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Post by nemesis on Jan 21, 2020 22:13:59 GMT
Today's missive from management tells investors the following .... The shares will be split into A shares and B shares The A shares (55% of your investment) will continue to pay dividends funded by the current mortgages. The B shares (45% of your investment) will pay no dividends and will be used to fund the development arm of the business. At this time there is no pathway to redemption for B shares. There will only be redemptions of these shares once various properties are deemed fit by management to be sold. As we know so little about the state of most of these properties, this could be a long haul to market. It is important to understand the 6% dividends will only be paid on 55% of your investment. Tim Dwyer had stated in the past that there was about $80M on the list for redemption. We do not actually know what that figure might be now - I would be very interested to know. $80M represents almost 50% of the total shares. This would seem to suggest that there are more than a 'few disgruntled investors' who are looking for redemption of their investment. Management encourages investors to share their views on a one to one basis with management. This will allow management to continue with their narrative that most investors are quite happy with what management proposes to do going forward. And we do not and will not know how many investors are actually content with HE working its 'magic'. OK - come at me  |
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worried
Junior Member
Super worried for my investment in HarbourEdge
Posts: 13
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Post by worried on Jan 21, 2020 22:41:51 GMT
"We truly believe this Plan gives the best balancing of the interests of those that want “out” and those that want to maximize recovery" I want "out", but I don't see a clear path; except for the redemption part coming from mortgage maturities. What happens with HRAC properties? Not a single word, let aside a schedule. Why didn't they provide a schedule for selling the real estate properties, just as they did for mortgages? Not fair for us to be locked in this fund indefinitely and get lectured by the management all the time. What a disgrace  |
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Post by rationalinvestor on Jan 21, 2020 22:47:30 GMT
nemesis Thanks for the summary. From my understanding, there's no news here. Since the initial proposal a year ago - Only part of the fund (55%) actually generates income. It will be conservatively managed and they expect to generate 7% (now I hear 6%)
- Part of the fund (45%) is in trouble and generates no income. We were to get our money out as capital return (ie no tax) as properties are sold, ideally not at a fire sale
- The original structure allowed this to be done in a tax-efficient way. The current proposed structure, I believe (not 100% certain — would love to hear from others more knowledgeable than me), is less favourable to shareholders.
Unfortunately, the dreadful, old school approach by management to communications as poisoned the air so everyone's opinion is seen through the lens of whether they trust management or whether they believe management are evil, self-dealers. Personally, I'm dithering on this and trying to focus on the facts. I thought the letter they attached from one of their investors — Blake Wallace — was terrific and I agree on all points. A fire sale would be the worst way for me to recoup my investment — not quite equal to his but not too far off I've attached his letter here in case anyone missed it. Investor Letter.pdf (182.47 KB)
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Post by disgustedbeyond on Jan 21, 2020 23:01:36 GMT
All ya got here was a litany of wounded duck . No accountability as to how this happened . Putting all the grief on a small group of investors . If there was only 1 investor at the full pop , fact is they carry the balance of shares . Full stop . The carrot is an actual schedule of redemptions for your 55% amidst various caveats . 😂 Add in value of shares are .90 ? So does that mean a 10% haircut on the 55% from the get go upon redemption , and then the 45% at no yield and no intelligent forecast to timeline , costs or if and what returns . Nothing new here or what am I missing ?
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Post by disgustedbeyond on Jan 21, 2020 23:05:09 GMT
Oh , and putting it on RA to have the audacity to ask about the pei properties , for a simple explanation , and was met with an attack instead of just answering the question . Having said that , and above , now reading the letter from Blake Wallace unfortunately I would have to concede his points . Like a divorce , split her in 2 or split it 4 ways including our most maligned professionals ( lawyers ) . 😡
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harry
Junior Member
Posts: 15
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Post by harry on Jan 22, 2020 6:37:53 GMT
"Retain the MIC structure with Class A & Class B shares. The Class A shares will be redeemed pro-rata at the monthly calculated NAV for all investors with redemption requests in the queue"
So does this mean the TRUST option is gone for good? If they can still split into A and B shares, what was the point of going to the trust? And I thought a MIC couldn't have over 25% of real estate in it?
Also, what is the NAV now? I thought it was still fixed at a dollar? And what's this 10% off the top what/why is that? What's it covering off?
With regard to the Wallace letter, he wrote that before the vote was to be taken and was still recommending the original deal. I wonder what he thinks of the latest deal? Is he in the forum here? If so, could you let the rest of us know?
Dear Worried, did you force your real estate agent to sell your last house by a certain date? Obviously HE wants to get rid of this stuff as quickly as possible without having a fire sale.
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Post by nemesis on Jan 22, 2020 12:35:15 GMT
Dear Worried, did you force your real estate agent to sell your last house by a certain date? Obviously HE wants to get rid of this stuff as quickly as possible with having a fire sale.
Harry, why do you think that HE wants to fire sale anything - I think it is just the opposite. HE wants to run a development business - it will take years for them to 'develop' the real estate - and as they don't have really anything in the way of development experience, it may take longer than that.
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Post by disgustedbeyond on Jan 22, 2020 12:58:25 GMT
Nemesis , LD doesn’t have any experience in development ? Curious statement . One of the reasons I invested . At the time I had all the faith in the world that LD was more than capable of developing acquired defaults . Was presented to me as a selling point . What am I not aware of ?
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Post by Moderator on Jan 22, 2020 14:50:59 GMT
Everyone made their arguments on this forum in a respectful manner, now we have to vote (informally): support or oppose the “improved Plan”; this will give HarbourEdge enough information to assess the investor intentions.
