Because we are using a crowdfunding platform (Collinson Crowdfunding) to raise funds under the Offer, we are obliged to provide a warning statement about the risks associated with equity crowdfunding and the Offer.
This document has been prepared by OHC1 Limited. The purpose of this document is in relation to the OHC1 Limited share offer on Collinson Crowdfunding. Collinson Crowdfunding is licenced and regulated by the Financial Markets Authority, and this public share offer made by OHC1 Limited will only be available through the Collinson Crowdfunding website. This version of the Information Memorandum was updated on the 28th, March 2021.
Warning statement about crowdfunding
Equity crowdfunding is risky. Issuers (companies issuing shares) using Collinson Crowdfunding ’s facility include new or rapidly growing ventures. Investment in these types of businesses is very speculative and carries high risks. You may lose your entire investment and must be in a position to bear this risk without undue hardship. New Zealand law normally requires people who offer financial products to give information to investors before they invest. This requires those offering financial products to have disclosed information that is important for investors to make an informed decision. The usual rules do not apply to offers by issuers using Collinson Crowdfunding to raise funds. As a result, you may not be given all the information usually required. You will also have fewer other legal protections for this investment. Ask questions, read all information given carefully, and seek independent financial advice before committing yourself to any investment.
This Information Memorandum contains certain forward-looking statements. A forward-looking statement is a statement that does not relate to historical facts and events. The forward-looking statements are based on analyses or forecasts of future results and estimates of amounts not yet determinable or foreseeable. These statements appear in a number of places in this Information Memorandum and include statements regarding OHC1’s intent, belief or current expectations with respect to OHC1’s financial position, business strategies, plans and prospects and future prospects of the industry.
In many cases, but not all, forward-looking statements can be identified by forward-looking terms such as “aim”, “believe”, “could”, “estimate”, “expect”, “forecast”, “intend”, “may”, “might”, “outlook”, “plan”, “possibility”, “potential”, “probably”, “project”, “risk”, “seek”, “should”, “target”, “will” and other such similar terms. These forward-looking statements are based on current estimates, assumptions and the like that OHC1 makes to the best of its present knowledge and are subject to risks, uncertainties and such assumptions. Should one or more of these risks or uncertainties materialise, or should underlying assumptions prove incorrect, OHC1’s actual results may vary materially from those forward-looking statements. Potential risks and uncertainties include, but are not limited to, those outlined under Section 1.5 (Key Risks).
1. OFFER DETAILS AND KEY RISKS
This is an Offer for Shares in OHC1 Limited (OHC1), an Opoly Holding Company. OHC1 intends to invest in an individual residential property. Shares give you a stake in the ownership of OHC1. You may receive a return from Net Rental Distributions the company accrues. It is intended these distributions will paid in the form of a quarterly dividend.
In the event the underlying asset owned by OHC1 increases in value, you may be able to redeem your Shares at a higher price than you paid for them, upon 3 years from the Offer Close Date. This involves Shareholders receiving the return of their capital plus any potential gain on sale and surplus funds in the company (if any), by electronic bank transfer.
By investing in OHC1 Limited, you are reliant on the operational decisions of the Manager and returns from the property that OHC1 Limited has invested in. As with any investment, there is a risk that you may lose some or all of your investment.
OHC1 intends to acquire the residential property – located at 4/338 Ponsonby Road, Ponsonby, Auckland, 1011. Further details about the propertyare set out in Section 3.
The Manager will aim to enhance the reliability of Net Rental Distributions and arrange the resale of the property upon 3 years from the Offer Close Date.
OHC1 Limited will be managed by Opoly Limited (or the Manager). Further details about the Manager are set out in the Management Agreement available on the Collinson Platform in the Offer Details section.
The purpose of this Offer is to raise capital ($1,100,000) to enable OHC1 Limited to purchase 4/338 Ponsonby Road, Ponsonby, Auckland, 1011.
This Offer Close Date is 28 April 2021, or earlier if the Manager determines sufficient capital has been raised.
1.2 KEY TERMS OF OFFER
The timetable above is indicative only and the dates may change. In particular, Opoly Limited reserves the right to close the Offer at any time prior to the offer closing date without prior notice.
This information is a summary only of terms in the Subscription Agreement provided with this Offer. The Offer is made under the Subscription Agreement and is subject to the attached Shareholder Resolutions, OHC1 Company Constitution and Management Agreement. We recommend you read these documents before subscribing for any shares under this Offer.
