with your complaint.
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Post by georgian1 on Feb 27, 2020 20:54:40 GMT
2 things.
1. I know the group that has led the charge to date has put a great deal of personal time in representing the investor group, but would you be the best at crafting the complaint to Ombudsman?
2. And if a complaint does not work, should be go to the press with this? Nothing seems to be happening now, so what do we have to lose if we gave the story to the Toronto Star?
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Post by disgustedbeyond on Feb 27, 2020 21:51:33 GMT
Have voiced my opinion b4 about this “ press “ thing . The absolute worst scenario without a substantial fact base . Fact , not speculation or deduction . I still maintain there will be a number of scenarios run up the flag pole by HE until one sticks . The last thing I surmise they want , is a trustee or person in authority auditing . Again , “information is power “ . True facts , that can be proven . Go off 1/2 cocked and you play into their game .
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bojo
New Member
I'd rather be dead in ditch than agree to get scammed
Posts: 8
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Post by bojo on Feb 28, 2020 1:37:00 GMT
Fact: Getting a person in authority to open the corporate books is easier than you think, just ask a lawyer, but you have to pay legal expenses to take it to Court. There is a free ride: convince the regulator (OSC) that something fishy is going on (we already have that, true facts not rumors, HRAC being used by LD for personal benefit)
Fact: I'd rather be dead in ditch than agree to get scammed. I'll never get tired of fighting for my money, whatever it takes, including going to the press if I must
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bryan
New Member
Posts: 7
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Post by bryan on Mar 12, 2020 10:36:21 GMT
Apparently the moderator is editing or removing some posts. Why?
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Post by nemesis on Mar 12, 2020 12:15:26 GMT
Because he/she is the moderator. And set up the board. And therefore has the control. If it is a problem for you or other posters, you can set up your own board.
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Post by Moderator on Mar 20, 2020 20:34:08 GMT
Another investor has given us permission to circulate his email to Larry Dunn - sent on March 16, 2020:
"Larry,
Now that the reorganization failed after four attempts and hundreds of thousands spent on legal fees, let’s remember why it has been initiated:
Reorganization Plan, Dec 2018: “It is now clear that HarbourEdge has become two distinct and separate businesses, namely mortgage lender and property developer/builder. Therefore, we feel it is in the best interests of all stakeholders to split the existing Fund into two separate entities”
More than one year later it is abundantly clear that not only me but many other shareholders “feel” that splitting the fund as proposed is NOT in their best interest because it is not suitable for them as Investors or because they simply lost confidence in your ability to manage the Fund.
As a minority shareholder my legitimate expectations are extremely affected by HarbourEdge conduct that persists in treating me unfairly by sacrificing my interests for the benefit of other shareholders.
1. As HarbourEdge Chairman & CEO, how do you intend to correct this situation that is seriously affecting me as a shareholder?
2. What are the reasons for redemptions still being suspended?
3. What is your strategy for resuming HarbourEdge redemption obligations in accordance with the OM?
Based on the information provided on March 13, 2020, there is no objective reason for redemption suspension as funds are already available or progressively available over the next year from both HRAC and HMIC. It would be totally arbitrary on your side to refuse my request for redemption of the assets that I own in HMIC/HRAC when funds are available or predictably available:
- HRAC Sales activity March 13, 2020 indicates that 52% of HRAC properties are sold or expected to be sold to a REIT; it is reasonable to expect that the most HRAC properties will be sold in near future as only $33 M representing 15.5% of our total investment are in “Site Plan/Draft Plan Approval and List for Sale or Develop” status
- On mortgages side, over $65 M funds will be available for redemptions from mortgage maturities over 2020-2022
Please, note that I do NOT expect to be treated preferentially and I am prepared to accept the redemption at NAV.
I’m looking forward to your expeditious answers.
From a HabourEdge Investor to Larry Dunn - sent by email on March 16, 2020"
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Post by Moderator on Mar 22, 2020 21:31:21 GMT
HE tells the shareholders that the value of their investment is going down because of the Investors that want to exit the fund. In fact, these Investors oppose to HE reorganization plan because their interests as Investors would be sacrificed for the benefit of HE Directors that plan to get HMIC on track at their expense, passing to them the non-performing assets.
