Frequently Asked Questions
FAQs
These are the frequently asked questions about Denarau, the Denarau Direct Mortgage Fund. More information can be found in the relevant Information Memorandum.
If you have any further questions or require a copy of the Information Memorandum for the Denarau Direct Mortgage Fund, please do not hesitate to contact us.
Have any other questions?
- Invest $500,000 or more, or
- Provide a qualified accountant’s certificate (that is not more than 2 years old) confirming you either:
- have net assets of at least $2,500,000, or
- have gross income of at least $250,000 for each of the last two (2) financial years.
The Denarau Direct Mortgage Fund provides first mortgage loans secured real property in Australia under credit policy guidelines.
| Investment decisions | Investors choose which mortgages to invest in. |
|---|---|
| Capital and income risk | Investor’s risks are only in the mortgages they are invested in. Investors rely on individual borrowers for income and repayment of capital. |
| Income return | Income commences on the commencement date of the mortgage investment. Each mortgage investment may generate different income returns. Income return is usually higher as the risk is concentrated to only the mortgages invested in. |
| Withdrawals | Investors can only withdraw when the loan is repaid. |
| Security | Security is registered in the name of the Investor. |
| Investment management | Denarau administers and manages each investment and each mortgage across both funds with the same level of management expertise and professionalism. |
Direct mortgage lending is also known as private lending, corporate peer to peer lending or marketplace lending. Direct mortgage lending removes banks as the middleman and matches borrowers directly with Investors. Investors provide the loans to the borrowers on commercial terms secured by mortgages over real property.
In the case of the Denarau Direct Mortgage Fund, the loans provided by Wholesale Investors to borrowers are for short term commercial purposes only and the security offered to investors are first mortgages over real properties within Australia. The Investors decide who they want to lend their money too whilst Denarau manages the whole process on behalf of the Investors from loan assessment, initial investment to loan repayment.
To receive mortgage investment opportunities, Investors first need to join the Denarau Direct Mortgage Fund by registering to become a member.
Once registered as a member of the Denarau Direct Mortgage Fund, Investors are presented with mortgage investment opportunities as they become available.
Mortgage investment opportunities are detailed in separate Syndicate Information Memorandums issued to the registered members.
Members will receive Syndicate Information Memorandums for specific Sub-Schemes and can then apply to invest in specific mortgage investments of their choice.
To receive mortgage investment opportunities, Investors first need to join the Denarau Direct Mortgage Fund by registering to become a member. To do this, Investors need to:
- Read and consider the Information Memorandum for the Denarau Direct Mortgage Fund.
- Complete and sign the registration form within the Information Memorandum.
- Provide confirmation that they qualify as a Wholesale Investor.
- Provide identification as detailed in the Information Memorandum.
Registration is free and provides no obligation to Invest in any mortgage investment.
Once registered as a member of the Denarau Direct Mortgage Fund, Investors are presented with mortgage investment opportunities as they become available.
An Information Memorandum is a document used to offer Wholesale Investors a range of financial products such as managed funds.
The Information Memorandum for the Denarau Direct Mortgage Fund provides information for Wholesale Investors to decide if they wish to register to acquire a membership interest in the Denarau Direct Mortgage Fund and should be read in its entirety. It details the features, benefits, risks and general information about the Denarau Direct Mortgage Fund.
Information relating to specific mortgage investment opportunities are detailed in the relevant Syndicate Information Memorandums made available to members of the Denarau Direct Mortgage Fund.
A Syndicate Information Memorandum is a document that supplements the Information Memorandum and relates to specific mortgage investments offered to the members of the Denarau Direct Mortgage Fund. It contains credit and loan information, a copy of the valuation report and any information relating to the mortgage investment as Denarau determines appropriate.
To apply to invest in the specific mortgage investment, Investors complete and sign the application form contained within the Syndicate Information Memorandum.
Each mortgage investment in the Denarau Direct Mortgage Fund is offered through a separate managed investment scheme known as a Sub-Scheme. Each Sub-Scheme is a loan to a borrower and has its own Investors and holds separate and distinct assets and security from each other Sub-Scheme.
Mortgage investments contained in the Sub-Schemes are only made available to Wholesale Investors.
Investors have rights to receive income or capital distributions in relation to the mortgage investment in the Sub-Scheme selected and in which they are an Investor. Income and capital distributions are proportionate to their share of the total amount contributed to the mortgage investment in the Sub-Scheme selected.
In most cases, borrowers are approaching their banks for commercial funding. However, over the past few years the banking regulators have moved to increase the banks requirement to hold significant amounts of capital in reserve. This has created cost of capital issues for the banks which has forced them to constrain lending, especially in the commercial debt sector. Even to existing clients, this has resulted in the banks being unwilling or unable to provide funding for property transactions. The current economic climate has further exacerbated this. Any lending that is offered to clients is often on extremely tight, onerous, and uncommercial terms. Banks’ lending to new clients has essentially stopped altogether.
The current lending constraints together with the royal commission and the borrowers seeking a greater level of customer service has given rise to an opportunity for private funders to provide debt facilities to bank risk level borrowers at private funding pricing.
The Constitution of the Denarau Direct Mortgage Fund allows for Denarau and/or the directors of Denarau to co-invest in the funds. If Denarau and/or the directors co-invest in either fund, they invest on the same terms and conditions as all other Investors. Denarau and/or its directors co-investing in a fund should not be viewed as a recommendation to invest and Investors should seek their own independent professional advice.
No. Denarau is only permitted to provide general product advice. Investors should seek their own independent financial advice before deciding to register and/or invest.
Denarau’s alignment of interest is simple. If investors are not getting paid, Denarau is not getting paid. This ensures that only quality transactions that meet Denarau’ stringent credit policy are offered to investors in the Denarau Direct Mortgage Fund.
Yes, Denarau has a formal Default Management and Loan Recovery Policy. The overarching premise of this policy is that Denarau treats the interests of our investors as the absolute priority. This includes providing regular up-dates on the status of any mortgage in recovery management to Investors. In the first instance, Denarau will work with the borrower to achieve an acceptable outcome. If an acceptable outcome is not achieved within a reasonable timeframe Denarau (through its Solicitors) will instigate formal legal proceedings on behalf of the Investors pursuant to the loan security held and if required sell the security property.
Yes. Denarau Asset Management Pty Ltd ACN 656 079 159 is the holder of Australian Financial Services Licence (AFSL) No. 540109. Denarau Asset Management Pty Ltd is the Trustee of the Denarau Direct Mortgage Fund.
Denarau Funds Management Pty Ltd ACN 627 571 528 is the Investment Manager of the Denarau Direct Mortgage Fund. Denarau Funds Management Pty Ltd ACN 627 571 528 is an Authorised Representative (No. 001306599) of Denarau Asset Management Pty Ltd (AFSL No. 540109).