Portland Private Income Fund

Transcription

1 Portland Private Income Fund

2 The Portland Investment Counsel Difference Long history of wealth creation: Portland Holdings Inc. is rooted in AIC Limited, acquired by Michael Lee-Chin in For over more than 25 years, Portland has been a steward of investor s assets, as a mutual fund company and a high net worth platform. Portland is democratizing access to alternative and private investment opportunities for its clients. portland investment counsel s approach Public Equity Public Fixed Income Cash Private Equity Private Debt Direct Venture Capital Real Estate Infrastructure Resources CLIENT NEEDS Preserve Capital Liquidity Income Growth Tax Minimization Public Fixed Income Public Equity Cash the standard approach 2

3 How Portland Private Income Fund is Managed Objectives Preservation of capital. Income and above average long-term returns via: monthly distributions fully-funded by interest income from underlying investments currently targeted at 8.0% annually based on a net asset value per unit of $50.00 and; potential for capital appreciation. Unique investment strategy Combines exposure to two complementary strategies: Private mortgage loans administered by MarshallZehr Group Inc. ( MZ ) (Mortgage Administration #11955). Portfolio of private commercial loans managed US based Business Development Corporations and Crown Capital Partners Inc. ( CCP ). Allocation is responsibility of the Manager, Portland Investment Counsel Inc. ( PIC ). Fund Features: Open-ended with monthly purchases and redemptions Redemptions require 60 days notice; early redemption fees may apply, 5% for redemptions within 18 months and 2% for redemptions between months. Minimum investment of $1,000 for accredited investors 1, $150,000 for all others; thereafter minimum additional investments are $ Liquidity is managed by investing in complementary income producing public securities and/or leverage of 3 up to 25% of the total assets.

4 Complementary Strategies Driving Steady Income PORTLAND PRIVATE INCOME FUND Steady income distributions and stable net asset value Commercial Mortgages Short Term Interest only Real estate SW Ontario and GTA Relationship driven deal flow MarshallZehr Private debt securities Growing markets underserved by chartered banks Inherently inefficient private capital markets Few direct competitors (barriers to entry) Large number of opportunities allows great selectivity Principals commit own capital alongside investors Proven track record of consistent returns Predictable exit Commercial Loans Medium Term Interest and participation Resources, manufacturing, services Alberta, Ontario, BC, Maritimes Growing deal flow in uncertain times Crown Capital Partners US Based Business Development Corporations 4

5 AIC Advantage Fund Disciplined Investing An independent risk review is performed by Portland Investment Counsel Inc., the Manager. The team is led by Chris WainLowe, who benefits from over 20 years of risk management experience, including three CEO bank positions. The Manager pays close attention to diversification by investment size, borrower, geography and type. Opportunities originated by MZ and CCP Risk is underwritten by MZ and CCP Investments are monitored by MZ, CCP and PIC Predictable realizations The Manager monitors the investments. Steady income distributions and stable net asset value 5

6 Mortgage Administrator Profile Specialty Investment Manager Profile MZ launched in 2008; its principals, Dave Marshall and Greg Zehr, have a combined 40 years experience in financial services and real estate lending; supported by their own team of engineers, finance and legal personnel. Currently administers over 60 projects and above $300 million worth of private mortgage loans. Since inception, MZ has averaged above 10% returns with no bad debt write-off or loss of principal. CCP was founded in 2000, as a successor company of Crown Life Insurance Co; its principals, Chris Johnson and Brent Hughes, have been structuring commercial loans for the growing middle market companies since Currently manages above $150 million in two limited partnerships (LPs). Raised four LPs and delivered an approximately 16% gross IRR 3 over 30 completed transactions. Focused on dynamic high growth niche markets such as infill and intensification projects in South- Western Ontario and the GTA (outside the very competitive core TO area). MZ success is based on long term relationships with property developers. Loans are diversified across sectors (energy, manufacturing, retail, consumer products, telecom etc.) and across the country (Alberta, Ontario, British Columbia, the Maritimes and Saskatchewan). Close working relationships with portfolio companies. Mortgage investments are secured by real property located in Canada. Lending based on cash flow and enterprise value. 6

