Governance and Security
Each Peak Syndicate is established to acquire a single designated property. The syndicate is legally structured as a unit trust, with intending investors applying for Ordinary Units in the trust. Each unit holder is entitled to share in the income and capital of the trust, in proportion to his unit holding.
The Syndicate is established for a finite period of time (5-7 years), with a guarantee of liquidity after 5 years, whether or not the property is sold at that time. Peak has the right to sell the property and wind up the trust at any time, if it considers it in the best interest of Unit holders to do so.
Peak is the holder of an Australian Financial Services License (AFSL) which imposes comprehensive obligations on the licensee. Principals of the licensee must possess extensive relevant experience and the appropriate degree of expertise. The company is audited annually, with the auditors certifying that the company is complying with all of its legal and statutory obligations. The auditors also audit the affairs of each Unit Trust.
Peak’s offerings are available only to sophisticated investors, as defined in the Corporations Law. In brief, that requires each investor to obtain a signed confirmation from their accountant or taxation agent, confirming that the investor (and associates where designated) either own assets of greater than $2.5 million or have earned in excess of $250,000 in each of the previous 2 financial years.
Subject to valuation, the Trustee typically borrows between 50% and 65% of the purchase price of the property. Through this gearing strategy, the Trust is able to maximize its net income and achieve excellent yields in relation to investors’ capital.
In its capacity as Trustee of the unit trust that acquires the property, the title is held in Peak’s name. Peak is also the borrower under the arrangements with the principal financiers. Under this form of “non-recourse” borrowing, Investors are not required to provide guarantees and have no liability either to the mortgagor, or to any trust creditors.
Management of the affairs of the Trust is in the hands of an associated company “Peak Equities Management Pty Ltd (PEM)”. PEM is responsible for negotiating the purchase of the property and managing every aspect of the Trust’s operations. PEM earns establishment fees for its work and expertise in sourcing the property, negotiating non-recourse financing and establishing each syndicate. A monthly Syndicate Management fee is charged, and, through the holding of Capital Units, the Founders participate in the capital gains of the Trust.
The quantum of each of the above fees may vary with the value and complexity of each acquisition.