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Frequently Asked Questions

The following is a summary of some of the most frequently asked questions. However, prospective investors should refer to the Offering Memorandum for complete details of the Offering prior to making any investment decision.

 

 

 


Q. What is a REIT?

A: REIT (Real Estate Investment Trust):

  • Is a like a mutual fund, except that it buys real estate and not stocks or bonds as its primary investment
  • Manages its properties for stability of cash flow and long term growth of capital
  • Distributes the cash flow from the properties on a regular basis to Unitholders
  • Usually REIT´s are focused on a particular asset type (apartment buildings, offices, retail, hotels or industrial space).

Centurion Apartment REIT invests in multi-suite residential and student residence rental properties and mortgage investments.


 

Q: What is a Qualified Investor?

A: Depending on where you live in Canada, the provincial securities commissions impose different qualifications for investing in a private REIT like Centurion. The information below is only a general description of exemptions and isn't comprehensive. You should speak to your advisor and/or our investor relations department for further information or to seek clarification.

Outside of Ontario and Quebec  the requirements are generally that you: 

 

(a)   are an Eligible Investor (1)(2)* OR 

      (b)  obtain independent advice as to suitability from an Eligibility Advisor(1)(3)* OR

(c)   invest no more than $10,000 OR

(d)  live in the province of BC, NB, NS or NL OR 

                                                               

In Ontario the requirements are generally that you either: 

(a)   are an Accredited Investor(1)(4)*                                                                                       

In Quebec the requirements are generally that you are an Accredited Investor(1)(4)*

 

* Notes:

(1)     As defined in National Instrument 45-106

(2)  An Eligible Investor means:

(a)   a person whose

    (i) net assets, alone or with a spouse, in the case of an individual, exceed $400,000,

    (ii) net income before taxes exceeded $75,000 in each of the 2 most recent calendar years and who reasonably expects to exceed that income in the current year, or

    (iii) net income before taxes, alone or with a spouse, in the case of an individual, exceeded $125,000 in each of the 2 most recent calendar years and who reasonably expects to exceed that income level in the current calendar year,

(b)  a person of which a majority of the voting securities are beneficially owned by eligible investors or a majority of the directors are eligible investors,

(c) a general partnership of which all of the partners are eligible investors,

(d) a limited partnership of which the majority of the general partners are eligible investors,

(e) a trust or estate in which all of the beneficiaries or a majority of the trustees or executors are eligible investors,

(f) an "accredited investor", as that term is defined in NI 45-106,

(g) a person that us a trustee, executive officer or control person of the Trust, or of an affiliate of the Trust,

(h) a person that is a spouse, parent, grandparent, brother, sister or grandchild of a trustee, executive officer or control person of the Trust, or of an affiliate of the Trust,

(i) a person that is a parent, grandparent, brother, sister, child or grandchild of the spouse of a trustee, executive officer or control person of the Trust or of an affiliate of the Trust,

(j) a person that is a close personal friend of a trustee, executive officer or control person of the Trust or of an affiliate of the Trust,

(k) a person that is a close business associate of a trustee, executive officer or control person of the Trust or of an affiliate of the Trust,

(l) a person that is a founder of the Trust or a spouse, parent, grandparent, brother, sister, child, grandchild, close personal friend or close business associate of a founder of the Trust,

(m) a person that is a parent, grandparent, brother, sister, child or grandchild of a spouse of a founder of the Trust,

(n) a person of which a majority of the voting securities are beneficially owned by, or a majority of the directors are, persons described in paragraphs (g) to (m),

(o) a person that is a trust or estate of which all of the beneficiaries or a majority of the trustees or executors are persons described in paragraphs (g) to (m), or

(p) a person that has obtained advice regarding the suitability of the investment and, if the person is resident in a jurisdiction of Canada, that advice has been obtained from an eligibility adviser.

