EquityLine Capital (Delaware) LP (the “Partnership,” or the “Company”) is a Delaware Limited Partnership formed for the purpose of acquiring originated mortgages or mortgage secured debentures or notes (the “Notes” or the “Mortgages”) primarily from EquityLine Mortgage Investment Corporation (“ELMIC”), a party owned and managed by the principals of the Partnership and operating a Canadian mortgage lender. Potential investment could be made in or through other affiliated mortgage lenders. The Partnership intends to acquire mortgages and maintain a portfolio of mortgages or mortgage secured debentures or notes with the mortgages consisting primarily of residential non-conventional mortgages and “Alt-A” Mortgages for the purpose of generating potential investment returns for Limited Partners in the Company.
The investment objectives of the Partnership include the strategy to include investments (“Portfolio Investments”) in real estate projects primarily in Canada and the United States to enhance the fixed income returns from residential mortgages. The investment strategy combines income producing real estate and mortgages for the purpose of making returns from income and capital gain (through enhancement of the real estate if and when the opportunity arises). The strategy is intended to enhance those investments returns using investments in securities, directly, indirectly or through funds, mortgage investment corporations, real estate investment trusts, private equity vehicles, second and subordinate lien loans and share investments where active investment participation is made available to the Partnership.
A unique model has been developed to balance the assurance of income and liquidity with the attractive higher returns that can be achieved from including a portion (25%) of the portfolio in an equity ownership approach to real estate ownership and development. Short term, less than 12 month term, high rates mortgages will be used as part of the portfolio to generate immediate returns, providing readily liquidated assets while real estate projects mature and the equity returns become available.
The Partnership intends to focus primarily on real estate located in urban markets in Ontario, which the Partnership believes are typically more liquid and provide less volatile security for mortgage loans than many other real estate markets. Although the Partnership intends to focus its investment in Ontario, the Partnership’s Asset Allocation Model permits the Partnership to invest in mortgages across Canada and the United States, if the Manager determines it to be advisable. The equity investment in real estate is intended to be made in up and coming Canadian and United States real estate for income markets, and primarily in rental properties with consistent cash flow.
Robert Baldauf, ICD.D, Independent Financial and Business Consultant
The Partnership intends to focus its investments primarily in urban markets and their surrounding areas, which the Manager believes are typically more liquid and provide less volatile security for mortgage loans. The Partnership intends to focus its investments in Ontario, particularly the Greater Toronto Area and Ottawa. However, the Partnership’s Portfolio Restrictions permit the Partnership to invest in mortgages across Canada, if the Manager determines it to be advisable. As at the date of this Offering, the Partnership has not engaged and does not currently intend to engage licensed mortgage brokers outside of Ontario. The Partnership’s focus on short-term (6 to 12 months) mortgages (e.g. home equity lines) and high value and high value-to-loan mortgages requiring prepayment of interest is primarily designed to reduce risk in the portfolio and increase liquidity of the investments.
The Manager believes that these strategies combined provide the Partnership with opportunities to:
The long-term strategy of the Partnership is to grow the portfolio by continuing to acquire mortgages or mortgage secured debentures or notes. In order to facilitate the timely acquisition of mortgages, bridging the maturity of mortgages and to manage working capital timing requirements, the Partnership may obtain a loan facility with a financial institution or other lender. This facility shall not exceed 30% of the Partnership’s total assets. As at the date of this Offering, the Partnership does not have a loan facility outstanding and has not entered into any discussions with lenders regarding any potential loan facilities.
EquityLine Mortgage Investment Corporation shall serve as the primary but non-exclusive Originator of loans for the Partnerships Loan Portfolio. ELMIC qualifies as a “mortgage investment corporation” (within the meaning of the Income Tax Act (Canada). By qualifying as a mortgage investment corporation, ELMIC is a non-bank provider of residential, and to a lesser extent, commercial, real estate finance. ELMIC finances loans that are secured by real estate assets but that may be identified as too risky by conventional bank lenders or loans which need to be funded quicker or are more customized than conventional bank lenders can accommodate. ELMIC’s investment objective is to preserve investors’ capital while providing a consistent stream of cash distributions. Investing predominantly in short-term residential, and to a lesser extent, commercial, real estate mortgage loans, ELMIC seeks to make loans in the alternative mortgage market principally in the residential mortgage market.
