Canada’s fixed income solution

Antrim Investments has been in the alternative mortgage space for over 45 years, becoming Canada's biggest asset manager of residential private mortgages. In this webinar, join Will Granleese, Portfolio Manager at Antrim, as he dives into the hows and whats of Canada’s largest residential Mortgage Investment Corporation (MIC). Watch now and gain insight into: • How a mortgage fund earns 6% • Why your investment is safe with Antrim • What happens when interest rises 

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James: [00:00:02] Hello, everyone, and welcome to this special wealth professional webinar in partnership with Antrim Investments. Thanks so much for joining us today. My name is James Burton, managing editor of Wealth Professional Canada. Now, having been in the alternative mortgage space for more than forty five years, Antrim has become Canada's biggest asset manager of residential private mortgages, and its Entry and Balance Mortgage Fund is a flagship part of this legacy. In this webinar, titled Canada's Fixed Income Solution Program, Portfolio Manager at Antrim Willdive into Canada's largest Residential Mortgage Investment Corporation to show firstly how mortgage fund earned six percent, why your investment is safe with Antrim and also what happens when interest rises. So without further ado, I'm delighted to introduce Will. He has extensive experience in both the financial advisory business and mortgage underwriting. He is also a previous Top 40 under 40 B.C. business recipient and past president of the B.C. Mortgage Investment Corporation Managers Association with Association over $3 billion. Please type your questions into the Q&A box as you think of them throughout the presentation. I'll be monitoring them and make sure that the best ones get put to Will, either during the presentation or at the end. So without further ado, over to you Will. Thanks so much.