1.3 HOW YOU CAN GET YOUR MONEY OUT
Opoly Limited (Manager) intends to arrange the resale of the property 3 years following the Offer Close Date (April 28th, 2021) via an auction. Each shareholder will receive the return of their capital plus any potential gain on sale, depending on what the property sells for at auction, in the event the Reserve Price is met or exceeded. However, there is no guarantee that you will be able to exit your investment at this time, or at what Share Price.
1.4 PROPOSED RESALE OF THE PROPERTY
Three years after the purchase of the property, the Company intends to sell the property by way of an auction. The Company intends the auction to have a reserve price of $1,255,000. If the auction does not reach that reserve price, the Company intends to continue deferring the sale for 12 months until it does. For more details, please refer to the Shareholder Resolutions attached to the Subscription Agreement available on the Collinson Crowdfunding Platform in the Offer Details section.
1.5 WHAT ARE THE KEY RISKS?
2. LETTER FROM OHC1 DIRECTOR
3.1 PROPERTY DETAILS – 4 / 338 PONSONBY ROAD
This executive 2-bedroom apartment capitalises on the best of its pivotal location and casts a sharp point of difference with water and city views.
On the first floor, an open kitchen, living and dining create a relaxed environment to timeout in or entertain, where the smooth transition to the balcony unites with harbour and urban views that will undoubtedly elevate any moment of impromptu gatherings. The separate guest bathroom and utility/laundry room complete first floor living. Catching the sunrise and sunset, the private balcony off the main bedroom provides sanctuary after a long day and is accompanied by the main bathroom and second well-appointed bedroom. A distinguishing inner-city feature are two secured car parks and additional storage locker.
Ponsonby is an inner-city suburb of Auckland located 2km west of the Auckland CBD, in the North Island of New Zealand. The borders of Ponsonby are often seen as being rather fluid, taking in St Mary's Bay and Herne Bay to the north and including Freemans Bay to the east and Grey Lynn to the south - Ponsonby is properly bounded by Jervois Road to the North and Richmond Road to the south but extends down Ponsonby road all the way to the Karangahape road.
“The suburb is oriented along a ridge running north–south, which is followed by the main street of the suburb, Ponsonby Road. A predominantly upper-middle class residential suburb, Ponsonby today is also known in Auckland for its dining and shopping establishments – many restaurants, cafes, art galleries, up-market shops and nightclubs are located along Ponsonby Road.”
3.3 SUBURB-MARKET OVERVIEW
From Jan 2000 – Dec 2020, the average historical capital growth rate of properties in Ponsonby, grew at an annualized rate of 8.75%*. Source: Corelogic
Capital growth, is an increase in the value of an asset or investment over time. It does not consider adjustments for Consumer-Price Index (CPI). Capital growth is measured by the difference between the current value, or market value, of an asset or investment and its purchase price, or the value of the asset or investment at the time it was acquired. We note that market conditions may change during the term of the investment. *Historical performance is not indicative of future performance.
3.4 BREAK-DOWN OF FUNDS RAISED
* All amounts are expressed in New Zealand Dollars.
Property Purchase: The price the property is being acquired for.
Opoly Acquisition Fee: This is the amount paid to Opoly Limited for performing its Manager duties.
Collinson Crowdfunding Fee: This is the amount paid to Collinson Crowdfunding Limited for performing its Crowdfunding duties.
Cash reserve: The cash reserve is intended to cover ongoing costs over a vacant tenancy period and unexpected expenses relating to the property. Any remaining funds in the Cash Reserve are to be returned to OHC1 Shareholders following the resale of the property.
Director’s fee: This fee covers annual compliance costs and is paid as a one-off cost of $500.
4. RENTAL PROJECTIONS
OHC1 intends for Net Rental Distributions to be distributed via a quarterly dividend according to the proposed schedule:
The below Net Rental Distribution is based on the assumption of 96% Occupancy Rate and material outcomes may differ.
* Net Rental Distributions are subject to change based on fluctuating market conditions, occupancy rate and unforeseen risks.
** OHC1 intends to adjust the rental rate to reflect changes in the Consumer-Price Index (CPI).
*** Body corporate, rates, and insurance expenses may fluctuate over time.
4.2 OCCUPANCY RATE
Opoly Limited intends to seek tenancy for 4/338 Ponsonby Road, Ponsonby, Auckland, 1011, immediately following a successful Crowdfunding Campaign where the Minimum Investment Target ($1,100,000) has been fulfilled. Opoly Limited has the intention of tenanting the property at a 96.00% Occupancy Rate (50 of 52 weeks), or higher.
