FREQUENTLY ASKED QUESTIONS:
1. What is the difference between the share classes?
(please refer to section 5.2 of the Prospectus for further information)
Oakland Investments (Aus) Ltd now offers three share classes, A, B1 and C1 in this prospectus.
A Class shares require a minimum investment of $5,000, and offer a coupon rate of 9% pa. plus potential profit share*
B1 Class shares require a minimum investment of $30,000, and offer a coupon rate of 10.5% pa. plus potential profit share*
C1 Class shares require a minimum investment of $50,000, and offer a coupon rate of 12.5% pa. plus potential profit share*
*If, after the payment of all coupon rates, a profit is declared, all share classes will be eligible to participate in this profit. Note that this profit is in addition to the fixed coupon rates. Profit participation may vary between the three classes of shares and will be at the Directors' discretion.
2. Can my Family Super Fund invest?
You can invest in Oakland with your Self Managed Super Fund, as long as your super fund's policy document allows it. Consult your accountant for advice specific to your Self Managed Super Fund.
3. What are the three different time frames mentioned in the prospectus?
Throughout the Prospectus, there are three key time frames mentioned. They are the life of the investment as it is offered in this Prospectus, the life of the Prospectus as far as ASIC is concerned and the minimum investment term for an investor. These are outlined below:
13 Month Shelf Life: Oakland can utilize the current Prospectus for a period of 13 months from the date of issue to raise money from investors. After 13 months, the Prospectus needs to be updated to reflect any changes to the Financial Services Regulations or to add any updates that Oakland may deem necessary.
30 Month Investment Period: This is the maximum time period that Oakland can utilize funds raised as prescribed in the current Prospectus.
12 Month Investment Term: This is the minimum time Shareholders' funds must remain invested with Oakland. Early redemptions via share buy-backs may still be available inside this period - see "Early Redemption".
4. How much should I invest?
(please refer to section 5.16 of the Prospectus for further information)
Each individual is different and what may be a risky amount of an overall portfolio for one investor may be an insignificant amount for another. We recommend that you have a balanced portfolio and consider the risks that you associate with this style of investment. The final decision must be yours and should be based on your due diligence and current financial situation. If you are unsure, we recommend you seek professional financial advice.
5. What is a coupon rate?
(please refer to section 5.5 & 5.13 of the Prospectus for further information)
The coupon rate is the rate at which an investor's cumulative dividend is paid. It is paid out of fund profits derived from the interest charged directly to borrowers on loans provided by Oakland. Investors in Oakland are also entitled to participate in dividends, which are paid out of the cumulative profits over and above the coupon rate and basic administration expenses of the Company. Investors therefore, may receive potential profits in addition to their base coupon rate.
First Priority Preference Shares have a preferential entitlement to the profit and capital of Oakland over and above the Ordinary Shareholders.
6. What are the guidelines and parameters of the Investment Criteria Model used to assess the potential loan applications to Oakland Investments?
(please refer to section 2.8 of the Prospectus for further information)
There is an extremely sophisticated set of criteria which addresses the quality of the people applying and their project. Firstly, the credibility and relative experience of the potential borrower is scrutinized. Secondly, the levels of security being offered are examined and all forms of collateral being pledged by the borrower are identified. Lastly, the strength of the project in terms of its feasibility, location, risk levels, projected profit and susceptibility to market volatility is examined thoroughly. This is a very brief outline of the assessment process, which is an arduous and exhaustive exercise performed diligently on each prospective application.
In addition to the Board of Directors, many key professionals such as investment and project analysts, engineers, surveyors and valuers are used in this process. Please see "The Investment Strategy".
7. If I have a question about my account, who can answer it?
You will be given a login and password to a secure Company website which will allow you access to all your account details. From this website, you can also message the Oakland administrator with any questions you have and can be assured of a response within two working days.
Shareholders will also have access to annual Company audits and will be contacted from time to time by Authorised Representatives.
8. How often will I be communicated with and what information will Oakland provide?
Information regarding Oakland's performance will be posted on the Company's website every quarter, in line with quarterly dividend distributions. This information will be in the form of a Fund Manager's report, including specific financial performance data of the Company.
Shareholders will also have access to annual Company audits and will be contacted from time to time by Authorised Representatives.
9. Can a Company invest?
Yes, an individual, Company, family super fund or a trust can invest in Oakland.
10. How long do I have to wait to receive dividends from Oakland?
(please refer to section 5.6 of the Prospectus for further information)
Oakland invests in real estate and other major land based projects via its mortgage finance model as its core strategy, with the majority of these projects being short-to-medium term. (3 to 12 months)
All loans provided by Oakland have a monthly interest component associated with them, ensuring that the coupon rate and basic costs of running the Company, are met.
