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INTRODUCTION TO THE MERIDIAN MORTGAGE FUND
ESTABLISHED 1996
Meridian Trust Company Limited
Clifton Simeon – Trust Officer / Investment Advisor
Overview
About the Turks & Caicos Islands
Turks & Caicos Islands Economy Update
Property Investments in the TCI
MERIDIAN MORTGAGE FUND
Protecting Your Money
Summary
Meridian Trust Contact
Turks & Caicos Islands
The total population of the Turks & Caicos Islands (TCI) is about 36,604 (2017) people. The two largest cities are Providenciales and Grand Turk.
The TCI consist of 40 islands and cays, eight (8) of which are inhabited. The islands are located approximately 600 miles southeast to Miami, Florida and110 miles south of the Bahamas. Technically, the TCI is located in the Atlantic Ocean, not the Caribbean Sea.
TCI is on Atlantic Standard Time (Eastern Daylight Time) all year long. Clocks are not turned back an hour in the fall, allowing residents and tourist to enjoy later sunsets and an extra hour of sunshine during evenings over the winter season.
The average temperature in the TCI is 80-90℉ (26-32℃) from June-October. From November-May the average is 80-84℉ (26-29℃).
The TCI’s government operates under British Law as a British Crown Colony. A governor is appointed by the Queen and presides over an executive council formed by an elected local self-government. Government offices are located in Grand Turk, with branches on other Islands as needed. The legal system is based on English Common Law.
Turks & Caicos Economy
Language: English
The economy of the Turks & Caicos Islands (TCI) relies on the tourism industry, real estate development, importation of goods and the exportation of seafood.
The TCI offers a wide variety of financial services, including establishment of offshore companies, offshore insurance, banking, trusts, limited partnerships and limited life companies.
The TCI’s Financial Services Commission regulates, develops and promotes the industry in major world markets.
The TCI uses the United States currency (USD).
The economy currently has one of the fastest growth rates in the Caribbean. The GDP growth of 5.94% (2015), the TCI is projected to experience economic growth of 4.4% in 2016.
Providenciales is by far the most developed of the Turks & Caicos Islands. With tremendous advances in infrastructure and services, and the real estate market has changed from a speculative market to more of a lifestyle purchase.
Property Investments
The real estate market in Turks & Caicos is very strong, with a steady supply of high net worth buyers. But despite all the growth, TCI is still underpriced compared to other top Caribbean islands, and offers tremendous value to foreign investors.
Since the upswing in quarter-four (Q4) 2011, real estate and development has experienced a healthy cross-section increase of sales in each segment of the market.
The TCI has a favorable tax system and no limitations to foreign ownership of property.
No income taxes on revenue generated from property.
No annual property taxes.
No capital gains tax on sale of property.
The Turks & Caicos has a modern land registry system, that makes transferring of title simple and accurate.
Property Investments
Vacation Homes: Many people are acquiring 2nd and 3rd homes to provide
portfolio diversification and to enjoy the property while capital
appreciates.
Raw Land: Beach front, canal lots and view lots are currently available on
the market. Limited supply and steady demand has pushed prices up.
Condominiums: There’s a wide selection of condos available from low
budget to high end luxury accommodations. Condos have seen an increase
of 18% in sales from 2015 to 2016.
Villas: There are a wide range of villas rentals available for you, most with
panoramic views of TCI’s pristine waters and magical sunsets. Villas sales
(up 27%) has finished strong yet again in 2016.
Affordable Options: An influx of migrant workers and limited supply of
affordable housing has driven rental yields upward.
Turks & Caicos Real Estate Sales 2016
The Turks &
Caicos Islands
are emerging
as one of the
fastest-growing
real estate
markets in the
Caribbean
region. 0
10
20
30
40
50
60
70
80
90
100
Test 1 Test 2 Test 3 Test 4
First
Second
Third
2016 Condominium & Villa Sales
Project
Item 1
Item 2
Item 3
Item 4
Turks & Caicos Condominium Sales – Year End Comparison 2016
Turks & Caicos Home/Villa Sales –Year End Comparison 2016
“A conservative fund which provides the
discriminating investor with periodic
income, high yields, stability,
diversification and liquidity.”
