Ready Capital Mortgage Investment Trust 4th Annual General Meeting

Link: https://youtu.be/LZ_eyEi_sbg

[00:00:12.040] – Ron Cuadra, COO

Welcome to Ready Capital fourth Annual Investor AGM. And coupled with appreciation, we're happy to see you here today. My name is Ron Cuadra. I am the Chief Operation officer.   We're here tonight not only to thank you our valued investors , but also to celebrate another successful year that we had in 2022. 2022was a year of turbulence in a housing market caused by multiple banks of Canada, rate hikes, decreases in property value, and high inflation. Despite all this, Ready Capital pulled through with blind colors, as confirmed for our most recent financials, which is now available through our website. We enjoy the growth of 47% year over year under management, growing from 41.1 million. Our number of investor accounts have also solved 29% year over year with 125 new investor accounts. So I'll say it again, thank you very much to our valued investors. We'd also like to thank our most trusted business partners who are here with us tonight. Partners, as I introduce you, please come up and have a seat and we'll hear you. To start, I'd like to introduce you president and CEO.

[00:01:52.640] – Christine Xu, President & CEO

Thank you. Welcome. So good to have a speech later on, so I'm not going to say it too much, but welcome. Thank you.

[00:02:06.100] – Ron Cuadra

The next one is Martin Reid, and he's one of capital trustees. Next is Kevin Cohen, he's head of AUM and he's our securities lawyer and is also the founder. Market Dealer global private partner Tebow. Our partner want to take you where they just want to say thank you also to Robert Kligerman, who's our internal council, along with Jonathan Holster who's the president of capital.

[00:03:21.950] – Martin Reid,  Trustee

Thank you very much everyone for coming out this evening. I just want to two things. One is to thank the team at Ready Capital. The last year has been very challenging with rising interest rates, rising inflation, etc, and they continue to deliver results regardless of the economic environment and congratulate them for your year. Well done.

[00:03:49.750] - Kevin Cohen, Security lawer

Hi everyone. It's wonderful to be here and to see the growth that's happened year over year. Obviously, this is a very professionally run event, just like Christine runs her business. It's been a real pleasure and we feel really fortunate, both Belco and AUM that we were selected as service providers. Belco sponsors three very important people right now. Currently three people that are our employees of money broker but are dealing representatives on Belco's platform. And Belco has non employees of money broker that train them, that oversee them and help them perform their obligations. And we really appreciate the care and attention to detail. They take compliance very seriously and we appreciate that you do. Also, on the AUM law side, we work very carefully to create the offering documents for those of you that choose to invest. They're important documents. They're largely for the benefit of you. So if you ever have any questions, don't hesitate to speak or ask any questions of your dealing representatives, because we're here to answer those questions and want to make sure of continued success of the fund. So congratulations to you, Christine and the whole team. Thank you.

[00:05:10.580] – Shay Seagull

Hi, My name is Shay Seagull. GCSE LLP is the independent auditor of the trust. We executed this year's audit smoothly with the full cooperation and help from management. And we believe the financial statements prepared by management presents darling the financial position and financial performance of the Trust for the year ended December 31, 2022.

[00:07:29.910] - Christine Xu， President & CEO

Listen to my speech or waiting for the movie to start. So today is the first time after COVID we are getting together in this room and we are trying something new. We're trying the new technology. So we have you see when we speak in English, the screen will show some Chinese subtitles but the technology is not perfect actually probably only 80%. A lot of times it doesn't really translate well. For instance, like our company's name for instance, Ready Capital. What it says oh perfect, Ready Capital. But lots of times it doesn't translate correctly. So just bear with us. If there's any questions, feel free to ask me. So I'm going to speak a little bit in Chinese right now.

[00:09:28.590] - Christine Xu， President & CEO

so let's start. So today is actually a celebration of our four years journey. We are four years already like seems to be yesterday in February 2019 we started Ready Capital and lots of you actually are our initial investors. At the time when we start at four years of opening this review what happened in the past four years. First of all, all our partners. So the partners who are here, everybody, we start four years ago. All partners are still staying with us, our trustees, so three trustees here and our EMD Belco kevin was representing a Belco and we actually have a new additional EMD from Vancouver Genesis. Our goal is have more EMP, small partners joining us and our administrators do the same, local rich auditor civil do the same, very happy and auditors still with us for four years. And we have three representatives today on the company and our internal lawyers, robert Klinman, who unfortunately couldn't come today.