7 Existing Mortgage Investments* Build Form Location Type Security Term Net Yield Loan to Value Senior Condominium Richmond Hill Pre-Construction/Development 1st Mortgage 12 months 11.40% 85% Residential Subdivision Mississauga Construction 1st Mortgage 18 months 10.00% 70% Residential Subdivision King City Pre-Construction/Development 1st Mortgage 24 months 10.00% 53% Professional Condominium Markham Pre-Construction/Development 1st Mortgage 12 months 12.00% 61% Residential Condominium Stoney Creek Construction 2nd Mortgage 24 months 11.90% 74% Mixed Use Condominium Kitchener Construction 3rd Mortgage 36 months 12.75% 84% Residential Subdivision Kitchener Construction 2nd Mortgage 24 months 11.90% 58% Senior Condominium North GTA Construction 1st Mortgage 24 months 10.20% 71% Senior/Healthcare Condominium *as at December 31, 2014 *as at September 30, 2014 Peterborough Construction 1st Mortgage 19 months 10.50% 60% Apartment Building Peterborough Construction 1st Mortgage 18 months 10.20% 78% Residential Subdivision Guelph Pre-Development 1st Mortgage 12 months 10.20% 61% Senior/Healthcare Residence London Term 1st Mortgage 12 months 9.50% 60% Student Housing Barrie Construction 1st Mortgage 24 months 12.00% 81% Residential Subdivision Mississauga Construction 2nd Mortgage 12 months 11.50% 74% Residential Condominium Kitchener Term 1st Mortgage 12 months 9.78% 55% Commercial Plaza London Construction 1st Mortgage 13 months 10.20% 63% Weighted Average 10.80% 66% 7

8 Proposed Commercial Loan/ Debt Portfolio* Loan Type Location Industry Amount Security Term Coupon Loan to Value Term Alberta Energy Services Term Term British Columbia New Brunswick Distribution / Technology Bonus Feature $25 MM 1 st Lien 48 mos 12% 46% Yes $10 MM 2nd Lien 48 mos 12% 65% Yes Mining Services $8 MM 1 st Lien 12 mos 12% 45% Yes Term Alberta Energy (E&P) $24 MM 1 st Lien 48 mos 9.25% 35% Yes Term Alberta Power Generation $20 MM 2 nd Lien 48 mos 8% 10% 59% Yes Term Saskatchewan Mining $25 MM 2 nd Lien 60 mos 10% 27% Yes Term Ontario Financial $15 MM 1 st Lien 60 mos 10% 15% Yes *Not currently included in the Portland Private Income Fund. It is anticipated that Portland Private Income Fund would be investing in the above opportunities in Transactions included in Norrep Credit Opportunities Funds I and II, L.P.s, Source: Crown Capital Partners Inc., November

9 Case Study Petrowest Corporation* AIC Advantage Fund In June 2011, CCP invested $25 million in Petrowest Corporation, a diversified energy services company that provides pre-drilling and post-completion oilfield services to the northern region of the Western Canadian Sedimentary Basin. CCP s financing was used to refinance the existing senior lending syndicate. Conventional terms: 4 year term 2% upfront fee and 12% interest rate Gifted equity Underwriting IRR of 22.4% and a cash multiple of 1.7x. The loan was refinanced in October 2013 by a Tier 1 bank. CCP continues to hold an equity position in the company. *Not currently included in the Portland Private Income Fund. It is anticipated that Portland Private Income Fund would be investing in the above opportunities in Transactions included in Norrep Credit Opportunities Funds I and II, L.P.s, Source: Crown Capital Partners Inc., November

10 Case Study Genalta Power* AIC Advantage Fund In December 2012, CCP invested $20 million in Genalta Power Inc., an independent power producer based in Calgary, Alberta. CCP provided growth financing to fund the company s ongoing capital projects. Conventional terms: 4 year term 1% upfront fee and an interest rate ranging from 8% to 10% dependent upon the number of megawatts being produced by the the company Gifted warrants Underwriting IRR of 17.6% with a cash multiple of 1.9x. *Not currently included in the Portland Private Income Fund. It is anticipated that Portland Private Income Fund would be investing in the above opportunities in Transactions included in Norrep Credit Opportunities Funds I and II, L.P.s, Source: Crown Capital Partners Inc., November