Will: [00:01:30] Yeah. Thanks, James, and welcome everyone. This is our our first webinar with wealth professionals, so it's it's a real delight to be here and appreciate. Appreciate your time. So what we're going to talk about here this morning is why advisors have been so successful utilizing Antrim over the past ten or twenty years, how the investment works and and some historical performance. We we don't have a huge audience today, so if you have any questions, please just enter them in the question and answer box and I'll get to them during the presentation. We don't need to have things very formal today. This is more of a an introduction to those that haven't used Antrim before. So why are you here? You're here because you're looking for a fixed income solution. You're here because stocks and bonds do not represent a properly diversified portfolio, Antrim's solution is very simple. We operate like a private bank. We have no historical NAV volatility. Last year, we paid six point three percent on our class with daily liquidity. So we offer a product that you can put in your portfolios that that secure the portfolio in the sense that there's no NAV volatility that increase the fixed income yield. In terms of that, six point three percent and basically allow a level of liquidity that is that is very difficult to find in our market. We are set up as medium risk for your KYC at all, at all approved firms. So you should be able to have Antrim with every, with every, every client in your portfolio. We've also I'm proud to say we've been around for for 50 years as of as of this year. So we're not a new player in the market. We're we're one of the oldest players in in the Canadian mortgage market. So how do we do this? Well, we basically offer first and second mortgages. We offer them on one year terms and we offer open terms to all of our borders. Open terms is a banking term. It basically means that people can pay us off whenever they wish with no penalties. The the security we offer is based on the the the loan to value, so we will lend to a maximum of seventy five percent of the value of any particular property. And and we're lending on residential properties only. So there is a number of very well known mortgage pools in Canada that are commercial. But Antrim is the only residential fund meaning lending on townhouse. Regular housing and and condos of of the same size. We we lend a major centres of British Columbia, Alberta and Ontario. So that's that's our that's our business model. We focus on residential properties, not principal. Sorry. And and principal residences, not rental properties. The reason there is because principal residences tend to be much more stable with regards to price than than rental properties, and we focus on properties valued between, say, three hundred and fifty thousand and one point two million. Now, the reason why we we focus on sort of that middle of the market is because again over time, the the property's value between, let's say, three hundred and fifty thousand and one point two million tend to be a lot more stable than properties that are valued at, let's say, five million plus. And and that's why the vast majority of our of our mortgages are on properties that are that have that value. Not to say that we don't lend on more expensive properties. We certainly do. It's just that when we do, our loan to value is restricted. I've told you that our Max loan to value is seventy five percent. The average loan to value in the portfolio is is only 60 percent, so it's a very, very low loan to value. And and the reason why Antrim managing funds for the past, let's say, 25 years, we've never had a single year where we've had a negative rate of return. So the product is is extremely stable, is in the past anyway is 100 percent positive. And again, we're trying to be that fixed income solution for you and your clients. Now we call it a balanced fund because we do take a balanced approach between first mortgages and second mortgages. The asset allocation you can see on your screen is typically three quarters first mortgage and about a quarter of second mortgages. What we've noticed through COVID 19 is that nobody wants second mortgages anymore. I guess the government has paid everyone enough that nobody needs any, any extra cash. And so we're actually quite overweight in first mortgages. At this point in time, we're about eighty five percent first mortgages with the balance in seconds. We are looking to go back to a seventy five twenty five basis. This will increase the yield of the fund and and management is is is very confident with having 25 percent of the portfolio in seconds when when the opportunity exists. So our borrowers who who is who is borrowing at Antrim, at, you know, at six percent plus let's say seven percent, well, they're typically self-employed. That's that sort of 80 percent of our borrowers are self-employed. Some of them have had some credit problems. And we're also dealing with new immigrants and internationals buying Canadian property. They're typically 45 to 60, five years old, so our board, we don't really have anyone under the age of 30 buying properties that are putting down, let's say, twenty five percent. So we tend to deal with sort of the middle aged people that are self-employed. They typically have owned a house for 10 years or more, and they've got substantial equity in that particular property. And why they're coming to Antrim is because the bank has declined their application and most likely, it's due to income qualifications at Antrim. The net worth of our average borrower is much higher than a bank borrower on on average. You know, our our our borrowers own more than one property and the banks have limits. There's only so much they're willing to lend, or only so, so much they're they're willing to lend based on the individual's income. Many people that are self-employed tend to write off, let's say, their tools, their expenses, their everything they can after they've already split income with perhaps a spouse or a business partner. So they tend to show relatively low income based off their net worth. And that's where we come in. You are not going to see Antrim advertised on the paper or the radio. All of our advertising is is directly towards mortgage brokers. Mortgage brokers bring us the vast majority of our applications, as well as we have banking agreements. At this time, we have an agreement with RBC and we have an agreement with CIBC so that if people go to, let's say, an RBC branch and they're declined due to income, but they have more than twenty five percent down, RBC will forward the application to Antrim for us to us to take a look at it. So we really appreciate the banking relationship that we have and and we're looking at calling that going. Going forward, our market share, so how many people really need a private mortgage or aren't approved by the banks? Well, you can see here that about seventy five percent of people in Canada are approved at the banks. Whatever make you deal with, most people are going to be approved. There's another about 12 and a half percent that are approved by the credit union or cast populaire, and we fall in this segment here with three point eight percent. So this is not entirely Antrim, and this is not entirely Mortgage Investment Corporation's, but the MIC, the MIC Group or the Mortgage Investment Corporation Group is somewhere between one and two percent of all Canadian mortgages. So we're we're we're a niche player. However, when you take a look at the size of the Canadian mortgage market, you know, in literally in the trillions of dollars, even that small percentage can lead to a billion dollar industry, which is which is what we've been seeing and and massive growth that our industry is seen. And you know, our industry is as as being very busy since the 1970s, but let's say back in in 2010, 2011 is when we really start to see a take off. And that's after the financial crisis. The banks really restricted their mortgage lending and people like us became became sort of the the new order of the day, and we saw an incredible explosive amount of applications coming to us. And that's primarily because the banks had these mortgage rule changes and they were trying to cool down the property market. They were, they were. They were. The federal government was acting through CMHC, not allowing CMHC to insure mortgage bundles for mortgage securitizations at the bank. And because of that, it really restricted the amount of business that the banks were allowed to do. Because even though the bank may do a mortgage that is not insured or by CMHC, the the the bank still securitized a number of its mortgages that it does have a loan to value of, let's say, less than seventy five percent. So that was a big deal. And it's remained it's remained a big deal to anyone who is, let's say, self-employed or a new immigrant or equity programs. You used to be able to go to the bank. Let's say if you're only looking for 50 percent and let's say you were new to Canada, you just come to Canada from the United Kingdom or India or China, and you want to put down a lot of money and and the bank would approve you. It was that simple, but nowadays, due to the changes of CMHC, it's not that simple, it's it's much more difficult to get a mortgage and it's really helped anyone in in in our space. If we if we take a look at the graph here, we'll see. This in particular is the Greater Vancouver area with Vancouver and then the Fraser Valley. If we look at this graph, we can see average prices of somewhere between, let's say, under a million dollars in the Fraser Valley, getting more expensive as we come closer to downtown Vancouver and our our our advantage here is is that we are more we are we are more aggressive with our loan to values in areas that that are lower priced because we know historically over the past 35 years that prices in the Lower Mainland area are much more stable with regards to price than, let's say, properties in West Vancouver or the west side of Vancouver that can ebb and flow much more with with economic conditions. For example, in West Vancouver, when when when Vancouver entered into COVID 19, we actually saw a drop in prices in in in in the west side of Vancouver. And that's because there was less Chinese buyers actually coming and buying property, whereas in the Lower Mainland area, we didn't notice much of a change at all. Now, more recently, all areas have risen due to the do due to COVID 19. And and but this is generally our business model in in a couple of slides. We're more aggressive on lower prices and we're sort of much more conservative. So we'll only lend, let's say, sixty five percent on more expensive areas. James, what about me answering a couple of Q&A? Is that is that OK?

James: [00:14:44] Absolutely Will. Ok. But if you can, you can you see them or you want me to read them out?