[00:11:01.210] - Christine Xu， President & CEO

And our fund counsel, our corporate lawyer A Kevin here today. And our underwriting team ever strong. So really happy and really appreciate our amazing team, incredible partnership with our partners that prove to be showing our stability on the fund. All partners here and showing our professionalism and the expertise we enjoy working with these partners. Really thank you. Appreciate and look at our performance. So that's our past four years performance, our fund starts from zero right now is over 62 million now. And many of you here with us are our investors. Thank you very much for your support. And our investors from zero four years ago. Right now we have 516 accounts, that including cash account RP and tax free saving account. So five years 516 of you. Thank you. And our performance, that's what we do for return for our investors. And our performance is incredible. We told you we can give you, you can expect over 8% return and every year we surpass our promise. So we are doing better than 8% every year. The first year only eleven months. The return is 8.1 months. And the second year 8.49. 3rd year 8.37. And this past year 8.23. So that's the return on investment.

[00:13:01.800] - Christine Xu， President & CEO

If you start as our initial investor in the first month, February 2019, if you invest 100,000 with us without taking out interest, we do automatic compound investment for you. This money by the end of last quarter is already 140 something thousand. So it's over 40% return on investment. So that's our excellent report to all our investors and our portfolio summary. So we have 62 million, but we actually lend out during the four years, double our portfolio. So 136,000,000 and we pay off our investors over $8 million for the interest to investors. I think we're doing great, something to be proud of. So how we did it, Why our funds doing so great, what's the secret? So the secret is very simple this fund is built for investors .Before we started this fund we asked all our investors, potential investors, what's the most important thing for you if you invest in our company, if you put money into our fund .What's the most important thing for you? What are you looking for? So, many of you are here. Probably you already answered the same question and actually, before I go on the second page, maybe you can yell out to me what is most important thing for you for your investment at this stage?

[00:15:04.020] - Christine Xu， President & CEO

I heard something making money .Yes. So everybody told us for the auto survey before we even started the fund. I think the most important thing investor told me that when they invest money with us, they want safty, they want to preserve their investment principle and secondary is return because there's a different type of investor and also there's a different stage in life. I think most investors are really here the audience that's a very good representation of the typical investors. You are investing your typical investors in this stage of life you don't want to risk all your money, you want to preserve your hard earned money, you preserve your principle. So you want somewhere to put your money safely, but you also want to see some growth. So very importantly, the fund is decided to have safety to capture preservation in mind. This is so important. So we build on everything depends in response to all your wants. The fund is built for investment. So what we do is first of all talking about the safety we want to choose an investment which has lower risk. It's nothing like called low risk, right?

[00:16:44.740] - Christine Xu， President & CEO

But we can only do lower risk so when you invest money, what is the lower risk? When you invest in stock or you invest buying a bitcoin or something, maybe have a higher return, but have higher risk. So people are thinking the lower rate investment, maybe something related to real estate. But we're going to show many of you, you are already our investor. You probably know, but your friend probably spend a little bit more time about talking about the real estate investment and risk. So we choose. This one is called Ready capital Mortgage Investment Trust. So by the name, you know, that's all we do is mortgage. So many investors, probably 90%, 95% of investor, they all ask me the same question where do you put your money? And I tell you every time, every seminar, every time, all we do habitats are always due it's just mortgages because our fund is mortgage investing, that's all we do. It's mortgages don't ask you like majority what do you invest? Like mostly what do I invest? All of our investments, 10% of our investments are secure debt on mortgages. So that's one thing to control the risk. We'll try to lower the risk. So I just want to repeat again, because every seminar people ask the same question. All the events were thinking about a fund,  a real estate related fund, they ask me the same question. So I just want to spend a couple more minutes today. That's the only thing today I'm going to spend a little bit time. So when you're talking about invest in real estate or real estate related fund, there's two categories very important. Everything is two categories. Either you invest in equity or you invest in debt. Only two. So when you say investment, something like a real estate fund or whatever, ask yourself, where is the money? Invested? Is there equity or debt? So what's the difference? So equity are those you hold direct ownership into the real estate property. So for instance, you're buying a home, you own a home, that's equity. A few of you own a home together, own a property together, that's equity. Or developers, they buyer land, they invite people to invest together with it. That's equity.

[00:19:39.480] - Christine Xu， President & CEO

So when you own directly the real estate is equity, what is the debt? You don't have ownership on the real estate, but you are the lender. You lend money to the landowner, the real estate owner. So for instance, somebody buy a home for a million dollars, they cannot get a mortgage, you lend the money to them. So the person that's your first person you know that owning the equity. You giving the money, you don't own the property, you're owning the debt. So what's the difference? The difference is the equity in real estate is not that real estate has a higher risk the reason why even you buy a home have a higher risk than our fund. Why? Because if you buy a home for a million dollars, suddenly you need the money. You may not able to sell it right away, but if you want to sell it right away, you probably have to discount it. So a million dollars home, if you want to sell it right away, you probably have to discount say 900,000 or 700,000 or something like that. Crazy because you need the money right away. So it's higher risk to lose money. So that's the equity instead of a debt owner. So the person who bought a million dollar home, they borrowed 650 from us. If they need to sell the home or they cannot afford a home, we still owning the debt, they still pay us.They still have to pay us.

