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M O RT G A G E I N V E S T M E N T S

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THE GLOBE AND M AIL
LAST UPDATED: SATURDAY, APR. 01, 2017 11:51AM EDT

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Alternative lender CareVest had loaned more than $100-million for several projects owned by Edmonton-based developer
VIP Developments, which ran into problems as Albertas oil-based economy nosedived, leavings plots of land in Western
Canada vacant.

TODD KOROL/THE GLOBE AND M AIL

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[ ]

CareVest
CareVest was known to advertise in small-town B.C. and Alberta newspapers.
Heres an ad that appeared in the Ladysmith Chronicle in 2012.

SOURCE: COMPANY ADVERTISEMENTS / NOTE: HIGHLIGHTING BY THE GLOBE

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The site of a proposed student housing development in Kingston, Ont., from a syndicated mortgage lender that was
forced into receivership last year.

J OHNNY C.Y. LAM/THE GLOBE AND MAIL

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WKURXJKWKHVFRUHVRIPRUWJDJHOHQGHUVWRILQG Investors looking to bet on Canadian real estate
have many ways to do it beyond buying homes.

13 of 43 2017-04-03 5:16 PM
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14 of 43
The following types of funds all pool money from
individuals and then either lend the money out
often in the form of high-interest mortgages or use
it to buy real estate themselves:
Mortgage-investment corporations
The bar to start a MIC is low; companies only need
20 shareholders, and they must invest at least half
their money in residential mortgages, insured
deposits or cash. They pay no tax. By definition
they are corporations, which means their executives
arent personally liable for their companys financial
obligations. However, they are limited in how much
real estate they can own and can lend only within
Canada.
Mutual-fund trust
Some larger mortgage companies operate as
mutual-fund trusts rather than as MICs, which
allows them to be less restricted in how they invest.
Some trusts focus exclusively on commercial
mortgages, while others target real estate
investments outside of Canada. However, trust
executives can be personally liable for their
companies obligations unless they can afford to
pay high fees to transfer liability to other
corporations that act as trustees. Many smaller
funds register as MICs because they arent large
enough to qualify as an MFT.
Syndicated mortgages
These funds group individual investors into a single
mortgage on a specific development. Syndicated-
mortgage companies often play up the fact that
investors can choose the projects they want to
invest in, while MICs and MFTs advertise the safety
of diversifying across multiple mortgages. However,
syndicated-mortgage investors typically cant cash
in their investment early, so they usually have to
wait until a mortgage gets repaid to get their
principal back, which can sometimes take years.
Real estate investment trusts
REITs are the most common type of real estate
investments, and most of these trusts are publicly
traded. Typically, they buy income-producing
properties, such as apartment buildings, and then
distribute most of the monthly cash flow to their
investors. Lately, though, REITs have started
building more of their own developments, and some
also serve as lenders to projects theyd like to
eventually own.
2017-04-03 5:16 PM
The investors who bet on a real estate boom and lost - The Globe and Mail http://www.theglobeandmail.com/report-on-business/mortgage-investme...

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15 of 43 2017-04-03 5:16 PM
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According to court records, MIC Trez Capital loaned at least $50-million to the companys various real estate investments,
including toward the purchase of the former Toronto headquarters of Postmedia. When the media company moved offices
in 2014, the building lost its only tenant.

FRED LUM/THE GLOBE AND MAIL

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