Will: [00:14:50] I can see them. Yeah, so so the first question here from Trevor is how are payments taxed? Ok, so Antrim, there is no chance of a capital gain. With Antrim, you're never going to have a capital gain. Payments are taxed by a T5, so it's interest income. The Mortgage Investment Corporation is is a flow through entity, so we simply flow through all the interest to you. Now, of course, we qualify for RSPs or risps or tax free savings accounts, but you can't really have your cake and eat it too. So. So that is how we're taxed. What is your management fee? Our management fee depends on the on the share class. So for advisors that are working on a trailer basis, the management fee is two percent. Antrim keeps one percent and Antrim forwards on one percent to the advisor. As a trader on our on our F class, Antrim just earns one percent again and we forward on everything to the adviser who takes who takes their their fee. So in a sense, Antrim's MAR or our management fee is about one percent. What is your competitive advantage, what is our competitive advantage? Well, I would say speed of transactions. Um, the mortgage world used to be old school where where, you know, I would be out golfing and I take your application and I'd get back to you after my round. But the world has changed. And mortgage brokers today, just like realtors need to know very, very quickly. So so I would say our competitive advantage is is the framework that we have in our office. Me as as as primary portfolio manager. I see all the applications coming into the office along with Chris Worsnup or other portfolio manager and our underwriting team. And we're able to make very, very quick, very quick approvals and get approvals out the door. I would say on a on a basic application, Antrim would would definitely be the fastest approval in the market. There's that. I would say the secondary competitive advantage we have is the fact that our market pricing is slightly less than our competitors. Now, why is why are our mortgage priced less than our competitors? Because we raised money mostly through Iraq firms. We have agreements with many Iraq firms, and an Iraq adviser or portfolio manager understands the trade off between risk and return. Whereas if you're raising funds through, let's say, the friends and family exemption, your friends and family demand more. They are not willing to typically give you funds unless unless you're paying, let's say, eight percent, whereas an adviser in a properly diversified portfolio is comfortable at earning, let's say, six percent. So I would say that slight pricing advantage, combined with the speed of our applications, allows Antrim to to really rise to the top. These are all questions by Trevor Franklin and Trevor. Thank you for your questions. I'm going. I'm going to read a few more questions here before I before. And Trevor, just ask all these questions. So, Trevor. Here we go. Here's your next one. What is your default rate or default rate is much higher than the banks. Our default rate is is approximately 10 times more than at the bank. But when you take a look at the at the equity that we have or the security that we have in the portfolio, we rarely take losses or at least recently. So let's say on the portfolio right now, our default rate is about a half a percent. So that would mean that a half a percent of all of our mortgages are behind by at least one payment. That compared to the banks at point zero point one percent, so 10 times less are our losses from that because of what's happened in the residential real estate market, prices have increased. Really, we've had no losses for the past three years. However, if we go back in time when interest rates were higher, I would say our average loss would be about a half a percent of the portfolio, so we would take losses on individual mortgages. At the end of the year when when those mortgages are combined with the other 1800 mortgages in the portfolio, we would we would see about a half a percent. Now that was when interest rates were like, let's say, double what they are right now. But just to give you some perspective of how low interest rates are currently and and where our default rate is, our default rate for private lenders would be at the lowest end of the pool. There are private lenders who are willing to lend to much higher loan to values, be much more aggressive than Antrim. And and those people, those people would have a much higher default rate than us because we're rated medium risk for your KYC. It does put a lot of diligence on the type of files that we have. So Antrim tends to lend on people that are just missed out from being bankable. And, you know, they have excellent credit. It's just they can't prove the income. So that's that's where that's where we are.

James: [00:20:53] Will, can I just jump in because I think there's another question, a couple of questions on the chat box as well. In addition to Trevor's excellent work, one type is on on the rating here from Eric DeLong. Do you mind if I read it out to you?

Will: [00:21:06] Please do. Yeah.

James: [00:21:07] So Eric saying my dealership aligned Capital Partners has rated this product as medium high. I inquired with them about this, and they don't plan on rewriting it, citing numbers of development, construction, mortgages being quite high for the current environment. Also, conflict of interest issues with the ownership structure. I really like this product as a fixed fixed income alternative with liquidity, but a medium to high risk rating is a big barrier to using it in my clients accounts. Can you comment on the factors leading my dealership to rate your higher risk and any changes in the future that may allow them to rewrite lower?