(3)   An Eligibility Advisor is:

(a)   a person that is registered as an investment dealer or in an equivalent category of registration under the securities legislation of the jurisdiction of a purchaser and authorized to give advice with respect to the type of security being distributed, and

(b)  in Saskatchewan or Manitoba, also means a lawyer who is a practicing member in good standing with a law society of a jurisdiction of Canada or a public accountant who is a member in good standing of an institute or association of chartered accountants, certified general accountants or certified management accountants in a jurisdiction of Canada provided that the lawyer or public accountant does not:

                                                         i.          have a professional, business or personal relationship with the issuer, or any of its directors, executive officers, founders, or control persons, and

                                                       ii.          have acted for or been retained personally or otherwise as an employee, executive officer, director, associate or partner of a person that has acted for or been retained by the issuer or any of its directors, executive officers, founders or control persons within the previous 12 months

(4)   An Accredited Investor is generally an individual who has any ONE of the following:

(a)   net financial assets (5) in excess of $1 million; OR

(b)   net total  assets of  $5 million; OR

(c)   an annual income before taxes, in each of the 2 most recent years, in excess of $200,000 individually, or $300,000 with a spouse. 

The full definition of an Accredited Investor, according to National Instrument 45-106 means

(a) a Canadian financial institution, or a Schedule III bank,

(b) the Business Development Bank of Canada incorporated under the Business Development Bank of Canada Act (Canada),

(c) a subsidiary of any person referred to in paragraphs (a) or (b), if the person owns all of the voting securities of the subsidiary,
except the voting securities required by law to be owned by directors of that subsidiary,

(d) a person registered under the securities legislation of a jurisdiction of Canada as an adviser or dealer, other than a person registered
solely as a limited market dealer under one or both of the Securities Act (Ontario) or the Securities Act (Newfoundland and Labrador),

(e) an individual registered or formerly registered under the securities legislation of a jurisdiction of Canada as a representative of a person referred to in paragraph (d),

(f) the Government of Canada or a jurisdiction of Canada, or any crown corporation, agency or wholly owned entity of the Government of Canada or a jurisdiction of Canada,

(g) a municipality, public board or commission in Canada and a metropolitan community, school board, the Comité de gestion de la taxe scolaire de l’île de Montréal or an intermunicipal management board in Québec;

(h) any national, federal, state, provincial, territorial or municipal government of or in any foreign jurisdiction, or any agency of that government,

(i) a pension fund that is regulated by either the Office of the Superintendent of Financial Institutions (Canada) or a pension commission or similar regulatory authority of a jurisdiction of Canada,

(j) an individual who, either alone or with a spouse, beneficially owns, directly or indirectly, financial assets having an aggregate realizable value that before taxes, but net of any related liabilities, exceeds $1 000 000,

(k) an individual whose net income before taxes exceeded $200 000 in each of the 2 most recent calendar years or whose net income
before taxes combined with that of a spouse exceeded $300 000 in each of the 2 most recent calendar years and who, in either case,
reasonably expects to exceed that net income level in the current calendar year,

(l) an individual who, either alone or with a spouse, has net assets of at least $5 000 000,

(m) a person, other than an individual or investment fund, that has net assets of at least $5 000 000 as shown on its most recently prepared financial statements,

(n) an investment fund that distributes or has distributed its securities only to
(i) a person that is or was an accredited investor at the time of the distribution,
(ii) a person that acquires or acquired securities in the circumstances referred to in sections 2.10 [Minimum amount investment], and 2.19 [Additional investment in investment funds], or
(iii) a person described in paragraph (i) or (ii) that acquires or acquired securities under section 2.18 [Investment fund reinvestment],

(o) an investment fund that distributes or has distributed securities under a prospectus in a jurisdiction of Canada for which the regulator or, in Québec, the securities regulatory authority, has issued a receipt,