The mortgages provided by ELMIC are in most circumstances “home equity lines of credit”, which are second mortgages that have interest rates that fluctuate with the prime rate. ELMIC’s home equity lines are revolving credit lines that provide property owners with additional financing for debt consolidation, renovations and other uses. The mortgages typically involve an interest only payment each month and can be called at any time.
EquityLine Financial offers mortgage brokering services, mortgage lending and private mortgage loan administration services. It is licensed as a mortgage brokerage, and through the Manager, operates as a licensed mortgage administration company, each through the Financial Services Regulatory Authority (formerly, Financial Services Commission of Ontario prior to June 8, 2019).
The Partnership utilizes a Loan Portfolio investment process that is characterized by a macro-to-micro approach to identify attractive mortgage investment opportunities, beginning first with a macro-level economic analysis of various geographic housing markets and properties, and second with the identification of individual mortgage investment opportunities and the assessment of specific details of each project and borrower.
Mortgage investments will be sourced by the Manager directly and through EquityLine Financial and through independent third party mortgage brokers. EquityLine Financial has an extensive broker network of external mortgage brokers. The Partnership will fund originated mortgage loans that meet the Partnership’s lending investment criteria and the Portfolio Restrictions, resulting from:
Once determined by the Manager to be satisfactory based on an initial review, the Manager is required to perform comprehensive due diligence of the underlying assets. This due diligence process revolves around the Manager’s system of underwriting loans, and evaluating properties and borrowers. The due diligence procedures undertaken by the Manager generally include, but are not limited to, the following considerations:
— Canadian Mortgage and Housing Corporation Q2-2020 Report and the Board of Governors for the Federal Reserve System Q2-2020 Report
The Company is currently managed by experienced business and sector professionals dedicated to the success of the Company and efficient execution of its planned operations.
Limited Partner &
Executive Vice President, Director
- "Buying or selling – key projections for Canadian real estate in 2021", Clayton Jarvis, Mortgage Broker News, January 5, 2021
Minimum Investment: $5,000 (500 Units)
The Company is offering a maximum of 5,000,000 Class A Limited Partnership Units (or “Class A Limited Partnership Interests”) at a price of $10.00 per Unit. Upon completion of the Offering, it is expected that up to 5,000,000 Class A Limited Partnership Units will be issued.
The intention, subject to the discretion of the General Partner to change the terms of distribution and reflect the same in the Offering Memorandum and Schedule “B” for a Class issued for classes of Units is to make distribution as follows, provided the same will be made solely from revenue and proceeds available to the Partnership after payment of expenses and pari passu and pro rata with other Units. It is intended that Units will be entitled to distributions, on a pro-rated, pari passu basis as amongst all other holders of the same Class of Units, payable after payment of Partnership Expenses pari passu and pro rata with other Units in accordance with the terms below. Rights to distribution may vary by Class and the description in Schedule “B” as to a Class sets out the right to participate as to either (iii) or (iv) and if applicable in (v) which will be as set out in Schedule “B”. Distribution will be made monthly, established on last Business day of each month and paid 15 days after.
The distribution terms are:
The distributions will be made on the Units to the Limited Partners as determined by the General Partner, provided the same will be made as offered in the relevant Offering Memorandum and solely from revenue and proceeds available to the Partnership after payment of expenses pari passu and pro rata with other Units.
Net Profits of the Partnership for any Fiscal Year and Net Loss of the Partnership for any Fiscal Year will be allocated by the Manager to the Limited Partners as follows:
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Equity Line Mortgage Investment Corporation - 550 Highway 7 Suite 338 - Richmond Hill, Ontario L4B 3Z4 — firstname.lastname@example.org — (416) 999-3993
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