The coupon rate and additional profit participation, are paid via dividends on a quarterly basis, conditional upon profits being generated by Oakland.
11. How transparent are the functions and operations of the Company to investors?
As this fund operates in a fully regulated environment, there is significant accountability of all Directors, key personnel and decision makers.
Company accounts are balanced and administered with full transparency every month, with full Company audits and accompanying reports completed every twelve months. These will be available to all Shareholders.
Internal compliance audits are also performed twice yearly and involve the scrutiny of Diversified Funds Management Ltd.
12. What are the major risk management strategies adopted by Oakland Investments?
(please refer to section 6 of the Prospectus for further information)
Oakland only invests in asset based lending, where the asset is property, and hence, every investment transaction undertaken by Oakland involves taking security over property, via registered mortgages. In some instances, Oakland may take charges over additional security (such as the personal assets of the borrower and the assets and undertakings of a corporate borrower) should the Company deem this necessary. Additionally, all directors of corporate borrowers are required to sign personal guarantees.
Oakland also implements a strict due diligence process on all potential investments (prospective borrower's applications) using its Investment Criteria Model.
Finally, Oakland has arranged a 100 percent Loan Capital Insurance Cover organized by Herbert Insurance via certain Underwriters of Lloyd's of London. This cover ensures that any potential shortfall that may arise in the recovery of an asset that Oakland has lent monies against, will be paid by the Underwriters and hence, Shareholders' capital will remain fully intact (providing of course that Oakland's Investment Criteria Model has been implemented in full and all of the conditions of the insurance policy have been met - please read section 6 of the Prospectus carefully to understand the risks associated with such insurance).
13. Will a downturn in the Australian property market affect Oakland's core Investment Strategy?
(please refer to section 2 of the Prospectus for further information)
For decades, the strength and stability of Australia's property industry has provided, and will continue to provide, attractive investment opportunities now and in the future. During this period the Australian property market has experienced several cycles, with "boom" and "bust" times, in addition to long periods of minimal capital growth.
Oakland's core Investment Strategy and Investment Selection Process has been designed to account for varying stages of the Australian property cycle over time. Hence, the Oakland Investment Strategy is not dependent in any way on strong periods of capital growth in the property market in order for its investment strategy to remain successful; in fact, quite the contrary.
Oakland believes in understanding the market and the dynamics of factors that affect it. In taking such an approach, Oakland is able to continually discover sound investment opportunities regardless of present day market conditions.
Oakland's ability to consistently challenge and improve its processes also ensures flexibility and adaptability over time.
14. What is the Investment?
(please refer to section 5.1 of the Prospectus for further information)
The First Priority Preference Shares provide Investors with a right to a cumulative preferential dividend, at the Coupon Rate. Holders of First Priority Preference Shares are also granted:
- preferential rights to receive dividends ahead of Ordinary Shares held by the Directors in Oakland;
- preferential rights to be repaid capital ahead of Ordinary Shares held by the Directors in Oakland;
- the right to accumulate unpaid dividends up to the coupon rate of return, from one period to another if there are insufficient profits in any given period to pay the required dividends; and
- the right to redeem their First Priority Preference Shares on the Redemption Date. On redemption of the First Priority Preference Shares, the holder is entitled to repayment of the face value of each First Priority Preference Share held (being $1 for each First Priority Preference Share held).
15. What is the Minimum Investment Amount and Minimum Reinvestment Amount?
(please refer to section 5.3 of the Prospectus for further information)
The minimum application amount is:
A Class Shares - $5,000. Additional amounts must be in multiples of $1,000.
B1 Class Shares - $30,000. Additional amounts must be in multiples of $1,000.
C1 Class Shares - $50,000. Additional amounts must be in multiples of $1,000.
Subsequent minimum investment amounts for existing investors for each share class will be considered a new investment and will attract the same coupon rate. These amounts are as follows:
A Class Shares - $5,000.
B1 Class Shares - $10,000.
C1 Class Shares - $10,000.
16. How can I invest?
(please refer to section 5.13 of the Prospectus for further information)
Applications for First Priority Preference Shares can only be made on the Application Form accompanying this Prospectus. The Application Form must be completed in accordance with the instructions set out on the reverse side of the form. By lodging an Application Form, the applicant acknowledges that they have received and read this Prospectus.
After application forms and monies have been received and accepted, Oakland will arrange for the First Priority Preference Shares to be issued to the successful applicants.
17. How will Oakland funds be used?
(please refer to section 5.4 of the Prospectus for further information)
Funds raised through the issue of the First Priority Preference Shares will be advanced by Oakland to successful borrowers by way of loans, on commercial terms.