(p) a trust company or trust corporation registered or authorized to carry on business under the Trust and Loan Companies Act (Canada) or under comparable legislation in a jurisdiction of Canada or a foreign jurisdiction, acting on behalf of a fully managed account  managed by the trust company or trust corporation, as the case may be,

(q) a person acting on behalf of a fully managed account managed by that person, if that person

(i) is registered or authorized to carry on business as an adviser or the equivalent under the securities legislation of a jurisdiction of Canada or a foreign jurisdiction, and

(ii) in Ontario, is purchasing a security that is not a security of an investment fund;

(r) a registered charity under the Income Tax Act (Canada) that, in regard to the trade, has obtained advice from an eligibility adviser or an adviser registered under the securities legislation of the jurisdiction of the registered charity to give advice on the securities being traded,

(s) an entity organized in a foreign jurisdiction that is analogous to any of the entities referred to in paragraphs (a) to (d) or paragraph (i) in form and function,

(t) a person in respect of which all of the owners of interests, direct,  indirect or beneficial, except the voting securities required by law to be owned by directors, are persons that are accredited investors,

(u) an investment fund that is advised by a person registered as an adviser or a person that is exempt from registration as an adviser, or

(v) a person that is recognized or designated by the securities regulatory authority or, except in Ontario and Québec, the regulator as
(i) an accredited investor, or
(ii) an exempt purchaser in Alberta or British Columbia after this Instrument comes into force;

(5)  "financial assets" means
             (a)   cash,

 

(b)   securities, or 

             (c)   a contract of insurance, deposit or an evidence of a deposit that is not a security for the purposes

                   of securities legislation

Your home and other real estate are not considered part of your "financial assets" for the calculation in (4)(a) but are included in the calculation (4)(b) above.     


Q. Is the REIT currently open for investment?

A. Yes, the REIT has re-opened on September 26, 2016 for a limited time offering of $30M in capacity. To learn more or read the news release, please click here. The REOT, however, remains temporarily capped. To learn more, please click here. 


Q. Where can I find historical returns and monthly Net Asset Values (NAV's) for The Centurion Apartment REIT?

A. You can find historical return charts and graphs along with monthly NAV price information posted on our website here.  REIT Unit prices are also posted to Fundata.com monthly.


Q. How do I invest in Centurion Apartment REIT?

A. Contact us and we will send you the information you need to invest, including the Offering Memorandum, the Declaration of Trust and the Subscription Agreement. You may also invest through an Investment or Financial Advisor.  The REIT is available via FundSERV.  The FundSERV Codes are CEN100 (DSC Class), CEN101 (Low Load Class), CEN 102 (Front Load Class) & CEN 105 (Fee Based).


Q. Are you registered with any securities regulators?

A.  The asset management company of the REIT, Centurion Asset Management Inc. is registered with the securities commissions in Alberta, British Columbia, Quebec and Ontario under the categories of Exempt Market Dealer, Investment Fund Manager and Restricted Portfolio Manager.  In Ontario, you can confirm this on the Ontario Securities Commission (OSC) website by clicking here. Centurion Asset Management Inc., as part of its duties, in cooperation with Centurion Apartment REIT's legal and compliance advisors,  manages the securities compliance issues on behalf of Centurion Apartment REIT.


Q. When was the REIT Established?

A.  The REIT evolved over many years out of an apartment portfolio which has been built up by Centurion since 2003.  This portfolio became part of a growth oriented private apartment investment fund called Centurion Apartment Properties LP ("CAPLP") which was founded in March 2006.  CAPLP was mostly an institutionally oriented investment fund. In 2009, the process of converting this fund into the REIT began. Centurion Apartment REIT  was established by Declaration of Trust on 31 August 2009 with the properties of Centurion Apartment Properties LP becoming the initial portfolio. After the establishment of the Trust, the REIT began to accept subscriptions from qualifying investors to continue its diversification and growth.


