Where an Assquire licensed fund manager brings their own Fund (which is separately licensed to use Assquire for that Fund), the homes matched to Mortgage Alternative customers will be owned by an Australian real estate investment trust (“the Fund”). The Fund is to be made up of institutional investors such as other real estate investment trusts, financial institutions and superannuation funds who are looking for a way to invest in Australia’s $5 trillion residential property sector. Institutional investors like investing in owner-occupied residential property because it is considered to be low risk and to add greater diversification, with not all money tied up in a single asset at a single location.
The Fund is what is known as a “fixed-term” fund, in that it only exists for a defined period of time, after which it sells all of its assets and returns the money to its investors. Mortgage Alternative funds have fixed terms that are linked to the duration of the purchase contracts on the properties owned by the Fund. For example, a ten-year fixed-term fund will have ten-year settlement terms in the Purchase Contracts executed on the properties in the Fund. This is why at the end of the contracted settlement period, Mortgage Alternative customers must either settle the purchase of their property with a traditional mortgage, or exit the home so it can be sold on the open market.
If they exit, all capital growth over the MA period reverts to the Fund, on top of the Assquire yield of 6-7%pa.