What is a Mortgage Investment Corporation?

Mortgage Investment Corporations (MICs) were created by the Federal Government in 1973 to allow investors to participate in a pool of mortgages on real property. MIC shares qualify for registered plans such as RDSPs, RRSPs, RRIFs, TFSAs, and RESPs. MICs are a flow-through investment vehicle and as such must distribute 100% of their net income to shareholders.

MICs are also subject to investment restrictions, some of these are:

  • Investments must be mortgages on real property located in Canada.
  • At least 50% of the mortgages must be against residential properties, including multi-residential, and/or cash and insured deposits at Canada Deposit Insurance Corporation member financial institutions such as banks and credit unions.
  • Dividends not held within registered plans are taxed as interest income in the shareholder’s hands and can be paid in cash or additional shares.
  • A MIC cannot construct buildings or develop land, and no more than 25% of its assets may be invested directly in property.

Manager

Trez Capital Fund Management Limited Partnership

Investment Objective

To acquire and maintain a diversified portfolio of first ranking mortgages that preserves capital and generates attractive returns in order to permit the Company to pay monthly distributions to its shareholders.

Investment Strategy

To achieve its investment objectives through prudent investments in mortgages to qualified real estate investors and developers, focusing primarily on short-term bridge financing needs not currently serviced by traditional real estate lenders. Mortgages will be secured primarily by income producing real property where the principal and interest can be serviced from cash flow generated by the underlying real property.  

The manager believes that its key lending practices and advantages in this market include its: (i) flexible structuring capability, (ii) speed of approval and funding, and (iii) certainty of execution, all of which lead to repeat business opportunities.  

In general, the mortgages will generate income through a rate of interest, which is typically payable periodically throughout the terms of the mortgages, as well as commitment fees which generally are paid at the time of initial funding. All mortgages will be secured by real property consisting primarily of multi-family residential (generally not including single family residential), office, retail, industrial and other commercial property located across Canada. Mortgages may be first ranking or a junior position in a first ranking mortgage.  

Credit Facility

The lender under the Credit Facility is a Canadian chartered bank that is at arm’s length to the Company and Trez. The terms, conditions, interest rate, fees and expenses of and under the Credit Facility are typical of credit facilities of this nature.

Monthly Distributions

The Company currently pays a dividend of $0.0485 per Class A Share per month ($0.58 per annum representing an annual cash distribution of 5.8% based on the $10.00 per Class A Share issue price). Dividends are expected to be taxed as interest income.

Management Fee

0.85% per annum of the gross assets of the Class A Shares 

Eligibility

Eligible for RRSPs, DPSPs, RRIFs, RESPs, RDSPs and TFSAs