Q. Can I borrow to invest?

A. Yes.

Using borrowed money to finance the purchase of securities involves greater risk than a purchase using cash resources only. If you borrow money to purchase securities, your responsibility to repay the loan and pay interest as required by its terms remains the same even if the value of the securities purchased declines. Generally, one should only borrow to invest if:

a) You are comfortable with taking risk.

b) You are comfortable taking on debt to buy investments that may fluctuate in value.

c) You are investing for the long-term.

d) You have a stable income.


Q. How do I Calculate What My Monthly Cash Flow Would Be?

A. Use this formula to calculate your monthly income

              Monthly Income = Amount of Your Investment / Price per Unit x Annual Distributions per Unit / 12

As an example, if you invested $100,000 and the Price per Unit was $11.15 and Annual Distributions per Units was $0.82/annum, your  monthly        income would be:

              $100,000 / $11.15 x $0.82  / 12 = $612.86 which is $7,354.260 per year at the current rate of distribution

Distribution rates depend in part on the performance of the portfolio and may go up as well as down and are not guaranteed.  Please refer to the Offering Memorandum for full details.


Q. Do you have a DRIP (Distribution ReInvestment Plan?

A. Yes we do.  If you choose to receive your distributions in Units rather than cash, you get a 2% discount on the Units purchased this way.


 Q. How will distributions be taxed?

A. REIT cash distributions are generally very tax efficient and in some cases may be tax deferred until you sell your investment, giving you years of tax deferred cash flow and growth. These gains, when realized, will then be capital gains and taxed at the lower capital gains rate.  From 2009 through 2012 inclusive, Centurion Apartment REITs distributions have all been return of capital for tax purposes (Box 42 on your T3 Statement). In 2013 and 2014, return of capital was 90.25% and 83.70% respectively. Please see this article on The Potential for Tax Efficient Investment Growth with REIT Investing


Q. What are the different types of real estate?

A. Click here


Q. How do I get my money back if I want to cash out?

A. There is a monthly redemption window for investors.  See the Offering Memorandum for full details


Q. Will there be capital growth on my investment?

A. An investment in Centurion Apartment REIT is the closest thing to buying apartments directly yourself, but without the hassle.  Over the long term, rents tend to rise with inflation and since investment real estate is valued by its cash flow, capital growth generally follows


Q. Where is the portfolio located?

A. The properties in the portfolio are invested in 17 Canadian communities in 43 separate properties.  You can get a map here.  We will, over time continue to add to the portfolio and diversify our holdings as accretive opportunities become available.


Q. How does condominium investing compare to REIT investing?

Here are two very good articles on this topic:

Macquarie Capital Markets Research on Apartment REIT vs Condo - REITs win!

The Globe and Mail on why buying a REIT is more profitable than a condo


Q. Who audits Centurion Apartment REIT?

A. KPMG LLP


Q. Is my investment CDIC insured or otherwise guaranteed?

A. Centurion Apartment REIT is not a deposit taking institution and the REIT isn't offering a deposit product.  Your investment is not CDIC insured or otherwise guaranteed. The REIT offers qualified investors an opportunity to invest equity in a portfolio of apartment properties. Please refer to the Offering Memorandum for full details.


Q. Is the REIT listed on a stock exchange?

A. Centurion Apartment REIT is not publicly traded on an exchange like a stock.  It is a private REIT which is open only to Qualified Investors via Offering Memorandum.  Click here for a description of the differences between public and private REITs.


Q. I own an apartment building that I'm tired of managing. Can I exchange my building for REIT Units?

A. Yes subject to our standard due diligence process, and agreeing on a fair price, we have a number of options available to owners of apartment buildings that allow them to exchange their building for REIT Units on a tax deferred basis potentially saving or deferring a significant amount of taxes


Q.  Will the REIT enter into joint ventures with other investors?

A. Yes, the REIT will joint venture in some instances with other (typically large) investors on specific property opportunities. This permits the REIT to broaden its portfolio and participate in deals that it may not be possible for the REIT to complete on its own.