BayLife Capital Limited Prospectus
BayLife Capital Limited will lodge a prospectus with the Australian Securities Investment Commission in third quarter 2010 to enable the an apartment purchaser to also invest into the development as per Property Maximiser® explained on the home page and Q & A. This Prospectus will be available to those who register their interest in late 2010. The issue of a Prospectus means complete transparency with valuations, development feasibility, risk analysis, and related party transactions all for investor review. Specific Q & A are re-visited below.
Timothy Wright as chairman of BayLife Capital Limited and the developer BayLife Pty Ltd is experienced at prospectus and capital raisings as well as development.
All applications for investment must be on the Application Form contained in the Prospectus. The Prospectus must be read in full and you should consult your financial advisers.
The Prospectus will comprehensively detail all matters including:
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Directors Statement
Application Form
Corporate Directory
Q & A Revisited
BayLife Capital Limited will issue Development Preference Shares to the public through a Prospectus with the moneys raised utilised for development and construction purposes. Strict preconditions and processes apply to release of moneys.
What are Development Preference Shares?
Development Preference Shares are Fixed Rate Redeemable Preference Shares and a particular class of share which are issued in accordance with the company’s constitution. This is much the same way that, for instance, ordinary shares are issued in a company including public listed companies that trade on the stock exchange.
However with Fixed Rate Redeemable Preference Shares which we have named Development Preference Shares there is generally a fixed rate of return to them, which in this case is 6% per annum paid monthly and they have a defined date for redemption (repayment).
To summarise the company BayLife Capital Limited, an unlisted public company, will issue Development Preference Shares to raise capital on which will be paid a fixed rate and will be subject to a fixed time for repayment. In the case of BayLife this repayment will be when the development is complete and the apartment title is transferred to the apartment owner. The BayLife Capital Limited investment along with the apartments purchasers bank finance will be used to complete the apartment purchase.
When you say collective investment what do you mean – and is this risky?
The investors are pooling their money though the issue of Fixed Rate Development Preference Shares issued in a public company yet to be incorporated (to be called BayLife Capital Limited). To enable this a Prospectus is issued to fully describe the offering.
When the Prospectus is subscribed to the required level and all preconditions met as will be explained latter, this money is released and lent to BayLife Pty Ltd the development company. This loan will be secured by mortgage with the appropriate company charges. Huntley Custodians as trustee holds the mortgage and company charges on behalf of the investors.
As to risk the Prospectus will detail the risks in full. All investments have risk. In assessing risk for the BayLife development both risk management and mitigation are vital and the following needs to be considered:
- No moneys are released from trust for the development of BayLife until the strict preconditions are met. In essence this assures that the building will commence construction and all the construction finance is approved.
- Once the building is commenced and a reputable and proven builder has signed a Guaranteed Maximum Price and Time Contract there is little risk the building will not be completed. The construction financier will assure that it is as the only way they are repaid is to complete the building.
- The BayLife building is a very simple building to build – flat level ground – slab on ground – no underground car park and only 3 storeys above the carpark.
- With the building complete titles will be issued. At settlement pre-agreement with the construction financier means that your investment has to be part of your apartments settlement.
- Essentially the investor / apartment purchaser is in a preferential position as to payment to the construction financier. The investor will be secured through a mortgage held by a trustee and hence title to the apartment will not transfer unless the investor’s investment forms part of the apartment settlement.
The Prospectus mechanics are further described on this web site.
Do all 92 apartments have to be sold to get a start?
Our target is to sell all 92 apartments under the Property Maximiser® scheme. However the exact number of apartments required to be sold will be finalised with the construction financier and fully detailed in the Prospectus which you will receive in early December if you complete and submit a Register of Interest.
Why issue a Prospectus?
As indicated above because BayLife Capital Limited is a public company issuing Development Preference Shares by way of a public offer, a Prospectus must be issued in accordance with the Corporations Act 2001.
Tell me about BayLife Capital Limited and BayLife Pty Ltd – what else are they involved in?
The mechanics are as follow:
- BayLife Pty Ltd owns the BayLife land and will issue 92 apartment presales contracts.
- BayLife Capital Limited issues a prospectus to raise capital. You have to be an apartment purchaser to subscribe for BayLife Capital Limited Development Preference Shares and the level of subscription is 20% of the apartment purchase price.
- BayLife lends this money to BayLife Pty Ltd. This money along with first mortgage construction finance will enable BayLife Pty Ltd to develop and build the 92 apartments.
- During construction BayLife will pay 6% per annum paid monthly to the apartment purchaser.