Will: [00:21:46] Yeah, well, I really appreciate that insight. I know when we joined the line a number of years ago, it was it was. I heard Medium and I didn't hear the high so much. A number of advisers that Adaline that have taken Antrim and put them into their portfolios, so I don't know. I don't know why the medium high is is restricting you that much from your client portfolios. For example, I know I know a couple of advisers that are putting, let's say, five to 10 percent of all their portfolios in Antrim, and it doesn't seem to be a problem now. The amount of construction mortgages we don't do construction mortgages and the amount of commercial mortgages, we don't do commercial mortgages. So I think maybe after this presentation, if you would like to ask your product group to do a, to do an analysis of Antrim and to potentially reclassify us as as a as a pure, medium risk, I'm not exactly sure the scale at aligned. I thought the fact that it just had medium in it was enough, but clearly it's causing you some issues. So I apologize for that. But I think there's some room to move down to to medium the ownership issues of Antrim. That's an interesting comment. So Antrim Investments is a is a private company. Like most investment companies, we happen to be owned by a family trust. And we're not publicly. We're not publicly traded. I. I can see why why aligned might not like that. But, you know, we've we've just been audited by the B.C. Securities Commission. We've just been audited by by the BC Financial Securities Commission with with no issues. So I don't know the issue that they would have for a company that's been around for 50 years. I think it's a it's a type of conversation that that may be myself and and the the due diligence underwriters at aligned might be able to have for us just to bring you down to a medium. I'm not sure if it goes to medium high and medium low, but but if we could get to a medium to satisfy you, that would be that would be great. Yeah. Any other questions there, James from from the chat? Oh, you're on mute right now, can you unmute yourself? There we go.

James: [00:24:31] Yes. Still doing it anyway. Two more questions to ask before before that you could carry on. I also want to remind everyone we're about to open the first poll question, which is are you currently using even your client investment portfolios? Just a simple yes or no? So that'll be the first that'll be the first question. You see that pop up. So submit your answer. And then beautiful. Well, we'll let you know the results when that's completed, so next question for you, Will is from Corwin. I have clients that are concerned about how this product will stand up if there is a significant housing correction in Canada, how much the housing market drop without impacting liquidity.

Will: [00:25:15] Yeah, OK. I mean, that is an excellent question. Ok. So if you understand the product, a lot of these, a lot of these type risks can be can be can be reduced. So the average loan to value on our portfolio is about 59 to 60 percent. Ok, so during the presentation on this slide, I say we lend to seventy five percent and we do and we do it on a daily basis. But we also get files at twenty five, at thirty five, at forty five percent loan to value. So the average loan to value in the portfolio is about 60 percent, which means we could withstand a sizable a sizable drop in in real estate prices. Am I concerned about real estate prices? Absolutely. I'm concerned, for example, in areas of the Greater Toronto area in areas of Greater Vancouver, we've seen prices increase 30 percent in the past 12 months. Now what do you think that does to our old mortgages that we that we have on our, you know, we have on the books 12 months ago? It makes them extremely safe. Ok, so prices could fall back again to 30 percent. And then we're already at a 40 40 percent loan to value on those. However, files that we're doing today, you know, it makes it makes them more risky. And what we have is we have what's called a sliding scale loan to value. So what it means is the maximum loan to value that we're willing to do on prices. Up to a million dollars is seventy five percent. And then over a million dollars, we reduce our loan to value to 60 percent. That that old tell about, let's say, five million where we just go a blanket across the board about a 50 percent loan to value. So we feel that given the immigration that that the federal government is is going to start up, let's say, this year, next year. We feel that considering the new immigrants that are coming to Canada, they really only want to live in our lending areas, i.e. Greater Vancouver, Greater Toronto. We feel that the economy is is very strong and we feel that interest rates are going to remain at historic lows. Yes, we could see a reversal in in residential real estate prices, but a dramatic reversal something say, 15 percent drop is extremely unlikely at this point in time. Now, if it is, the portfolio is there or we have, we have our mechanisms in place to to to combat that. However, I think the the opportunity or the chance of a large drop in Canadian real estate prices is is is unwarranted at this point in time. If it's there, you know, we we we can deal with it. But but I don't think I don't think it is from a historical standpoint, we lend the same way we did in the 1970s. Ok, so our portfolio has never had a negative rate of return. I tell people, if your answer has a negative rate of return, you're not going to be phoning me, you're going to be where you're going to be worried about something else in your portfolio because it's going to take a much larger loss than us. So again, Antrim is not meant to be the one product solution. It's meant to be, let's say, a five or 10 percent of the entire portfolio, a nice portion that your clients can not not receive any portfolio volatility on. For example, during COVID 19 or our breakthrough COVID 19, we offered a daily liquidity with with a one dollar par value rate during the Ukraine crisis. We've offered exactly the same thing, so it's something very stable. And I think if you understand what we're lending on, which is not the high end real estate, it's not commercial real estate. We've seen a few cracks in commercial real estate over the past year. We've seen we've seen a few commercial real estate funds lock up, which means not not not provide redemptions on a daily basis. Antrim has absolutely never done that. And the reason is is because we have more mortgages and the duration of our portfolio is much less so the the the duration on our portfolio is about seven months. That's that's compared to a multi-year duration in a in a commercial mortgage mortgage pool. So yeah, we can talk about that later in in the Q&A. But James, do you mind if I jump to the slides now and and before?

James: [00:30:31] Yeah, absolutely. We can come back for some more questions then a bit later. All right, thanks.