Oakland will use funds raised to invest as outlined in the Prospectus and "The Investment Strategy". The underlying investments of Oakland are loans secured by registered mortgages where the Loan to Value Ratio of each individual loan will not exceed 75 percent of the value of the security properties, and the loan complies with the terms and conditions of the Lloyd's Underwriters' Loan Capital Insurance Policy.
18. What is the Investment Criteria Model?
(please refer to section 2.8 of the Prospectus for further information)
The Investment Criteria Model is a sophisticated set of lending guidelines which direct Oakland's decisions on financing investment opportunities as presented from time to time.
19. What is the Oakland Investment Strategy and how does Oakland achieve its proposed rate of return to investors?
(please refer to section 2.1 of the Prospectus for further information)
The core philosophy and market strategy of Oakland Investments is to engage in property secured investments by providing a professional level of service to Borrowers in a unique niche market segment in situations with urgent time constraints that are associated with high risk lending. In exchange for a level of speed, service, advice and support not available from the traditional lending institutions, Oakland is able to charge premium interest rates, resulting in attractive margins and resultant profits to pay dividends to the Shareholders. This should not however be considered as a guarantee by Oakland of payments of dividends as market forces may alter, and as such, may be beyond the control of Oakland.
20. What is the Lloyd's Underwriters' Loan Capital Insurance Policy?
(please refer to section 6.3 of the Prospectus for further information)
The Lloyd's Underwriters' Loan Capital Insurance Policy is one of Oakland's risk mitigation strategies in case the borrower defaults and the sale of the asset is required to recover principal.
Oakland in its own right has a sound investment strategy with exceptional levels of risk management, and property as the underlying security. However, the Oakland team has sought an extra layer of security for Investors in the form of Loan Capital Insurance, facilitated by Herbert Insurance and underwritten by certain syndicates at Lloyd's of London. This insurance is called Mortgage Indemnity Insurance.
In the event of a forced sale of the underlying security not realising the full amount of the outstanding loan, the insurance policy in place will make up the difference. This means that the Underwriters will fill the gap between the amount the property is sold for and the amount of the original loan. Therefore, there should be no loss of loan capital, and as such the risks have been significantly reduced.
Please see the section titled "Risks and Benefits of Investing in Oakland" for reasons why the Loan Capital Insurance may not cover the actual loss to a particular borrower.
Oakland has also arranged Mortgage Impairment Insurance through certain Underwriters of Lloyd's of London , providing a specialised insurance to cover potential losses where there is a lack or insufficiency of valid insurance on security properties, over and above what is already covered by Lloyd's Mortgage Indemnity Insurance (Loan Capital Insurance). This will cover events where there is physical damage to the property, such as fire or flood.
All costs associated with the two insurance policies provided by Lloyds above, are borne by Borrowers and not the Company. Therefore, the costs of the Policy are therefore only specific to all loans made by Oakland at any point in time.
21. Are there any other forms of insurance to reduce risk that Oakland has arranged?
(please refer to section 6.4 of the Prospectus for further information)
Oakland has arranged additional insurance via First Title, a large American based insurance company, covering all loans made by Oakland for other factors subsequent to those covered in the Lloyd's Loan Capital Insurance Policy outlined above.
This policy insures the titles of every property Oakland lends against for losses caused by problems such as, but not limited to, incorrect surveys of properties, zoning problems, outstanding land tax, borrower ownership discrepancies, borrower fraud and legal mistakes.
All costs associated with this insurance provided by First Title, are borne by Borrowers and not the Company, specific to individual loans made by the Company.
22. Can I get my money out early?
(please refer to section 5.8 of the Prospectus for further information)
In normal circumstances you will only be able to withdraw your investment at the end of the minimum period of investment being a 12 Month Term. However, in the case of economic hardship or death of an Investor, the Directors may, at their discretion, allow a withdrawal of part or all of your investment before the Redemption Date. Requests for redemption must be in writing and lodged, together with supporting documentation, directly with Oakland. A response can be expected within five working days upon receipt of request.
23. Are the First Priority Preference Shares transferable?
(please refer to section 8 of the Prospectus for further information)
Investors have the right to transfer their holding, subject to the normal approval requirements of the Board. Investors should be aware that transfer of First Priority Preference Shares may give rise to stamp duty liability and they should seek advice from their professional advisors prior to transferring Shares.
24. Do I pay any brokerage and stamp duty?
(please refer to section 7.7 of the Prospectus for further information)
No brokerage or stamp duty is payable by the Investor on the issue of the First Priority Preference Shares.
25. Are there entry or exit fees payable?
(please refer to sections 5.8 and 7.7 of the Prospectus for further information)
No entry or exit fees are payable by Investors for funds invested for the full Term. However there may be fees applicable if an Investor requests an early redemption of the investment whereby the Company may deduct from the amount payable to the Investor, the costs and losses which it incurs.
These costs incurred by the Investor will be at the full discretion of the Directors.