[00:21:22.570] - Christine Xu， President & CEO

So even the property decreasing value before is a million dollars and now because the situation changed, the market situation changed, the property value decrease. If you own the debt, all the market is due to pay. So the debt is more secure. So that's the differences between equity and debt. So there's a different structure for the equity fund and debt fund. So for the equity fund there's so many different type of mutual funds you can buy from the bank of the owning different type of real estate. In Canada, in US international equity fund, so they usually name as some international real estate fund. So that's equity fund and the second type of the equity fund is okay, lots of people heard about REITS, know about REITS,  because it is still very popular even in China, a lot of people know REITS. So what is the REITS? REITS is real estate investment trust, right? So you own the equity but it's direct ownership. So you put it into a trust format. So because that owning directly, you have a direct ownership in the real est ate. So when we're talking about REITS secure or higher.

[00:22:53.270] - Christine Xu， President & CEO

So there's so many REITS fund out there. That's most people when they invest in real fund that people invest and also there's so many private funds. So when you heard people losing money and losing hundred percent of money lot of times it's a real estate private fund. So what is the real estate private fund? Typically developers for instance, they bought a piece of land, this piece of land they think soon to be developed into a condo project or a subdivision or something like that. So they don't have enough money, but they want to raise money. So the developer say this piece of land right now is $5 million land only. However, after five years when a developer say 200 units total become 50 million or something like that. Which is true a lot of times developers make so much money in Canada, in China, the same thing. But when they leave the money for the project because there's so much cost first of all you buy the land and then there's so many permits to apply for and it can take years, five years , average five years. Sometimes it's a number, sometimes never, right? So they raise money to build a project and they promise investor. I'll give you 20% return a year. However, this is minimal five years you cannot move your money because there's no cash flow, right? So whether five years later when I build, when I sell it can give you 20% return.

[00:24:38.940] - Christine Xu， President & CEO

Some are actually just so many successful pockets. People may be 20%, 30%, even higher. But lots of times when we see people losing any penny hundred percent of their money,  it's because the developer actually went under, they went bankrupt. Even though you have the equity in the fund but the equity is not the exact amount. So they raise instead of 5 million they raise, say the project 50 million. They using the percentage of that you are LP owner,  your limited partnership. But when the project goes down, of course everybody losing money even though you don't have limited partnerships you were told you had no liability but you could lose everything. So most people losing money is on those equity funds especially private equity. REITs of course can go up and down sometimes lot of commercial rates for office rates. I think it's going to be a big problem. But that's the equity side. Okay? And when we talking about the debt set.So that also is three different categories. It's a mutual fund. They have something mortgage fund usually it's not exciting because the return in past few years , so no financial advice and nobody even know buying it because the larger, larger mortgage fund are qualified by A lender, the rate is expecting 5% really very good.So that's a larger mutual fund.

[00:26:27.490] - Christine Xu， President & CEO

And secondly is the mortgage investment chart which that already has mortgage investment trust.  Relatively not that usual because the cost is higher, register cost, accounting cost, ongoing cost. So lot of times when people raise money to do mortgages, they don't go to the trust, they usually do a private fund like a MIC, like a MIC or the private fund. But the reason we do mutual fund trust is just like say weight the real estate trust. It's just because we want to be more transparent. And the more transparent, the more the investment, see? And the more regulated. I think the paper is our part, the paper is our investment. So we choose the multi trust group and for the private side we call the MIC and also prior. MIC  right now actually is pretty regulated as well. And it's getting more and more regulated because they just like the industry, try to protect investors, so they're getting more regulated. And the private part of private lenders, a few of them put money together to lend money and they say they are regulated. But I think it's very easy if you know the differences between a regulated fund or non-regulated fund, or private fund, just ask them to show you offering memorandum, protected or all their financial statements they don't have.

[00:28:12.790] - Christine Xu， President & CEO

And I think you shouldn't invest with them because you can see nothing. We can tell you anything that you can see nothing, doesn't mean anything. So when people want to invest, I hope you can find very credible fund with all the financial statements, with complying with the offering memorandum and with the percentage, things like that. So that's  the main difference is for us, try to safeguard your money, our investment money, we choose to invest, tender the debt into small businesses and into a very regulated vehicle contract. Okay? Secondly, so all the mortgages right now, all investments are in Ontario. The reason all in Ontario, because we know Ontario very well, even though you've been seeing Alberta, there's probably lots of good opportunities, but we don't know the area as well as in Ontario. So our money right now is in Ontario. So the second most important thing for the safety of your money is flexibility. Just like previously, when I give you an example, when somebody promised you 20%, 30% a year, like lots of developers raise money, but because we don't have cash flow, they say your money has to be locked in for five years.