Will: [00:30:36] Yeah. Yeah. So so those are excellent questions. But moving, moving on on on on the presentation, we talked a little bit about interest rates. Now these are the current interest rates that we're charging our clients. If you come to us and you're looking for a mortgage for something less than 60, 60 percent loan to value. We're going to charge you six point forty nine percent. Now that sounds high. And it is. However, it is fully open, which means let's say you've got a condo that is that you agreed to purchase years ago. It's come up now. You've got to close on it. And the bank says, sorry, we can't lend you any more money. We've lent you enough. Well, in that particular case, you can come to natural. You can get this mortgage for, let's say, six point four, nine percent and you can hold on to that deposit. Maybe you've given them fifty thousand, maybe you've given them one hundred thousand. There's no risk or chance of losing that deposit. And if you decide to flip your unit, maybe you only have the mortgage with us for two months. Or maybe you decide this is a great investment. I'm just going to hold it and I'm going to rent it out. Then then then we then we'll go that way as well. So at seventy five percent loan to value today, if you came to Antrim, you'd be paying six point nine five percent for second mortgages. For 60 percent, you'd be paying eight point forty nine sixty five eight point forty nine and at seventy five percent, which we don't actually do any seconds at seventy five percent right now. But based on our our our pricing schedule, you'd be paying ten point four nine percent. So how we actually create our line, how we actually create our the payout is very is very simple. We simply take the the average mortgage rate and take off our fees, take off our trailers that we pay. And that's what that's what the client gets. Now, just to add some context to where these interest rates come from. If if we look back at the financial crisis back in, say, 2008 2009, the Green Line represents mortgage applications. And if you can remember, similar to the start of COVID, the bank stopped lending only to their best clients. The absolute top of the top people were actually getting mortgages. Everybody else was told, Sorry, we don't have money right now, so people still had to move. People still needed mortgages. People still were completing on on properties that they had agreed to purchase. Previous. So the amount of applications Antrim received really increased at the same point in time. We only have money to lend if we're provided funds from advisers. So at the same point in time, the funds we had actually dropped off because, you know, the world is ending and there's a new crisis and we're not seeing a lot of new deposits. So we don't have a lot of money available to lend and we have got nothing but applications. So what we said to our mortgage brokers is exactly what we're saying to them right now. I'm sorry if you want the funds. There's going to be a bidding process and our rates increased. Our rates actually increased so much during the financial crisis that we actually ended up paying 10 percent. I think it was in 2009, our investors actually earned 10 percent rate of return. So in a typical recession Antrim is where you want to go for earning a higher rate of return. This recession that we've seen through COVID 19 is unlike anything we've ever seen before. The amount of quantitative easing, the pressure on the banking system, the the amount of liquidity that's being pumped into individual hands is unlike anything we've ever seen. So during this particular crisis, we've actually seen a reduction in rates. So it's it's operated very differently than normal. But just as a note to everyone on the phone, you can see this is typically where our weighted average rate on the portfolio is. So we were sort of in the nine percent range, let's say, through twenty twenty twelve post post the financial crisis, interest rates fell off. They bottomed out for us around twenty sixteen. Started increasing and then COVID 19 hit, and I thought, I've got a specific slide for what's for what's happened recently, but that's typically our weighted average rating on a portfolio. The composition of the portfolio is exceptional at this point in time. Ninety nine percent of the mortgages are paying as agreed. Less than one one percent are experiencing delinquency. And I know during the early days of the financial crisis during during the COVID 19, advisers were phoning me saying, Hey, will. What are you seeing on the portfolio? What's going on? And we tell them, you know, everyone's making their payment. No one's defaulting. And I said, I can't see us operating in a vacuum here. I think everyone else is in the same position. And sure enough, through COVID 19, the banks have shown exactly that, that the fear that was that people were not going to make their payments. Well, you know what? The host just became much more valuable to people than than it was in the past. And not only that, prices tend to increase. So, so really, at this point in time, I would say at twenty twenty two, I would say it's an excellent time to be joining Antrim because of the security that we have. The question, you know, have you ever seen a loss? Well, no, we've never seen a loss. And honestly, with the way people are paying at this point in time, there's I don't want to say no chance, but there's very, very little chance that at this point in time, we're going to experience any potential, any potential losses. The downside of this market is that we have had to follow the the the credit and the interest interest amounts of our of our competitors. We don't operate in a vacuum. Our world is becoming more competitive every day and we've had to reduce our interest amounts. You know, it's hard for us to charge 10 percent when you can go to a bank and you can get a five year term at under two percent. So yes, clients are very secure. The portfolio is arguably more secure than it's ever been today. However, you're not being paid as much. Like I say, last year, the the class paid six point three percent and we're expecting a slightly lower rate of return this particular year in in twenty twenty two. I'll come to that in a second.

