Hi-Rise Capital offers investment opportunities in the real estate sector through vehicles such as participation mortgages. Unlike a mortgage investment corporation, or MIC which offers a pool of mortgages to invest in, a mortgage investment with Hi-Rise involves investors lending capital through a mortgage on a specific project to a specific borrower or developer. This loan carries with it a lien, secured on title of the land and assets being developed. In exchange for the loan, investors earn a quarterly Interest Payment based on the interest rate on the mortgage. The interest payment made to Investors is dependent upon the amount being invested and on the duration of that investment.
THE HI-RISE STRUCTURE
1 Hi-Rise Capital Ltd. discloses project information to the investor.
2 The investor enters into a Mortgage Administration and Loan Participation Agreement with Hi-Rise Capital Ltd. to invest in the project.
3 Hi-Rise Capital registers a mortgage charge against the project. Investors will hold an interest in the mortgage registered against the title of the project.
By their very nature all mortgage investments carry a risk. Given the high returns provided by real estate investments, the risks can be high. Examples of these risks include, but are not limited to:
- It may be difficult, if not impossible, for investors to withdraw money early. Typically, an investor is locked in for three years or more should there be any delays in the project.
- Repayment of the investment may depend on the successful completion of the project, and its successful leasing, sale or refinancing, none of which are guaranteed.
- The funds raised are usually utilized to fund the earliest and thereby riskiest stages of development.
- Successful completion of the project and the realization of the final built out value is not guaranteed and could take much longer than expected. Construction delays and cost overruns can negatively impact the value of the project.
For this reason, we urge all investors to speak with their advisers and conduct their own thorough due diligence when considering investing in real estate investments such as participation mortgages.