Meridian Mortgage Fund (MMF)
What is a ‘mortgage fund’?
A mortgage fund is a type of
investment in which you buy units
in a fund that is operated by a
professional fund manager.
The mortgage fund’s money is
lent out (as mortgage loans) to a
range of borrowers who use the
money to buy and/or develop
properties.
In return for investing your money
(your ‘capital’), the fund manager
promises to pay you a regular
income through cash distribution
or reinvestments.
Meridian Mortgage Fund
Currency: US Dollar (USD)
Classification: Mortgage Backed Securities
Fund Manager: Meridian Mortgage Corporation Ltd.
Regulator: TCI Financial Services Commission
Auditor: (PwC) PricewaterhouseCoopers
MERIDIAN MORTGAGE PORTFOLIO
Total Loan Portfolio $ 63,564,434
Total Cash & Certificate of Deposits $1,069,176
Total Fund Value $64,633,610
Value of Underlying Security
$160,389,506
Loan To Value Ratio 39.63%
Fund Facts Portfolio Summary
AVERAGE ANNUALISED NET RATE OF RETURN (%)
Q4 2016 3 YRS 5 YRS INCEPTION
(1996)
6.12 6.25 6.26 8.80
Meridian Mortgage Fund Mandate
The objective of the fund is to achieve the highest level of current return as is consistent with the preservation of capital.
The fund intends to achieve its objective by investing primarily in first position mortgages”
In the Turks & Caicos Islands
With a maximum 3-year loan term
With a maximum loan-to-value ratio of 50% of the appraised value
All borrowers securing a loan on property containing a structure are obligated to carry building insurance from an insurer deemed acceptable by the fund manager. The fund is audited by a ‘Big 4’ accounting firm annually. Returns accrue bi-weekly and are distributed on a quarterly basis. The fund is designed for investors who are seeking high yield returns over the mid-to-long term horizon.
MMF vs. US National CD Yield
Comparison
between two
low-risk
investments.
Meridian
Mortgage Fund’s
return compares
favorably with
US National CD
yield.
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
16.00%
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
MMF Dividend Yield (Life of Fund) vs. National Average 1-year CD Yield
Dividend Yield 1-Yr CD Yield
Meridian Mortgage Fund
classifies its portfolio with
secured mortgages containing
a mixture of loans between
land, residential, commercial
and multi-unit residential that
creates security for all
investors.
Meridian holds 74% of its
total loan portfolio in the form
of assets, 26% vacant land.
Meridian Mortgage Fund maintains a balanced portfolio of loans by spreading money we lend and invest between different loans, borrowers and investments.
The loan-to-value ratio is currently 39.35% (Q4 2016), which remains significantly below the maximum ratio of 50% which translates into reduced risk.
Stability Diversification
Meridian Mortgage Fund
Secured Property Classification Portfolio Analysis
Meridian has no front-end load fees to investors.
Investors are liable for a 2% redemption penalty if shares are redeemed within the first year.
No redemption penalty after 1-year period.
MMF has the ability to meet its short-term cash needs.
Interest rates in the Turks &
Caicos Islands, historically,
have been significantly higher
than other onshore locations.
Meridian Mortgage Fund has
an average return of 5% and
higher to investors
(subscribers).
Most recent calculated net-
return, Q4 2016 is 6.12%.
Liquidity High Returns
Investors’ income generated by the fund:
Can be reinvested in the fund ; or
Paid out on a quarterly or annual basis
Income is generated from:
Income received (interest collected from borrowers)
Selling off assets and collecting late payment penalty fees
MMF maintains
$3,000,000.00 in liability
insurance.
MMF is audited by
PricewaterhouseCoopers on
an annual basis.
All mortgages are registered
with the government land
registry.
Meridian requires a first
position charge against all
properties.