Will: [00:37:27] So for those of you that are perhaps invested in Trez Capital or a few other well-known mortgage investment corporations, this graph is the complete opposite. So with Antrim, you're investing in smaller loans. Our average mortgage size is about four hundred and twenty thousand. Now, not to say we don't do multimillion dollar loans, but they're a much smaller portion of the portfolio. So the the most amount of loans we have would say are under five hundred thousand. Yes, we do two and a half million dollar loans, but they're but they're relatively relatively small in terms of the overall portfolio and with a portfolio of of of over 1800 mortgage loans. The the the security and the diversification that we have is is absolutely second to none in anywhere in Canada. So our top portfolio holdings are a small percentage. The largest mortgage we don't is less than one percent of the portfolio. The the the average mortgage is is zero point one five percent of the portfolio. So it's a very, very diversified portfolio. Before I go on to some funding examples and this is actually really quite interesting, we'll talk about a few files that we've done. Maybe James a chance to answer a few more questions if there's been a few more questions that are that have popped up. Is there any?

[00:38:53] There was definitely some that we didn't get to last time. So let's just roll back a little bit one from Paul here. If you had credit issues with clients affected by floods and fire and B.C. weren't able to be insured because of their risk location. Do you consider this in your underwriting?

Will: [00:39:14] Yeah, very, very good question. We haven't. And the purpose or the reason is because the majority of the flooding that happened in the Greater Vancouver area happened in a rural area of Abbotsford. Now, Abbotsford is a generally a rural area, but this is this is a farming area in Abbotsford, so we don't lend on any. We don't lend on any farms that are actually you earn your income from the farm. So let's say a blueberry farm or anything with a crop value. The only quote unquote farm that we would lend on would be, let's say, South Langley, South Surrey, where it's more of an estate property. It's a five or 10 acre piece with a big large house on it. So no, we have. Had any exposure to that, the fires are predominantly in smaller centres in the interior of British Columbia. The towns aren't large enough for us to lend in the other area of of water damage was in merit, which is a relatively small town which we don't really lend in. And I'll tell you the reason why, because small towns, let's let's say there is a pulp mill in the town and the pulp mill decides to shut down due to world prices. Well, you might have had a mortgage in that town that was only 50 percent loan to value, and now nobody has any work. You know, you can't sell the house for love or money, so we just don't deal in small towns anymore. You know, we'll let other people in our market go ahead and let. So suffice to say, no losses due to fire, no losses to due to flooding. But yes, absolutely. They're on our mind and part of the reason why we haven't taken any losses. Maybe another question Is there another one?

Will: [00:41:05] Yeah, yeah, sure. One here from Crucell announced it, right? Can you expand more on daily liquidity?

Will: [00:41:12] Ok. Interesting. So Antrim offers daily liquidity, meaning we redeem on a daily basis over fund serve. Now that is a best efforts. We're not. We're not held to doing daily liquidity. Antrim is is offered by an offering memorandum. That's how we're allowed to keep our share price stable at a dollar. And if we needed to gate the fund, we would. Having said that, in the past, funds that have gated have suffered liquidity going forward, so we never want to gate our fund. We feel very comfortable with doing the daily redemptions. We have a large line of credit. We have $100 million line of credit that's being given to us by a syndication of TD Bank and RBC Bank, and that hundred million is available for four redemptions for funding, mortgages or whatever we really require. So. So yeah, so so the the short answer is we're not we're not required to redeem daily, according to our offering documents. However, it's it's not a difficult thing for us to do, and we've been offering daily liquidity for the past for the past, I guess twenty five years. So hopefully the financial crisis, hopefully COVID 19, hopefully there's not something that's worse than that. But if there was, then we would have to gate the fund. We would only do it for a for a very short period until we thought that liquidity was available, but there would certainly be no no losses to the investor. That's a very good question.

James: [00:43:04] We do have another poll. I wonder if we we should open that up and then we will approach you. Perhaps you could talk to it. You know, the poll is do investors need to be accredited to purchase shares in the Antrim Balance Mortgage Fund? So maybe if we put that poll up there and see see what we get and then you can you can give us the answer, right?