How do I invest into Development Preference Shares?
You cannot invest into Development Preference Shares until you receive the Prospectus and complete the Application Form in the Prospectus.
What is the minimum Development Preference Share subscription?
Your minimum subscription will be 20% of the purchase price of your apartment.
What else is BayLife Capital Limited and BayLife Pty Ltd involved in?
The companies are involved in no other projects or business of any kind and will not be involved in any other project or activity. They have been formed solely for the development of BayLife.
What is the responsibility of the Trustee?
The trustee is yet to be formally appointed and will be prior to the issue of the Prospectus.
The primary responsibility of the Trustee is to hold, for the benefit of the Property Preference Shareholders, the right to enforce BayLife Pty Ltd obligation to pay interest on and repay the loan made by BayLife Capital Limited to BayLife Pty Ltd and the right to enforce Baylife Capital Limited’s obligation and to make a capital return of the Development Preference Shares. The Trustee holds the registered second mortgage and registered second company charge and administers the Trust Deed on behalf of the Development Preference Shareholders.
Is the land on which BayLife is to be constructed going to be mortgaged and how is my investment secured?
Yes, firstly the construction financier will hold a first registered mortgage for the construction funds. Secondly, the Trustee will hold a registered second mortgage on behalf of the investors. However, pursuant to a Priority Deed between the construction financier and the Trustee on behalf of the investors, it will be agreed that as each apartment settles by each apartment purchaser (who is also an investor) then the investors funds (equal to 20% of the apartment purchase price) shall form part of the apartment purchase price.
Where does the money come from to pay my monthly interest and how secure is that?
Sufficient funds to pay the monthly interest will be in a set aside trust account to pay the monthly interest.
Does my investment have a maximum term?
Yes. As it is a loan from BayLife Capital Limited to BayLife Pty Ltd the loan needs to have a maximum term. As is will take approximately 12 months to build BayLife this maximum term is likely to be 18 months. This will be fully detailed in the Prospectus.
What happens to money that I pay before Drawdown?
All moneys are invested into trust prior to Drawdown.
What are the preconditions for my investment to be drawn down and used to develop BayLife?
This will be fully documented in the Prospectus and is very important. Preconditions in brief include:
- A guaranteed maximum construction price and time contract
- All funding approved to ensure completion of construction and the project to be fully funded
- Development Approval in place
- Required unconditional presales
- Mortgages in place
How will the project be managed? Are the directors experienced?
Timothy Wright and the directors are very experienced at development and construction. A complete management profile will be included in the information provided in early December. As well as Timothy Wright as chairman and executive director the board will also comprise non executive directors without a financial interest to ensure company compliance in all matters.
Importantly the building site will have an experienced project manager directly reportable to BayLife Pty Ltd. The project manager will closely monitor cost control, construction time and quality.
Who guarantees the construction debt – is their any personal investor liability?
There is no investor liability whatsoever. As indicated the investors invest into BayLife Capital Limited who then lend those funds under mortgage to BayLife Pty Ltd the developer of the property.
The construction debt will be guaranteed personally by Timothy Wright so it is in his interest to ensure building completion and debt repayment.
Am I able to sell or transfer my Development Preference Shares?
You will be able to sell or transfer your Property Preference Shares, however, BayLife Capital Limited cannot do that for you. The Development Preference Shares in themselves are likely to be not liquid because it is unlikely there will be a secondary market.
However where you have elected a Third Party Option Contract you may resell your apartment prior to completion and transfer your shares however you must guarantee the performance of who ever you resell your apartment to.
What happens at settlement?
When the building is complete the plan will be sealed by council and lodged for title issue. The apartment contract will stipulate that 14 days after title issue the apartment purchaser must complete the purchase. The settlement statement will stipulate that the balance required at settlement will be the purchase price of the apartment less the investment amount invested by the apartment purchaser / investor into BayLife Capital Limited.
What if an apartment purchaser defaults and does not settle?
In the event of an apartment purchaser defaulting on their apartment purchase they will forfeit there investment in BayLife Capital Limited and trigger release of BayLife Capital Limited being required to repay their investment capital.
BayLife Finance and Packaging
The BayLife team will work with you on all aspects to ensure your apartment purchase proceeds with ease.
1. Obtain your apartment finance at the best rates – we will package finance opportunities for you
2. Optimise your depreciation benefits
3. Through on site management optimise rentals
4. Offer all required services to ensure all runs smoothly
Please find below a list of questions which will assist our BayLife Finance Consultant in the expedition of any loan application you may require.
Download Loan Enquiry Questionnaire