Periodic Income Security
MMF as a Pension/Savings Account
Scenario: Jack & Diane invested $25,000 in 1996 into MMF as a pension/savings account. Without any additional subscriptions to their account, as of November 2016, the account has a balance of $127,096.90. The same scenario is compared if Jack & Diane were to invest that money into a bank CD for the same amount of time.
$0.00
$20,000.00
$40,000.00
$60,000.00
$80,000.00
$100,000.00
$120,000.00
$140,000.00
1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016
Initial $25,000 Investment at Start of Fund
Bank CD MMF
Based on Average Rate of Return for 2016
Double Investment Amount
Scenario: Jack &
Diane are happy
with their
investment. Apart
from their
Pension/Savings
account, they have a
grandchild now and
wanted to know how
long an investment
of $100,000.00 will
take to double.
Keeping the rate of
return constant, for
the example, it
would take about
12 years for Jack &
Diane’s investment
to double in value.
As compared to US
National Bank CD.
$0.00
$50,000.00
$100,000.00
$150,000.00
$200,000.00
$250,000.00
2016 2018 2020 2022 2024 2026 2028 2030
Investor Wants to Know How Long Their $100,000 Investment Will Take to Double - Meridian Mortgage Fund vs. Bank CD
MMF Return 6.5% Bank CD Return 0.29%
$212,909.62
$103,536.04
Based on Average Rate of Return for 2016
MMF Applicable Fees
Summary of Fees and Expenses
Meridian Mortgage Fund has no fee associated with subscribing (minimum first time investment of $25,000.00).
Management fee is .5% of the average daily NAV (net asset value) of the fund.
This fee is paid quarterly
Investment advisor fee is .15% of the average daily NAV of the fund.
This fee is paid quarterly
Referral fee of 1% to any individual referring Meridian Mortgage Fund.
This fee is paid quarterly
Two (2) Ways to Invest in Mortgages
Investors “pool” their money into
MMF.
Profits generated are distributed to
investors according to their
proportional interest at subscription.
Earn a blended rate of return based
on the interest earned from each
respective mortgage.
Simplest form of mortgage-backed
securities.
Mortgage Pool
Group of investors invest in one specific mortgage at a time.
Investor is free to contribute any amount they’d like toward the full loan amount.
When mortgage matures and is paid out, the funds are returned to the investors.
More hands-on than a normal mortgage pool.
Specific Mortgage Syndication
Due Diligence
Individual Investor
Certified copy of Passport of Driver’s License
Copy of Utility Bill (credit card statement etc.) showing
current address
Occupation (job letter or resume)
Place of Birth
Contact Information (telephone number, email and/or
mailing address)
Due Diligence
Corporation and/or Private Company
Copy of the Certificate of Incorporation
A certificate of ‘Good Standing’
Identification of Directors
Identification and Nationality of Beneficial Owners
Nature of the Company Business
Registered office details
Asset Protection
To protect client confidentiality, Meridian acts as nominee director and secretary, registered office and administrator of bank accounts.
A USD $3,000,000 insurance policy with Lloyds of London is set in place to protect clients capital + investment.
The FSC (Financial Services Commission) of the Turks and Caicos Islands ensures that competent management with sufficient experience is met to manage the affairs of a Trust company, they review the business license on an annual basis.
Benefits of Investing in MMF
Returns that average 5.5% and higher
Liquidity (fund policy in place that ensures cash is on hand to meet cash needs)
Real estate security (mortgage-backed security - not associated with the US stock market)
Monthly income
Low volatility
Professional management
Diversification (fund policy in place for lending and investing)
Compounding is available
Meridian Contact Information
Mr. Clifton Simeon Trust Officer / Investment Advisor
Meridian Trust Company Ltd.,P.O. Box 599, Le Vele Plaza, Grace Bay
Providenciales, Turks & Caicos Islands, BWITel: +1 (649) 941-3082Cell: +1 (649) 243-9275Fax: +1 (649) 941-3223
Email: [email protected]: www.meridiantrust.tc