Will: [00:43:26] So I'll just run through the next couple of slides because it looks like we're forty two minutes into our presentation and I just want to finish the presentation today. It won't be a problem, but after I do this, then I will answer that question. So here's here's a few examples of of mortgages that we've done over the past year. This particular property is in Chilliwack, and what ended up happening is that the husband on this particular property was diagnosed with a disease, and he and he couldn't work. So the payments stopped because the income into the house really shriveled up and they needed someone to pay out the local credit union. So it was a very low loan to value. It was only about twenty five percent of the House House's value and Antrim came in, provided that the husband, thank goodness, has actually recovered from his illness. And so we're expecting them to go back to the credit union sometime over the next six months. So there's a relatively short term mortgage that Antrim does from from from time to time. The next file here this House is in is in Delta, British Columbia. This particular property was purchased as a revenue property for someone who owns a number of car car mechanic centers, not a not a Jiffy Lube, but something similar to that. And so they make all this money. They want to reinvest their funds and buy property. And the bank said, You know what? You just can't prove that you can make the mortgage payment. So they came to Antrim and that was for a first mortgage. I believe it was around six point ninety five percent and really a property in Surrey or Delta. A nice lot. You can't, can't go too far from there. This property is is a house in Surrey. I forget the borrowers in this particular case, but I think it was a purchase and I think it was just a rental property that somebody was buying and and they came to Antrim because they had already owned a number of rental properties and we were able to help them out. This property is in is just north of Toronto. This property was interesting and this is during COVID 19. The husband and the wife worked for an auto parts manufacturer, and both of them actually lost their jobs during COVID 19, so they didn't have any money coming in. Couldn't make the mortgage payment, and they came to Antrim again like a 50 percent loan to value. So we let them the funds, and I believe they're both working again right now. So this one should be relatively short term in nature. They should should have us paid up fairly quickly on that one as well. This property is in, it's in Toronto as well. This was purchased by a Chinese family coming to Canada. They wanted their children to go to a Canadian university, and they had no credit in Canada and they had no income in Canada. So the bank said no, but they had a lot of a lot of cash that they brought in. So. So we were able to help them out with with with the purchase this one will have for a longer period of time. This one we might have for several years before they become become bankable. And that's something else that people listening to the presentation should understand that that we do like to people that have no credit. So if you come from, let's say, India or China or or the United Kingdom or not the United States, but some other area, you're not going to have a credit rating, the type that the banks actually utilize. So it can be very difficult for some people to get to get a mortgage if they're if they're coming to Canada from other areas. This property here was in Oakville, this house just outside Toronto, and this one we refinanced an existing private lender, so someone like Antrim. But it was an individual person and they were up for renewal. And the mortgage broker brought it to us and said, Hey, you know what, you guys are willing to to lend on this at a slightly lower rate and which we did and we we refinanced that, that property. I think I think that's about it. Now the the the answer to the question, does answer require people to be accredited? No, we don't. You do not need to be accredited. This is not a ultra high risk product. So all of your clients, assuming we have the aligned question that it was medium high. I'm not exactly sure what a medium high, how much medium high you can have, but but the product should be available to virtually all of your clients. So that's that's the answer to that. Projected rate of return. Ok, Series B is our trailer. So we we earn in the fund. Assuming, let's say, eighty seven percent first mortgages and 13 percent seconds. We earn, let's say, somewhere around seven point three percent. We take off an estimate for around zero point three percent for loan losses. We take off our management fee, which is two percent. So you get one percent, we get one percent. We share we share the fee, essentially. And we end up with a rate of return. This is an approximation for this year. At five percent last year, that was a little bit higher. But we think twenty twenty two is going to be the going to be the dip in the bottom before we see interest rates going up. The next graph is of our our class, which is growing in popularity. The only difference in this is our management fee, so we take one percent. That's sort of the bare minimum we need to to run the fund and then we pass on to yourself. Six point one percent. And then and then your then your fees come on top of that. Now, in non-registered funds, the management fee is is tax deductible. So that's another benefit, obviously of the cost. So this is what this is, what a graph looks like when you invest with Antrim over the long term, this this woman goes back to two thousand eight. But we could go back to the early nineteen nineties, you know, when we were making thirteen percent in some given years, that's what a graph looks like. When you take no losses, every year is positive. You know, we're not making 30 percent or 20 percent like you might see on your on your fixed thing or you on your your TSX or or any of your equities. However, a positive return annually is extremely powerful over the long term. You can see our one year, three year, five year, 10 year since inception. Everything right now is actually in the six percent range. So very, very steady paying out quarterly dividends to you. And this is this is interesting. So this shows this goes back to say 2008 Antrim and the TSX and the Canadian, the Canadian Bond Index. So if we compare Antrim to the Toronto Stock Exchange, you can see that it looks like in two thousand eight. So the stock exchange suffers from the financial crisis comes back up. Great. Ok, we're the same. And then Antrim is basically our our annualized rate is more than the Toronto Stock Exchange, right until very recently where we see the the TSX at at all time highs. So from a client standpoint, I mean, where would you rather be? You know, every night with with no NAV volatility in Antrim or at a lower amount with with this volatility in the stock exchange now the bond, the TD Canadian Bond Index, unfortunately, I don't think this graph does it true justice because in the early days when when interest rates were falling, the the bonds were doing very well. It's just it's just we were doing very well at the same time. But suffice to say, we've we've we've beaten the TD Canadian Bond Index and of course, you know, when interest rates or when the coupon rate goes down to, let's say, one percent and you're potentially dealing with a an increase in interest rates, well, why would anybody own a Canadian bond, right? And so that is that is really at this point in time of the cycle, why you would want to get into Antrim because as interest rates increase on an annualized basis, we charge our borrowers more. So the inverse relationship and I should have said this earlier, but the inverse relationship between price and yields does not exist with Antrim on an annualized basis. We reset the the the mortgage interest rate. And so if interest rates increase, you end up earning more with interest. If interest rates decrease, you end up earning less, but you don't have that inverse relationship. And potentially if there's some questions on that, I can, I can answer that. But that is a very, very powerful tool that we have at Antrim. So this right now on our class is what we're paying. We're paying five point seventy five in January, April, July and October. Now we also pay what's called a top up dividend, and that is a little bit extra that we pay and we pay. We pay the extra in September because we're one hundred percent flow through. So we pay a regular quarterly dividend. And then whatever extra we've earned, we we pay that out to investors in in September. This is showing Antrim's rate of return. Comparing it somewhat to a government of Canada bond this year is the Government of Canada two year bond and you can see we basically earn the Government of Canada. Plus, let's say four or five percent is basically. Basically, what we're what we're earning. And from a mean variance standpoint, this work was done some time ago. But we do mention some large, large companies Atrium Firm Capital, Timber Creek, McCann. These can all be found on the Toronto Stock Exchange. There are commercial mortgage lenders, so you can see Antrim's expected rate of return is a little bit less than these commercial funds. But our our annual volatility is now. This is with regards to not not NAV, but our payout. So our annual return is so much less with regards to risk, so it just showing the risk in return there. Again, this is showing a more generalized risk between the Dow and the Toronto Stock Exchange, and you can see that Antrim over time because interest rates weren't as low as they are right now over time. So so during 2000 to twenty six, Antrim earned just under nine percent, with six times less annual volatility than the annual rate of return of the Dow of the Toronto Stock Exchange. Tax treatment we talked about, which is five interest income, of course, where RSP eligible and we're looking for clients with, let's say, a three year time horizon. Yes, the fund is you can redeem from us at any time. However, we don't want advisers using our fund as a as as a as a six percent money market fund. Are borrowers tend to use the money for about three years before they go back to the bank. So we'd like to be part of that medium term horizon request for for for for shareholders. And yeah, so to finish off the presentation, I just like to, you know, put put the presentation or the question back to you. You need a fixed income solution that's not correlated with traditional asset classes, right? I mean, who would have thought that we would have seen what's happened here in Ukraine? Who would have thought that we would have seen what's happened with COVID 19? And who would have thought what's going to come up in the next six months, five years, 10 years? So by having tantrum, it's something that the clients can't obtain on their own. We don't advertise the general public it's typically sold through through financial advisers. And and and having that piece of the puzzle something that clients can't get, let's say, on a bank branch, but something they can get with an independent Iraq investment dealer really, really puts forward your the value proposition that that that you provide. So. So yeah, so that's that's that and I think we've got any more questions you can go on to our website. This is an investment scam. Here we are opening up the Toronto Stock Exchange. That was a tremendous mortgage fund is also available on the Toronto Stock Exchange NAVex platform. And we have no we have no security, no narrative volatility there as well. But I can talk about that and a little bit as well. But yeah, we've got our fund profile research fund facts, everything you need to know about, about investing in natural. You can, of course, give me a call whenever you wish. Just give me a call or email me [email protected] and I think James, that's about it, unless we've got some more questions for potentially. You've got to I mean, you've got unmute yourself again. There we go.