The way everyone will vote comes down to their confidence in HE management and employees.
For some of us it is hard to believe that somebody can still have faith in the team that drove us in the abyss and destroyed part of our investment, parking it in illiquid assets that are hard or impossible to sell. And it is even harder to comprehend how HE asks us to support the "improved Plan" that is nothing than a Plan without a plan: not a single word about the timeline of selling the HRAC properties (anything between now and 50 years?), no rules for distributing the proceeds from selling properties to the shareholders (are the proceeds distributed or used for maintenance/construction/development?).
The lack of real estate properties disposition plan affects dramatically the most vulnerable category, the older investors that are running out of time. These investors need a clear exit path in short term, not just vague promises that could take more years than they have left.
This category has the legal option of oppression remedy that protects minorities in situations where oppressive conduct violates the reasonable expectations of that minority. Please, send me a message if you are interested to be part of the investor group filing for legal action.
And yet, some of our fellow investors have faith in HE; none of the arguments made on these forum shattered their confidence in HE directors / team. We respect their opinion as they are respecting ours.
The time came to let the ball rolling, to stop making arguments and VOTE
Good luck to ALL
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Post by nemesis on Jan 22, 2020 15:01:57 GMT
Mr. Dunn has lots of businesses on the go - he has a talent for putting money and projects together. He bought a cab company. He started a kitchen company. He purchased Lora Bay at a deep discount. (The infrastructure was already completed before Mr. Dunn became involved.) He owns many parcels of land. He owns the land upon which The Holiday Inn Express is currently being built. I would say, however, that his background in actual construction is on the thin side. Mr. Dwyer has no background in development/construction that I am aware of. Mr.Prest manages the golf clubs. I'm not sure where the 80 years of combined development/construction experience comes from as claimed by management.
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Post by nemesis on Jan 22, 2020 17:03:20 GMT
I should also have added that both Dwyer and Dunn have indicated that retirement is in the future - what expert will be handling the development portfolio then?
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Post by maryanne on Jan 23, 2020 22:04:26 GMT
10% haircut of our investment explained by HE in Fact Check doc: “Investors in the past realized superior returns due to the type of mortgages held by HMIC. With these returns came risk. “
Let’s see how it works for an investor that entered the fund in 2015, shortly after the dividend started going south. Their return was roughly 25% from the initial investment that stands now at only 90%
HE logic does not apply to this investor, and to other ½ of all investors that purchased shares after 2012. Maybe the real problem that happened was that HE business model was not good enough to accommodate such a big and sudden growth, and HE loans went left and right without enough due diligence
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Post by maryanne on Jan 23, 2020 22:22:40 GMT
Another one from Fact Check: our popular thread Seniors most affected by HarbourEdge reorganization standoff received 0 (zero) comments  Or maybe we can count "Management has ignored investor suitability requirements by putting them in a real estate fund"? No, that could not be, because it would be unfair for a 80 year old to land into a construction/development real estate fund, and HE tells us one more time that anything unfair "would go against the fiduciary duty that Management has to treat all Shareholders equally". Well, I hope they understand the concept of treating shareholders fair and equally is not a cookie cutter. This doesn't work well on people (isn't this obvious already?) "The investor suitability was accessed at the time of purchasing their shares in a mortgage investment." , like 10 years ago. They don't understand their basic obligations towards investors, how is OSC not taking away their licence? |
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Post by disgustedbeyond on Jan 23, 2020 22:32:20 GMT
Totally inconceivable that so many loans , so qwik , all basically w a few exceptions from down east , could have had extensive approval investigation applied . To infer that their agent down east dropped the ball is folly , nothing goes past LD’s desk without him seeing it , let alone TD reviewing the apps. Too much $$’s dumped in their laps from the pension / fund investor and an obvious reluctance to refuse some of the input and just say we can’t diligently place that amount properly in a timely and prudent fashion . What other explanation is there ? I would love to hear from HE to enlighten me . Combined with what was small town relationships between the principals of HE and now the adage “ it’s just business “ sure makes a person angry . What would be somewhat more productive is for HE to sit down with groups of us , have a “ mea Culpa “ on a without prejudice basis , and here’s what we are going to do to make amends . That type of approach would gain a lot of traction with me .
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Post by Moderator on Jan 23, 2020 22:57:32 GMT
Totally inconceivable that so many loans , so qwik , all basically w a few exceptions from down east , could have had extensive approval investigation applied . To infer that their agent down east dropped the ball is folly , nothing goes past LD’s desk without him seeing it , let alone TD reviewing the apps. Too much $$’s dumped in their laps from the pension / fund investor and an obvious reluctance to refuse some of the input and just say we can’t diligently place that amount properly in a timely and prudent fashion . What other explanation is there ? I would love to hear from HE to enlighten me . Combined with what was small town relationships between the principals of HE and now the adage “ it’s just business “ sure makes a person angry . What would be somewhat more productive is for HE to sit down with groups of us , have a “ mea Culpa “ on a without prejudice basis , and here’s what we are going to do to make amends . That type of approach would gain a lot of traction with me . Good point, "mea culpa" would be great, we could discuss and move on; HE is not there yet, they are still in denial: "The foreclosure rate does not exceed that of any other MIC in Canada"! What FS from Dec 31, 2019 tell us: that the trend of transforming our funds in real estate properties continues: on June 2019 HE had 48% of our funds in mortgages and 44.6% in HRAC properties; in only 6 months the mortgage part went down to 44% while the HRAC assets went up to 45.3%. We have now more funds buried in properties than in mortgages (part of those funds are going to HRAC to finance the development projects). Sooner rather than later will have all our funds transformed in real estate properties. |
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