In reality, HE reorganization plan is deeply unfair for ALL current Investors and only serves the interest of HE directors:
1. All current Investors would be treated unfairly compared to the new Investors because dividends will be paid on just 55% of the amount invested compared to 100% for new investors
2. Investors that choose not to redeem their Class A shares immediately: limiting the redemption to the current requests leaves the Investors that are not redeeming their shares immediately to face future market risks, i.e. foreclosures on the existing mortgages, experiencing a situation similar with what happened with the large redemption initiated in 2015. This is definitely very unfair for the existing investors that remain with HE
3. All current Investors are treated unfairly compared to the shareholders that required the massive early redemption in 2015. To satisfy their request, HMIC suspended redemption rights for all the other shareholders and paid off the redemption as agreed
An orderly wind-up, done in-house by HE (no receiver or fire sale) is the only fair and equal solution for ALL current Investors as it levels the field.
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Post by Moderator on Mar 28, 2020 20:47:26 GMT
HE Investor Letter, March 27, 2020 Posted on the behalf of Robert Mitchell and Murray Dell
Current Economic Environment
It goes without saying that the coronavirus pandemic poses notable downside economic and market risks as new global cases rise exponentially and as government efforts to contain its spread sparks a slowdown in economic activity. As witnessed across Asia, severe economic pain is likely in order to ensure that the virus is contained. We are now experiencing this same trade-off across Europe and North America.
We have been diligently monitoring the outbreak of the COVID-19 virus and its ongoing impact on global financial markets. While the public markets have been in the spotlight due to the exceptional losses, private market investments like real estate and mortgages are also susceptible to the major changes taking place ie: the fall in commodity prices and interest rates. In the short term, we can expect more volatility than we typically see in real estate, with a higher probability of impacts on reliable income streams from mortgages and net asset valuations.
Due to the current market uncertainty caused by the COVID-19 pandemic, HarbourEdge (“HE”) faces an uncertain lending environment and real estate development and sales. The impacts of broad based closures in Canada and the US have yet to be determined so it is clear that this is a time that calls for fresh thinking and flexibility. To this end we believe it is time to move beyond a debate over the merits of the Two Share plan vs the Two MIC plan and find a plan that best preserves investor capital and the returns that these investments generate.
Before outlining a possible plan for moving forward, we would like to (i) review the Two MIC Plan because there is much misunderstanding of its purpose and (ii) raise a few questions/issues concerning the Two Share Plan. In the Conclusion, we present a possible reconciliation of the two plans.
The Reorganization of HMIC and the Two MIC Plan
The Plan of Arrangement (“POA”)
As originally presented, the POA was clearly more focused on preserving and growing HE’s mortgage lending business than on expediting the redemption of Class A preferred shares of investors wishing to exercise their redemption rights as stated in the OM and denied since 2015. The Information Circular and supporting material included in the POA package failed to include any specific timeline or credible pro forma projections as to when shareholders could expect their shares to be redeemed or at what value.
Request for Information
Our immediate response to the POA was to request information we considered critical to our being able to better understand the full implications of the POA, and more particularly, the prospects of being able to have our shares redeemed over the shortest possible time consistent with maximizing return of our capital measured on the basis of net present value (“NPV”). Our requests were for the most part either ignored or dismissed as irrelevant. Thus we were left with no alternative but to oppose the POA and join other investors in defeating the POA.
Notwithstanding being initially rebuffed, we continued to press HE for the information critical to analyzing the HMIC mortgage and property portfolios and projecting cash flows available for redeeming Class A preferred shares only to be informed by HE that they had fulfilled all their obligations with respect to the provision of information, or that our questions were “irrelevant”.
Lack of Shareholder Support
As a consequence of our being unable to fully evaluate the POA due to our requests for information being denied, we were left with no alternative but to join other investors in defeating the POA. We understand that in a recent polling of investors HE once again failed to get support to continue with their Two Share Plan.
The Two MIC Plan
Following defeat of the POA, we agreed to meet with HE management in hope that we could reach an agreement to prioritize share redemptions over further investment in mortgage lending and property development. We proposed the Two MIC Plan as a simple, inexpensive alternative to the POA (Two Share Plan) that would serve the interests of all parties with prejudice to none.
The Two MIC Plan: Treats all shareholders equally and equitably.
a) For shareholders wishing to have their Class A preferred shares redeemed, all non-committed cash from maturing mortgages and property sales is dedicated to the redemption of all shares on a pro rata basis – it is important to note although most of our group are on the list of investors who have requested their Class A preferred shares be redeemed, we have not requested retaining any priority but have rather advocated for all shareholders requesting redemption be treated pro rata.
b) For those shareholders wishing to continue having their investment managed by HE, they can have their HMIC dividends and proceeds from share redemptions reinvested in a new HE MIC – it is important to note the new MIC in the Two MIC Plan is proposed for the dual purpose of accommodating existing shareholders to have their investment managed by HE and to permit HE to continue to serve its shareholders and to attract new investors to a new MIC untainted by the problems of HMIC, as they have repeatedly stated.
