It’s been nearly 50 years since futurist Alvin Toffler predicted the rise of the “electronic cottage,” a serene and comfortable place where we could live as well as work.
It took the arrival of high-speed internet – something that hadn’t even been invented in 1980, when Toffler’s The Third Wave made such a splash – but now many thousands of us live, work, and manage our investments from our electronic cottages.
Graham Banks says the serenity of working from the cottage creates the ideal atmosphere for knowledgeable investors to evaluate investment opportunities and contemplate portfolio strategies. And many of them are looking closely at alternative assets, says Graham, who is Senior Vice President at Morrison Financial, leading the company’s loan origination and underwriting teams.
“One of the significant challenges for the sophisticated do-it-yourself investor is to find high quality alternative investments where the returns are not correlated to those of the traditional 60/40 asset mix available through the public markets,” explains Graham, himself a long-time cottager. “Alternative investments are financial assets that do not fit within conventional equity and fixed income categories. Traditionally, they have only been available to institutional investors.”
One of these alternative asset investment opportunities exists within private loans for real estate projects, something Morrison Financial knows a great deal about. Founded in 1987, the Toronto-based non-bank lender has advanced over $1.6 billion in loans since then, making it one of Canada’s longest-standing private finance firms.
“One of our areas of specialty is providing loans for real estate projects in Ontario, with a focus on residential construction,” says Graham. “We manage a portfolio of short-term loans funded by a combination of private and institutional money.”
Partnership trust funds
The company’s primary sources of private money are two limited partnership trust funds: the Morrison Financial Senior Mortgage Income Fund and Morrison Financial Junior Mortgage Income Fund.
These funds fit the “private debt alternative investment” category, Graham explains. Both are comprised of a basket of mortgages structured to provide good liquidity, attractive risk-adjusted fixed income returns, and returns virtually uncorrelated to investment instruments trading in the public market.
As of December 2022, the Senior Fund’s current weighted average loan-to-value (LTV) ratio is 34 percent, with annual returns ranging from seven to eight percent; the Junior Fund has an LTV of 62 percent with annual returns ranging from nine to ten percent.
“They can be purchased within registered accounts such as a TFSA, RRSP or RRIF to provide the investor with tax benefits in addition to historically strong returns,” explains Graham.
For those who will find themselves enjoying a peaceful day at the cottage while making investment decisions this summer, there are alternative options to boost your portfolio.
TEXT CHRIS OCCHIUZZI | PHOTOS ANDREW FEARMAN
