Soteria operates a wholesale managed investment scheme which gives Accredited Investors the opportunity to invest in the commercial real estate market. Soteria works with corporate lenders (‘Loan Originators’) who typically make loans (“Loans”) to borrowers (“Borrowers”) in the commercial real estate and real estate development markets. Our Loan Originators are typically family offices or private funds, and not banks or other mainstream lending institutions. By participating in the Programme, Loan Originators can access liquidity that is not available to them through traditional banks.
We create one or more Pools for each Loan Originator. Each Pool will be created in respect of one or more of the Loan Originator’s Loans. You can invest money into a Pool, and your investment will be used by Soteria to acquire a corresponding principal amount of the Loans in that Pool. Each Pool will mature at its stated maturity date or when all Loans in that Pool are repaid.
Each Pool will earn interest. The interest rate will be specified in the Pool Conditions. For the period of your investment, you should expect to receive interest on the amount of capital you have invested. Your investment will continue until the earlier of the date that all Loans in a Pool have been repaid and the Pool maturity date (if any) specified in the Pool Conditions (the “Investment Period”). At the end of the Investment Period you should expect to have your capital returned to you.
However, there is no guarantee that you will receive full repayment of your interest and capital at the end of the Investment Period. If there is a credit issue with one or more of the Loans in a Pool, it may take longer to get funds back and the Investment Period may need to be extended. The Pool’s recourse is typically only to the amount recoverable from the Loans. If a Borrower is unable to repay a Loan, then this will negatively affect the net asset value of the Pool. While Soteria will be usually able to take enforcement action against the Borrower under the Loans, in such circumstances you may not receive all or any of the interest owed to you or repayment of your capital*.
Each Loan accepted onto our platform will have a Loan-to-Value ratio of less than 85% at the time accepted onto the Platform. Our Loan Originators are required to continue to hold at least 10% of the principal amount of each of their Loans (“Residual Interest”). All amounts collected on the Loans are collected by Soteria, and the Loan Originators have agreed to subordinate their claims to such amounts until investors have received repayment of their capital and interest in full. The combination of a robust LTV ratio and the Loan Originators’ subordinated Residual Interests are intended to give investors a degree of protection against downside scenarios.
Investments into a Pool may be used to acquire existing Loans of a Loan Originator or to make new Loans. The purpose will be described in the Investor Information accompanying each Pool. Where a Loan Originator wants certainty of funding (eg. to fund a Borrower to make an acquisition or to meet monthly drawdowns under a development loan), Soteria may agree to underwrite all or part of a Loan. It will do this by making a separate loan to the Loan Originator (a “Liquidity Loan") with the expectation that the Liquidity Loan will be repaid by the Loan Originator from future investments by Investors into the relevant Pool. In this circumstance, Soteria will be entitled to repayment of its Liquidity Loan before investors receive their interest payments or repayment of capital. If this is applicable, it will be described in the Pool Conditions.
Each Pool is constituted as a separate unit trust created under our Master Trust Deed for the Programme. Each Pool also has a set of Pool Conditions which sets out the key terms of that particular Pool. Soteria is the manager and trustee of the Programme (and each Pool). The Loans are acquired under a Loan Purchase Agreement entered into between Soteria (as trustee) and the Loan Originator.
Copies of the Master Trust Deed, Pool Conditions and Loan Purchase Agreements are available on the platform for Accredited Investors only.
Managing the Loans day-to-day
The Loan Originator (or one of its affiliates) will be responsible for servicing each of the Loans in its Pool. This means that the Loan Originator is responsible for managing the relationship with each Borrower and monitoring that the Borrowers meet their obligations under the relevant Loan agreements.
The Loan Originator will provide investors with periodic reports on the Loans as well as other information received from Borrowers through the Platform. Soteria will not review this information prior to its distribution on the Platform and is not responsible for the content of this information.
Loans may amortise over time or be repaid early by Borrowers in accordance with the terms of their Loan agreements. As a result, Soteria may receive returns of Loan principal from time to time prior to the end of the Investment Period. Soteria may elect, in its discretion to repay these amounts to Investors early, or hold such funds until the end of the Investment Period.
The Loan Originators will instruct their Borrowers to pay all amounts under their Loans to a Soteria collection account. Soteria will then manage the distribution of those amounts to investors in accordance with the terms of the applicable Pool Conditions, Master Trust Deed and applicable Loan Purchase Agreement.
If there is a credit issue with any Borrower, it is Soteria’s expectation that the Loan Originator will manage the potential remediation of that issue. However, Soteria will direct the Loan Originator on how to proceed with remediation and will control decisions on taking any enforcement action. The Loan Originator is required to act in accordance with Soteria’s instructions in this regard.
Soteria also has the right to replace the Loan Originator as servicer of the Loans, including in the context of any enforcement action.
Investor Information and Confidentiality
Information regarding investments is categorised on the Platform as public or confidential Information.
Public information is information about a Pool that anyone can view, meaning you do not need to be a Soteria Accredited Investor to view it. This information includes high level information such as the loan amount, interest rate to senior investors, Loan-to-Value ratio (LVR), etc.
Confidential information contains more detailed and commercially sensitive information about a Pool. This includes confidential information of Loan Originators and Borrowers, such as financial and operating metrics, asset valuations and specific terms of the Loans. To view confidential information, you must be a Soteria Accredited Investor by completing our on-boarding process. As part of that on-boarding process you will have agreed to our Platform Terms and Conditions which will require you to keep this information confidential. See Platform Terms and Conditions.
Our goal at Soteria is to create a more transparent lending platform for investors. Help us by honoring your confidentiality obligations. You can then get more valuable information about the loans and feel more confident when investing.
What are the risks of investing in the Programme?
Like any investment, there are risks in making an investment through the Platform which may result in you not receiving the return you expected when making your investment.
We hold all of your investments on trust for you subject to the terms of the Master Trust Deed. Investors’ cash is held in a trust account separate from our operating accounts.
See our Risk Statement here for further information.
Your investment, and any returns you receive may be subject to the tax laws of New Zealand and other jurisdictions. We do not provide any tax advice. You are solely responsible for understanding how your activities in relation to the Platform will be taxed under the laws applicable to you. If you do not have a tax advisor then please contact us at email@example.com and we can recommend some for you to choose from.
We will withhold from payments due to you any amounts that we are required to withhold by law, including on account of any withholding tax or similar levy.
Certain of our Pools may qualify to be taxed as Portfolio Investment Entities (PIEs) for New Zealand tax purposes. If a Pool is a PIE, additional controls on withdrawals and transfers may apply to ensure that the Pool maintains its PIE status. These controls and the risks related to them, will be specified in the Pool Conditions.
Investments in Pools are investments in unit trusts managed by Soteria NZ and are only available to wholesale (or other qualifying) investors in New Zealand or other jurisdictions where we are legally able to offer them. Soteria NZ is not a licensed managed investment scheme manager and offers of units are not “regulated offers” in New Zealand. Investments involve risk (see our Risk Statement) and returns are not guaranteed. We encourage you to invest carefully and obtain independent advice (including tax advice). We do not provide financial advice.
Wholesale and Eligible Investors are defined in law and, broadly speaking, are people or organisations who have sufficient previous investing experience or financial wealth that means they don't require
disclosure or the full legal protection provided to retail investors. The term
Wholesale and Eligible Investor is explained on the FMA website.