It is simple to implement and inexpensive to operate.
a) The ongoing business of HMIC could be continued without the costs of an expensive reorganization. b) The cost and challenge of calculating the net asset value (“NAV”) of two classes of shares on a continually updated basis would be avoided.
Two Share Plan
Following a careful analysis of the Two Share Plan, which is challenging because there is a lot that we don’t know, here is a partial list of important issues and questions:
1. We still do not have a clear picture of the mortgage portfolio or the mortgage commitments, which have recently increased without explanation. We don’t know who the contractual mortgage commitments are with, how long is their duration and the quality and terms of the loans and commitments? (i.e. information we have been requesting and not received).
2. It only becomes attractive for new investors invited to subscribe for new Class A shares to actually invest in the ‘injured HMIC brand’ if NAV (and therefore the price the new investors pay) is low, i.e. a ‘deal’. A ‘deal’ for new investors however will be a ‘loss’ for initial investors whose shares are to be redeemed at the same price.
3. The Two Share Plan seems to limit the redemption of performing assets to current redemption requests which will expose investors who are not redeeming their shares immediately to future market risks, i.e. foreclosures on the existing mortgages, and the risk of a situation similar with what happened with the large redemption initiated in 2015. In our view, it is improper to give redemption priority to those in the current queue as it violates the share conditions. Every investor is entitled to file for redemption at any time as per the share conditions.
4. We still do not have a clear understanding of the HRAC portfolio: their exact address, debt owed by the respective borrower to HMIC at the time HMIC or HRAC took possession of each property and the value each property that was recorded on HRAC’s balance sheet at the time of foreclosure, the amount of capital invested or required to be invested in each property, the anticipated listing price, etc. And, most importantly, will the net proceeds from the ultimate sales of the properties actually be greater than the present liquidation amount – a question we asked in our November meeting with HE?
5. With regard to HRAC, how much funding is required to ‘finish’ each project/property so they can be sold at an optimized amount? Where is the money to come from? New investors won’t want their money invested in HRAC as they won’t share in the proceeds (unless perhaps the interest rate is attractive). What is the timeline for the ultimate liquidation of the HRAC portfolio?
6. Will the promised redemptions on the new Class A shares occur as promised or will there be a further suspension of redemptions even at a low NAV? Will some investors get ‘locked in’ indefinitely as management continues to invest the remaining capital as it wishes.
7. There are tax issues for many investors. Investors who hold their shares personally should be entitled to claim a tax loss as against other taxable gains or income (to be determined) if the actual losses can be quantified. The Two MIC solution provides for a reasonably definite quantification. What an investor doesn’t receive back in the form of cash or new shares of Two MIC will be their quantified loss. However, the Two Share Plan will ‘blur’ any possible quantification even if an investor receives, say, 70% NAV on 55% of their investment as there will likely be no quantification of the proceeds from their HRAC shares. Canada Revenue Agency could consider that the loss on the new Class A shares could possibly be recovered by proceeds from the HRAC shares (even though this is unlikely) and therefore the investors’ loss on the original investment can’t be claimed as incapable of then being quantified.
8. One final issue with regard to the Two Share proposal is that the issuance of new Class B shares for a real estate portfolio that is in default – high risk and with no income – would be considered either not exempt or unsuitable for many investors pursuant to securities regulation.
Conclusion and a Way Forward We believe that an orderly wind-up of HMIC, completed by HarbourEdge in-house (no receiver, lawyers or fire sale) is the only truly fair and equal solution for ALL Investors and, in the current economic environment, is the optimal solution. If HarbourEdge wishes to remain in business, then HE establishing the second MIC would be the simplest and least expensive course it could take.
An orderly wind-up of HMIC, completed by HarbourEdge should include:
• the HMIC mortgage portfolio to be wound down over a period of 27 months, as estimated by HarbourEdge, though we believe it will take longer. Mortgage commitments to be honoured as part of this process;
• HRAC portfolio properties to be sold according to a plan approved by the Advisory Committee. This plan is to include development costs where it can be shown that the prospective sales price exceed the current liquidation value and is expected to require 2 -4 years to complete.
• redemptions (capital distributions) to be made to all investors giving them a free choice as to whether to re-invest with HarbourEdge in its new MIC or receive the proceeds to invest elsewhere.
NOTE: it is common in the real estate investment business to close one fund and open another twin fund, allowing the manager to continue their strategy – in this case without the baggage of the troubles experienced by the corporation in which we invested.
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