4.3 PROPERTY MANAGEMENT SERVICES
Opoly Limited will be the assigned property manager. During the tenancy period, Opoly Limited will comply within New Zealand Tenancy Services Standards and Guidelines. This service will be provided at no expense to the Shareholders of OHC1.
4.4 NET RENTAL DISTRIBUTION POLICY
It is intended that Net Rental Distributions accrued to OHC1 will be paid on a quarterly basis, before the 20th of each month, beginning from August 1st 2021, following collection of rent. Distributions are paid using electronic bank transfer. These distributions are made up of the Gross Rental Income – Estimated expenses = (Net Rental Distribution).
Net Rental Distributions are made at the discretion of Opoly Limited. Opoly has forecast that distribution payments will be made at a rate of 3.15%* net per annum (pre-tax) for the year ending 31 March 20. Shareholders are expected to receive their first cash distribution on 20 August 2021. Net Rental Distributions are not guaranteed.
4.5 EXIT STRATEGY
Opoly Limited intends to arrange for OHC1 to enter into an agency agreement with a licensed real estate agency. The OHC1 Director intends to act as the authorized signatory, of OHC1, on the Agency Agreement and Sales and Purchase Agreement. The intention is to sell 4/338 Ponsonby Road, Ponsonby, Auckland, 1011, by way of an auction. Upon the successful resale of the property (refer to Section 1.4) OHC1 intends to be wound up, with Shareholders receiving the return of their capital plus any potential gain on sale and surplus funds in the company (if any), by electronic bank transfer.
4.6 LIQUIDITY OF SHARES
Until the intended resale of the property upon 3 years from the Offer Close Date, Shares are considered to be illiquid.
4.7 RENTAL APPRAISAL
The property has received an independent rental appraisal by Charlton Property Management. See below.
OHC1 will register with Inland Revenue as a limited liability company and pay tax at the prevailing corporate tax rate (presently 28%) on the net annual profits from its rental activity(I). All tax payments will be recognised as credits to OHC1’s imputation account,(II) and will be attached as imputation credits (ICs) to the distributions of profits made to investors each quarter.(III)
OHC1 is also obliged to deduct Dividend Withholding Tax (DWT) of 5% from all distributions,(IV) meaning investors will receive net cash representing 67% of any profits and 33% tax credits.
Distribution to investors:
This tax treatment ensures that the dividends paid by OHC1 are “fully imputed” when paid to investors, which ensures they both fully comply with all tax requirements and ensures investors have no (or the minimum amount of) additional tax payable upon receipt of the dividends.
Tax position of investors:
In some circumstances, investors who borrow funds to make their investment in OHC1 will be entitled to claim a tax deduction for any interest paid on those borrowed funds during the year,(VI) which will further reduce their tax payable on any dividend received.
(I) Under section CC1 Income Tax Act 2007
(II) Under Part OB Income Tax Act 2007
(III) Under s CD15 Income Tax Act 2007
(IV) Under Part RE Income Tax Act 2007
(V) Under s CD1 Income Tax Act 2007
(VI) Under s DB5 Income Tax Act 2007
6. GAIN ON SALE OF INVESTMENT
For commercial reasons, the duration of the investment has been predetermined with the intention of no longer than 3 years (See Section 1.4). OHC1 is committed to on-selling the property, winding up the investment and returning any profit to investors.
Due to this commitment, for income tax purposes OHC1 has a purpose or intention of selling the property from the time it is purchased. As a result, any profit from the future sale of the property is taxable income.(VII) OHC1 must pay income tax at 28% on any capital gain from the on-sale of the property. As above, that tax payment by OHC1 will be give rise to an imputation credit that can be passed on to investors when their share of that gain is distributed upon the wind up of the investment.
As the property is also residential land, if it were not already taxable as being purchased for the purpose of resale, any profit from the on-sale of the property within 5 years would also be taxable under the Bright Line land tax rules.(VIII)
In most circumstances the purchase, rental and on-sale of domestic property is exempt from Goods & Services Tax.(IX)
As a result OHC1:
Likewise, GST is not payable by the investor:
This exempt GST treatment ensures that the investment is not subject to the Goods & Services Tax regime.
