FAQ
Does the General Partner have a proven track record of success?
Yes, The England Group has sold several different projects, each at a significant profit, representing millions of dollars in transaction value. We know of no other syndicator in Canada with a track record that surpasses ours. Our most recent disposition was Maple Leaf Quay Project Limited Partnership, our flagship Canadian property in Toronto. Acquired in 1996 for $42.6 million – with $14 million down – the project was sold for $150.5 million in March 2013.
Has the England Group successfully sold any properties?
Yes, The England Group has sold several different projects, representing millions of dollars in transaction value. We know of no other syndicator in Canada with a track record that surpasses ours. We have sold a number of limited partnership projects, each at a significant profit. For example, in March 2011, we completed the sale of Southern Ontario Townhomes, a project that was acquired in 1997. Southern Ontario Townhomes Limited Partnership consisted of five unique properties located in key markets throughout southern Ontario. It was acquired for $22,188,000 and was sold for $35,416,000.
What is a Limited Partnership?
A Limited Partnership is a business entity consisting of a General Partner, who manages the business, and Limited Partners, who enjoy rights to the partnership's cash flow, but are liable only to the extent of their investment.
Why do people invest in real estate Limited Partnerships?
Many of the world's millionaires have made their fortunes in real estate. Investing in high quality real estate via a Limited Partnership allows investors to increase their net worth by receiving positive cash flows and capital appreciation. In addition, the tax deferral characteristics of Limited Partnerships enable investors to accumulate further wealth by utilizing funds that would have otherwise gone to pay income taxes.
How many people have invested in The England Group's real estate Limited Partnerships?
Over the past 26 years more than 5,000 investors have successfully invested in our real estate projects - they include physicians, trades people, bankers, lawyers, realtors, nurses, teachers, sales people, entrepreneurs and investment advisors. Investors have been attracted to our investments because of our successful track record, the high quality of real estate, the Limited Partnership structure, and our professional services and timely reporting. We take pride in our long-term track record, which has resulted in many satisfied investors returning to invest again.
Do your projects have positive cash flow?
Yes. The rental income from our projects covers mortgage payments, operating and management expenses, and also pays out a quarterly cash disbursement to investors.
Where do the tax deduction benefits come from?
Our Limited Partnership investments are structured to permit investors to deduct various costs of the offering from their personal income. Investors can deduct all offering costs over the first five years of ownership, certain fees in the year of acquisition, plus the interest cost on the mortgage and any interest cost on their equity loans on an annual basis. As well, investors are able to deduct Capital Cost Allowance (also known as depreciation), which is a deduction permitted over time for the cost of the buildings, equipment and other assets comprising the real estate property.
I understand that this is an illiquid investment. What happens if I need to sell my investment before the property is sold?
Although limited partnership units are illiquid investments, The England Group has developed a program to assist investors that may require an early exit. Investors, however, should view this as a long-term investment. The market cycle of real estate and the individual circumstances concerning each property will determine when the time is right to sell.
Most of your properties are located outside British Columbia. Isn't that too far away to make a safe investment?
To eliminate any concerns associated with investing outside of the Lower Mainland, The England Group hires professional property managers that are carefully selected from the local market. Our asset managers travel to each project for regular site inspections.
We have also assembled a select team of professional advisors to provide additional expertise. This includes BDO Canada, chartered accountants and project auditors; Fasken Martineau, legal advisors; and Thorsteinssons, tax law specialists.
We have also assembled a select team of professional advisors to provide additional expertise. This includes BDO Canada, chartered accountants and project auditors; Fasken Martineau, legal advisors; and Thorsteinssons, tax law specialists.
How will I know how my investment is performing?
Investors will receive quarterly updates and quarterly cash distribution cheques, plus yearly audited financial statements and income tax information from our chartered accountants and project auditors, BDO Canada. An Annual General Meeting for each project is also held each spring to provide a formal update. The General Partner oversees all aspects of property management, and investors are welcome to call us at our office to discuss the project at any time.
What is my maximum liability?
The Limited Partnership structure limits each investor's liability to the amount of the original investment, including their portion of the assumed mortgage. Although The England Group only invests in projects with sufficient projected cash flow to cover mortgage payments, operating and management expenses, and provide cash distributions to investors, there are additional safeguards built into the Limited Partnership structure. The General Partner generally provides a commitment to advance funds to the Limited Partnership for a 5-year period should there be insufficient cash flow to cover the mortgage payments. Furthermore, each project includes a comprehensive insurance package at all times.
What is the role of the General Partner?
As the real estate expert, the General Partner takes care of every facet of the investment process on behalf of our investors. We research markets to determine which cities and communities will provide the best return. We find the property, negotiate the acquisition, perform all due diligence on the asset and arrange the mortgage financing. We then manage and refurbish the property, arrange for annual audits, and prepare tax information and quarterly update reports for investors. Our responsibilities also include identifying the optimum time to recommend a sale, and then negotiating the sale on behalf of the investors.
What is a 'carried interest' and how does it work?
A carried interest is a management incentive designed to protect investors and ensure that the General Partner's objectives are aligned with those of the entire partnership. With a carried interest, investors can be assured that the project is being operated to its highest potential. It gives the General Partner a vested interest in a project's upkeep, successful operations and eventual sale of the property.
The General Partner receives a carried interest only after the investors have received a minimum return on their investment – generally 10%. After the investors have been returned their entire investment plus the minimum return, the General Partner is entitled to share in future cash flows from the investment – usually limited to 20%.
The General Partner receives a carried interest only after the investors have received a minimum return on their investment – generally 10%. After the investors have been returned their entire investment plus the minimum return, the General Partner is entitled to share in future cash flows from the investment – usually limited to 20%.
How much does it cost to invest with The England Group?
Each Limited Partnership project is unique, and so they are priced differently. In general, the equity portion of our partnership units tends to be priced between $20,000-25,000 Canadian. Investors also assume mortgage obligations.
Is it better to pay cash for this investment, or to finance it through borrowing?
According to our discussions with financial advisors and accountants, we have found that the majority of investors finance the investment in order to receive more leverage on the investment. By borrowing, investors can benefit from additional tax deferral savings, which optimizes the rate of return. An investor who has cash available would be well-advised to use it for paying down any non-deductible debt (i.e. a home mortgage) and then borrow for this investment.
