Ebisu Income Fund (Isle of Man)

Posted on 1st March 2019 by Trevor Reynolds in Blog |Finance in Focus

The Banner Asset Management Ebisu Income Fund (IOM) has been established to invest mainly in  Australian mortgage funds, the Banner Ebisu Income Fund, the Banner Wholesale fund, and the Banner Institutional fund. Together referred to as the Master fund.

The Master Fund is a mortgage and construction loan fund based in Australia.  All monthly returns since the first month of operations have been positive.

The fund has security of invested capital as priority. It lends money to developers, with loans usually ranging from $10 million to $50 million. The fund does invest directly in property: the fund lends a percentage of the ‘on completion’ value of approved property projects. Australian law enables the lender to step into a property and sell it (or complete the project) where a loan defaults. The loans are usually for a term of 12 to 24 months.  There are typically 20 to 25 loans in the Fund at any one time, and loans are repaid on a regular basis — creating regular fund liquidity.

The lending activity – at rates of ranging from 9- 18% p.a. – this is possible because the Australian banks are reluctant to meet demand, especially as such loans require the banks to hold greater capital in reserve. The Australian banks show no signs of re-entering the market that they largely vacated after the 2008-2009 financial crisis. Developers still need to borrow and are prepared to pay relatively high rates to do so.  Banks are often slow to assess loans, making them less competitive. As the fund has developed, it has increasingly taken on repeat borrowers — developers of experience who over time have become regular borrowers.

Once made, the loans are carefully managed.  The fund assigns portfolio specialists to monitor the construction process for each loan and only provides the money stage by stage during the construction process.    Most of the properties are significantly pre-sold, to assure repayment on completion from the sales.

 

Investing

To invest directly into the fund in Australia the minimum is AUD $500,000. There is a 10% withholding tax for non-Australian resident investors; for Australian residents the income is taxable.

At the end of 2016, the Isle of Man-domiciled fund was established by Banner Japan to allow its clients access to the Master Fund, with a minimum investment of AUD 25,000. This fund has been available since January 2017.  The Isle of Man fund is free of taxation, and the returns are accumulated into the fund price.  Many investors will only have a taxable position on sale according to their country of residence (each case subject to the investor’s own taxation advice).

Corporate Information

Banner Capital Management Ltd is an Australian based ASIC-licensed fund manager focused on structuring, funding and managing quality private debt opportunities in Australian real-estate. Banner has a proven track record of delivering investment returns, to both institutional and private investors. Since 2010 the Banner funds have invested across 45 Australian real estate debt deals, have provided capital more than $500mln and managed assets valued at over AUD3.5bln.

Existing fund structures:

  • Banner Wholesale Fixed Interest Income Fund – an “asset specific” investment vehicle (not commingled).
  • Banner Ebisu Income Fund – a commingled onshore fund. Min $500,000.
  • Specialist opportunity funds – opportunity specific funds that may invest more broadly across the capital stack.
  • Banner Asset Management Ebisu Income (Isle of Man) Fund – a commingled offshore fund. Min $25,000.

A strong local partner for Banner Japan within the Australian real estate industry, Banner is driven by long-term, trusted relationships and built on certainty, speed, transparency, and integrity.

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