(VII) Under s CB6 Income Tax Act 2007; see Morrow v CIR (1989) 11 NZTC 6,053 (HC)
(VIII) Under s CB6B Income Tax Act 2007
(IX) Under s 14(1) Goods & Services Tax Act 1985
(X) Under s 51 Goods & Services Tax Act 1985
(XI) Under s 3A Goods & Services Tax Act 1985
(XII) Under s 8(1) Goods & Services Tax Act 1985
(XIII) See CIR v Gulf Harbour Development Ltd (2004) 21 NZTC 18,915 (CA)
(XIV) Under s 14(1) Goods & Services Tax Act 1985
8. ABOUT OHC1
OHC1 Limited has been established with the purpose of purchasing 4/338 Ponsonby Road, Ponsonby, Auckland, 1011.
The goal of the OHC1 is to deliver Shareholders regular, passive income, and capital appreciation over time. The strategic investment objectives will be:
8.2 BALANCE SHEET
OHC1 does not currently have any assets, liabilities, or shareholders equity. This is shown in the below Balance Sheet.
FELIX WATKINS (25)
Felix has been immersed in Information Technology from a young age. He successfully ran a software development company, working with a range of clients globally. Previously Felix worked for BlockchainLabsNZ, where he audited smart contracts, ensuring quality control and providing detailed reporting practices. Following this, Felix was recruited as the lead technical specialist for Menlo One, a protocol for developing scalable decentralized applications. Felix previously also organised the Blockchain Wellington meetup group, a growing community with 1250+ members who meet on a monthly basis to discuss the implications of blockchain technology, and its important role in the future.
ISAAC WILLIAMS (25)
Isaac was previously an Institutional Equities Trader and Financial Analyst with Woodward Partners, in Wellington. During that time, he was responsible for Direct Market Access trading forthe likes of ACC, NZ Superannuation and Milford Funds. He was also a part of major research projects and has good experience conducting financial modelling and analysis. After working in Institutional Finance, Isaac worked as a Commercial Property Broker for NZCPB. Isaac holds a Bachelor of Finance and is a Licensed Real Estate Agent by the REAA.
8.4 RELATED PARTY INTERESTS
8.5 WHO ELSE IS INVOLVED
9. KEY DATES AND OFFER PROCESS
The timetable above is indicative only and the dates may change. Opoly reserves the right to close the Offer at any time prior to the Offer Close date without prior notice. Opoly also reserves the absolute right in its sole discretion to accept or reject any application in whole or in part without assigning any reason.
Investors’ subscription monies will be held in a trust account established by Collinson Crowdfunding from subscription to the date on which Shares are issued to Subscribers.
9.1 SETTLEMENT DATE
In the event of a successful Crowdfunding Campaign, it is intended legal ownership of the property will be transferred to OHC1 Limited, approximately 21 days from the Offer Close Date, and subject to Ordinary Voting Shares having been issued to the relevant investors.
10. SHARES AND SHAREHOLDERS
10.1 SHARE STRUCTURE
OHC1 will have only one class of Shares: Ordinary Voting Shares. Currently, Opoly Limited holds all shares in OHC1 Limited.
Share Capital (if Minimum Investment Target is achieved)
Following a successful Crowdfunding Campaign (where the Minimum Investment Target is reached) existing shares on issue held by Opoly Limited will be cancelled for $0.Within 21 days of a successful Crowdfunding Campaign and, subject to compliance with relevant laws and requirements of the Collinson Crowdfunding platform, Ordinary Voting Shares will be issued to investors under this Offer, as seen in the table above.
10.2 RIGHTS OF ORDINARY VOTING SHARES
Shares are with voting rights and all other rights conferred to shareholders under the Companies Act and Company Constitution. Ordinary Voting Shares confer on the holder rights to dividends as set out in Section 4 "Rental Projections" above, and rights to share in the surplus assets of the company and other distributions (if any).
10.3 FUTURE CAPITAL RAISING PLANS
OHC1 has no further capital raising plans. As noted above, OHC1 is to be wound up as mentioned above in Section 4.5 following the resale of the property. It is intended following this, all funds and surplus assets will be returned to OHC1 shareholders.
10.4 SHARE REGISTER
OHC1 will engage Opoly Limited to manage the share register and related matters.
11. TERMS OF OFFER
12.1 MANAGER FEE (OPOLY)
The fees payable by OHC1 Limited to Opoly Limited for performing its Management duties include:
Acquisition Fee: The Acquisition Fee will be an amount equal to 1.00% of the gross amount raised in the Crowdfunding Campaign, payable within 20 Working Days of the Settlement Date. Refer to Section 9.1.