James: [00:57:33] Sorry about that. So we do have a few more questions, but I'm conscious of time. You have a few minutes left. Let's see if we can do them like quick fire. But obviously you've just given out your your email address there we can afford on any questions that don't get answer to. Is there a minimum transaction amount or maximum transaction frequency since you mentioned you don't want to be a six percent money market fund?

Will: [00:57:57] Right, right. Well, no one really starts investing with Antrim, you know, without having a conversation with myself. And during that point in time, I'll make sure that we're on the same page that you're not using us for for a money market fund. Now, if you put if you put five or 10 percent of three hundred clients into Antrim. You know, from time to time, you can use us, you can use us like a money market fund, but but we can have that conversation and and and and as far as minimums, there is no minimum. As far as maximums, you know, if you want to put if you want to give us, let's say, five million or 10 million, I may, depending on the volume that we're getting, I may ask you to tranche that twice over two months. But in general, we don't come across that very often.

James: [00:58:55] I lost one heck of a time for one more. Could you please clarify the investor requirement is if everyone or the eligible investor criteria has to be met?

Will: [00:59:06] It's for everyone so long as they come to Antrim via a licensed adviser. You know, we only use advisors, so as long as you're an adviser, then you meet the qualifications to buy Antrim. So it's not as if it's not as if the clients have to have anything special. Now there's some limits. So a client can only buy 100000 per year of Antrim in the province of Ontario if they're not accredited, if they're accredited, they can buy as much as they want. British Columbia doesn't have that restriction, so there's there's a few little minute details. And when you when you contact our office, you talk to myself or you talk to the dean. We'll deal with the province that you're dealing with and we'll sort things out. But in general in general, no, there's there's no restrictions and anyone can. Anyone can buy.

James: [01:00:03] Marvelous. All right. Well, listen, thank you so much. I appreciate all the questions that the audience over apologies that we missed a couple out, but I do encourage you to get in touch with well via the channel, as he mentioned, to get any info you might need. Well, thank you so much for your time and insight. That was a great presentation.

Will: [01:00:20] Yeah, OK, I appreciate it. Thank you very much, James. Thank you.

James: [01:00:24] Yeah. Once again, thanks everyone for attending and have a wonderful rest of your day. All the best.