11 Case Study Questrade Inc.* AIC Advantage Fund In November 2013, CCP invested $15 million in Questrade Inc., Canada s largest independent discount brokerage firm. CCP provided growth financing to the company in order to meet its capital requirements for its growing customer base. Conventional terms: 5 year term 2% upfront fee and 10% interest rate Cash bonus program based upon various growth metrics Underwriting IRR of 15.6% and a cash multiple of 1.6x. *Not currently included in the Portland Private Income Fund. It is anticipated that Portland Private Income Fund would be investing in the above opportunities in Transactions included in Norrep Credit Opportunities Funds I and II, L.P.s, Source: Crown Capital Partners Inc., November

12 Key Reasons to Invest Reliable income, with low correlation to the stock market (see chart below). Predictable yield and stable net asset value (see chart below). Access to opportunities typically limited to institutional investors. Complements/replaces public fixed income exposure. Two complementary strategies and two layers of risk management in one product. Registered accounts eligible. Historical net asset value per unit for the Fund s Series F (right hand) versus ishares DEX Short Term Bond Index Fund (XSB) (left hand), from January 31, 2013, to December 31, Distribution Distribution Distribution Distribution Monthly Distributions $52.0 $ $ $49.0 $ $ $ $45.0 PPIF NAVPU ishares DEX Short Term Bond Index Fund (XSB) *ishares by Blackrock, DEX Short Term Bond Index Fund, 12

13 Potential Risks While the Manager, MZ and CCP exercise due diligence throughout the lending process, no guarantees can be given to offset a risk of loss and investors should consult with their Financial Advisor prior to investing in the Fund. The Manager believes that given the character of the private debt investments that are making up the majority of the Fund s holdings, the Fund has less exposure to the market risk than a similar fund invested in publicly listed securities would. The Manager believes the following risks are key to the Fund s performance: nature of investments, credit, interest rate, general economic and market conditions, liquidity, marketability and transferability of units. Please read the Risk Factors section in the Offering Memorandum for a more detailed description of all the relevant risks. 1 Accredited investors as defined under National Instrument For investors who are not Accredited Investors, the additional investment must be in an amount that is not less than $500 if the investor initially acquired Units for an acquisition cost of not less than $150,000 and, at the time of the additional investment, the Units then held by the investor have an acquisition cost or a net asset value equal to at least $150,000, or another exemption is available. 3 From January 2002 until December 31, 2011; the internal rate of return (IRR) is the discount rate that makes the net present value of a series of cash flows equal to zero. The Portland Private Income Fund (the Fund ) is not publicly offered. It is only available under offering memorandum and other exemptions to investors who meet certain eligibility or minimum purchase requirements such as accredited investors. Information herein pertaining to the Fund is solely for the purpose of providing information and is not to be construed as a public offering in any jurisdiction of Canada. The offering of Units of the Fund is made pursuant to an Offering Memorandum and the information contained herein is a summary only and is qualified by the more detailed information in the Offering Memorandum. Portland Investment Counsel Inc. has not independently verified all the information and opinions given in this material. Accordingly, no representative or warranty, express or implied, is made as to the accuracy, completeness or fairness of the information and opinions contained in this material. Information presented in this material should be considered for background information only and should not be construed as investment or financial advice. Information presented in this material should be considered for background information only. Investment funds are not guaranteed. Commissions, trailing commissions, management fees and expenses all may be associated with investment funds. Please consult a Financial Advisor to discuss the risks of investing and review the Offering Memorandum before investing. Any reference to a company is for illustrative purposes only; it is not a recommendation to buy or sell nor is it necessarily an indication of how the portfolio of any Portland Fund is invested. Every effort has been made to ensure the utmost accuracy of the information provided. Information provided is believed to be reliable when published. All information is subject to modification from time to time without notice. Consent is required for any reproduction, in whole or in part, of this piece and/or of its images and concepts. PORTLAND, PORTLAND INVESTMENT COUNSEL and the Clock Tower Design are trademarks of Portland Holdings Inc. used under license by Portland Investment Counsel Inc. Portland Investment Counsel Inc., 1375 Kerns Road, Suite 100, Burlington, Ontario L7P 4V7 Tel.: Fax: info@portlandic.com PIC8225-E(07/14) 13