Great Pacific’s Mortgage Investment Corporations (MICs)
They may excite us but mortgage investments are really the boring part of your portfolio. They just keep making consistent returns quarter after quarter after quarter – the power of compounding interest.
What are MICs?
Enhance your investment portfolio
MICs are a great way to enhance your investment portfolio, offering the best of security and return on investment, especially when compared to the risk of stocks and the low returns of money markets.
Private mortgage lending
MIC funds are designed for private mortgage lending in Canada. MICs lend to qualified borrowers in a ‘niche’ mortgage market who may be finding traditional mortgage lending is not getting them the results they need.
Short Term Investment
Mortgages in a MIC generally have a higher interest rate and are short term, usually not longer than one year. They are designed to support borrowers in the early stages of a project to the point that they are able to attract conventional lending.
Reduced exposure to risk
A MIC maximizes profits while preserving capital for shareholders, who invest in a diversified and secured pool of private mortgages, which greatly reduces their exposure to risk.
Shares of a MIC are qualified investments under the Income Tax Act (Canada) for RRSPs, RRIFs, RESPs and the Tax Free Savings Account (TFSA).
Secured by property
MIC mortgage investments, like any other mortgage, are secured by property. We often take additional security such as other properties, personal and corporate guarantees, general security agreements and assignments of material contracts, such as insurance policies.
ARE MICs FOR YOU?
Here are some examples of how our investors use MIC investments from Great Pacific.
Real estate owners borrow against the available equity in their property to invest in MIC funds – leveraging their equity to make a high rate of return. Please seek qualified advice prior to the use of leverage in any investment.
Investors looking to simplify their estate planning invest in MICs in joint title with family members.
Many shareholders are looking for a secure investment with higher returns than Bonds, GICs and other lower return investments so they move their investments into MICs.
Shareholders often choose to ‘try out’ MICs with a small initial investment. Most choose to increase their MIC investment over time.
The following are highlights from the Income Tax Act
A MIC must have at least 20 shareholders.
A MIC is generally widely held. No shareholder may hold more than 25% of the MIC’s total capital.
A MIC has, at all times, at least 50% of its capital invested in residential mortgages and/or government insured instruments (bank deposits, treasury bills, etc.).
A MIC may invest up to 25% of its capital directly in real estate property for income purposes but may not develop land or engage in construction.
A MIC is a tax exempt investment vehicle, providing the MIC distributes 100% of its net income to its shareholders.
Dividends received by MIC shareholders are taxed as interest in the shareholder’s hands.
A MIC is an eligible investment for RRSP, RESP, RRIF and TFSA.
Choosing a MIC from Great Pacific
There are two distinct MIC funds to choose from at Great Pacific. A member of our team will help you choose the best fund or mix of funds to suit your needs. Our MIC funds are all eligible for private or corporate investment and are eligible for RRSP, RRIF, RESP and TFSA. Shares of the MIC funds are not offered by prospectus. All investors must qualify for an exemption from the prospectus requirements. This information is available in the offering memorandum.