Invester

How do I switch between cash dividends and reinvesting dividends in my account?

Please contact our Investor Relations Manager, Allison D. Allen at shareholders@magentacapital.ca

When will I start receiving my dividends?

Dividends are paid monthly.  Dividends reinvested and held in trust may take up to 10 days after month-end to be reflected in your online account with the trustee.

What is my current rate of return?

For more information about your return, please contact our Investor Relations Manager, Allison D. Allen at shareholders@magentacapital.ca

What is a Mortgage Investment Corporation?

Investors pool their money by buying shares in a Mortgage Investment Corporation (MIC). A MIC is governed by Section 130.1 of the Federal Income Tax Act to enable investors to invest in a pool of mortgages. A MIC may also borrow from a bank or other lender, employing the shareholders’ capital and loan proceeds to fund its mortgage portfolio. The MIC continuously manages the pool of mortgages with newly invested share capital, with the proceeds of repaid and discharged mortgages being used to fund new mortgages.

The MIC’s management is responsible for all aspects of the company’s operations, including sourcing suitable mortgage investments, analysis of mortgage applications, negotiation of applicable interest rates, terms and conditions, instruction of solicitors, mortgage portfolio and general administration. Like an investment fund, the MIC’s management, in this case, Magenta Capital Corporation, the General Partner, is compensated for carrying out these duties through income distribution.

The Income Tax Act requires that 100% of a MIC’s annual net income, as verified by external audit, be distributed to its shareholders in the form of a dividend. This dividend is taxed as interest income in that it essentially represents a flow-through of the interest earned on the company’s mortgage portfolio. Like any company, a MIC’s net income is equivalent to its revenues, less its expenses. A MIC’s revenues are comprised primarily of mortgage interest and fee income. Expenses are comprised primarily of costs for the administration of the fund, audit and other professional fees, and loan interest if the MIC is employing debt in addition to share capital.

What is a private mortgage investment?

A private mortgage is held by an individual, group of individuals, or private corporate entity, such as a Mortgage Investment Corporation (MIC), instead of a bank or other institutional lender. The legal status of any mortgage is the same, regardless of who holds the mortgage. The mortgage borrower is legally obligated to repay their loan at a stated interest rate to the mortgage holder within a stated time period. The mortgage loan is secured by a charge on the underlying real estate owned by the mortgage borrower. Private mortgage interest rates are typically higher than bank mortgage rates.

Mortgages typically offer consistent rates of return, lower risk (as they are backed by the asset – i.e., property) and regular income at a fixed interest rate.

The legal obligations of the borrower, or mortgagor, and the legal remedies available to the lender or mortgagee, are prescribed by law. Private mortgages have long been an investment option used by relatively sophisticated, affluent investors. These investors typically fund 100% of an individual mortgage and hold the mortgage directly.

How does a MIC differ from directly held mortgages?

A MIC is financed by investors who put their money into a pool to fund groups of mortgages. All of the individual investors hold shares in the MIC. Once your money is invested in a MIC, the management company deals with the administration of the investments, including selecting the mortgages that are funded and managing the administration of the company.

If an individual investor funds 100% of an individual mortgage and holds the mortgage directly, they are solely responsible for sourcing and evaluating the mortgage investment, negotiating the interest rate and all other applicable administrative activities. In this case, the individual investor would also be responsible for ensuring timely payments and dealing with problems that may arise in the event of a default.