[00:29:53.870] - Christine Xu， President & CEO

For instance, even though you can get 20%, but your money has to be locked in in five years, that's no good. That's a very high risk because you don't know what's happening during the five years. It can go back up. That means you have nothing. So for us, the flexibility we give you is there's no locking period anytime. Because we only invest in mortgages and we get monthly income and people can pay off anytime. Our borrower likes us too, because we don't have long interior, they can pay off their mortgage anytime. So for us, for all investors, there's no locking period. If you need your money back, give us two months notice. You can withdraw your money. And many of you probably already withdraw money in one point or the other. Give us two months notice. However, because the administration calls and everything, we don't want people to put in money and taking money all the time, like a saving account. So we say in the first twelve months, if you take off money, we charge you 3% service charge. So after that, after the first twelve months, there's no cost, just give us two months notice.So that flexibility is very important to safeguard your money.

[00:31:13.100] - Christine Xu， President & CEO

And third is transparency. You know where you invest and you know the money.,When you give her money, you know where it goes. It's very transparent. If you give her money to a private company, to your friends, you may not see the financial statement all the time, they may not show you the book if their book is not going to be audited. But our transparency, I think that's very important to safeguard your money. So talking about the transparency, first of all, I'm going to read it, I think very important. Grand Capital is a mutual fund trust registered in Ontario. So we are regulated as a mutual fund trust register in Ontario. Fundraise governs by offering memorandum. So we have offering memorandum. And very important, each year when we have a new Financial statement, we have to update our offering memorandum. Do you know where to get offering memorandum go? Our website. So our Financial statement is our website, the most updated financial statement and our offering memorandum is on our website. If you just email it. So you need an offering memorandum right away and send it to you.

[00:32:34.420] - Christine Xu， President & CEO

So every year minimum, we have to update our offering memorandum and it's just done. So it's filed, it's all there. And the money is distributed by our EMD lab on Delco. And then the new EMD we just partnership with Genesis. So all the funds are sold by EMD representatives. So the transaction filed by security resident of the security regulator every month. So every month if it's Ontario investors, we file in Ontario. If it's DP investor, we file BC. So every province that they have their own regulatory security commission. So every month we file reports with the security commission policy and the mortgage administered by Blocking Rich Management. And unfortunately our partner today is not here today. We are audited by Seagull. We are RP test free saving account, cash account, of course eligible. So they ask the Administrative Register account administered by Olympia Trust, which is the largest administrator in Canada. We have monthly reports. So every of you receive monthly email report every month. Sometimes people calling me, we didn't receive a report. So I said check your junk email box and if you don't see a report, you miss one month report. So check your junk email box first.And otherwise just call us will manually send you a report.

[00:34:37.970] - Christine Xu， President & CEO

So every month the investor will get you a report and also by the end, of course, we have an audited financial report and T3. T3 is distributed every time at the end of March. So march. March 21. I believe everybody already received your T3.  If you didn't receive a T3, Canada already have a copy. You can go online, it's there. And checking your RP, your tax free saving account, your cash account. I'm very grateful. Most of our investors are our trust clients. People borrow mortgage through us and they know how professional we do and they trust us with our investors. And even though you still have mortgages but you have RRSP, you have tax free saving account and then you have money saved for your future. So that's a good place to put your money in our fund. And we are socially responsible. We try to contribute to the society and give to those who need it. So last year, our first annual golf tournament, we only have because of the first year and we didn't really advertise doing too much advertisement, so our investors are our clients.

[00:36:10.540] - Christine Xu， President & CEO

People borrow mortgage through us and they know how professional we use our work and they trust us with our investors. And even though you still have mortgages but you have RFP, you have tax free saving account and then you have money saved for your future, so that's a good place to put your money in our fund. And we are socially responsible. We try to contribute to the society, to those who need it. So last year our first annual we only have because of the first year and we didn't really advertise doing too much advertisement, taking the flow out almost instantly raised $15,000 for Alzheimer Society of Canada and this year we're going to do it again. So the date is already firm. It's July 18,  so any of you who's interested, try to register as soon as possible because the ticket wbe so long. And this year we will minimum our target minimum double of last year. Okay, well that means our main presentation, thank you very much. And I know our movie is starting, five minutes. Unfortunately we probably do not have much time to put questions, so we will start at 08:00 movie.

[00:37:47.820] - Christine Xu， President & CEO

If you have questions, just reach out to us. There's all the good information, my cell phone, sorry, my email and we chat and feel free to reach out to us. We have five minutes right now and we're going to start. If you have questions, you can ask. Otherwise if anybody wants to take a break, we want to get a drink or something. If anyone have questions.

Link: https://youtu.be/LZ_eyEi_sbg