Disposal Fee: The Disposal Fee will be an amount equal to 2.00% of the gross amount paid to or on behalf of the Company following the sale of the Property. This fee is all-inclusive including of marketing and real estate agency costs.
Note: The NZD ($) amount will be known upon the successful resale of the property and is yet to be determined.
Director Fee: While the Initial Director is a director of the Company, the Director Fee will be a one-off cost of $500.
All amounts are GST inclusive.
12.2 CROWDFUNDING FEE (COLLINSON CROWDFUNDING)
The fees payable by OHC1 Limited to Collinson Crowdfunding Limited for performing its Crowdfunding duties include:
Collinson Crowdfunding Fee: The Collinson Crowdfunding Fee will be an amount equal to 1.00% of the gross amount raised in the Crowdfunding Campaign, payable within 20 Working Days of the Settlement Date. Refer to Section 9.1.
All amounts are GST inclusive.
Please note: The usual Crowdfunding Fee charged by Collinson Crowdfunding is 6.00%. The fee charged by Collinson Crowdfunding of 1.00% is exclusively for this offer. The discounted fee is to support the first offer of its kind.
13. MANAGEMENT AGREEMENT
OHC1 Limited has been newly formed to acquire a residential property. Acquisition of the residential property will be contingent on the Company raising sufficient funds under a Crowdfunding Campaign.
The Company wishes to engage the Manager (Opoly Limited) to assist with the Crowdfunding Campaign and to procure or provide operational, management, and other services to the Company on the terms of this Agreement.
These services include:
13.1 COMPANY MANAGEMENT SERVICES
Property acquisition services
1. Identifying a suitable Property for acquisition by the Company.
2. Assisting with a crowdfunding campaign in order to raise the funds to acquire the Property.
3. Negotiating the terms of acquisition of the Property.
4. Procuring and managing the suppliers of Property Management Services and other propertyrelated services required by the Company from time-to-time.
5. Arranging for the sale of the Property in accordance with any special resolution of shareholders.
Company secretarial and management services
1. Procuring that the Initial Director (currently the sole director of the Company) remains on the Board until such time as he retires or is removed by a resolution of the Company’s shareholders.
2. Acting as company secretary and keeping, or causing to be kept, such business and accounting records in relation to the Company, the Manager and this Agreement as are required by law or otherwise necessary for the proper conduct of the affairs of the Company and the discharge of the Manager’s obligations under this Agreement.
3. Preparing and circulating notices, agendas and board papers for meetings of the Board.
4. Arranging the Company’s shareholder meetings and giving notices of any such meeting to all shareholders in accordance with the constitution, and otherwise undertaking all required shareholder communications.
5. Keeping minutes of all proceedings of all Board meetings and shareholder meetings.
6. As required by the Board, providing a recommendation on the payment of dividends to shareholders.
7. Reporting to the Board at each meeting of the Board and otherwise when and as reasonably requested, on: a. the Company’s financial performance; b. any material matters which relate to the Company Management Services; and c. any other acts, matters or things which the Board reasonably requires.
8. Opening accounts with such authorised bank as the Company may from time to time appoint as its bankers in the Company’s name, into which all moneys coming into the hands of the Manager on behalf of the Company will be paid, and operating such bank accounts, authorising the making of withdrawals from such bank accounts, in accordance with any delegated authority given by the Board from time to time in relation to such bank accounts.
9. As soon as practicable on receipt of any moneys received on behalf of the Company, paying such moneys into a bank account held in the name of the Company.
10. Subject to there being sufficient funds available to the Manager in the Company’s bank accounts, meeting all liabilities of the Company in relation to this Agreement as and when such liabilities will become due and payable.
11. Procuring and managing legal, accounting and other professional service providers engaged to assist the Company.
12. Procuring such other goods and services as the Manager considers reasonably necessary for the Company’s business.
13. Arranging for the preparation of the financial statements of the Company.
14. Arranging for the preparation and filing of all returns and notices required to be filed by the Company under any applicable laws.
15. Keeping comprehensive and up to date records of all transactions entered into by the Manager relating to the Company Management Services and Property Management Services, and retaining copies of such records for at least such periods as are required by law or for so long as the Manager provides the Company Management Services or until they are delivered up to the Company.
16. Maintaining the Company’s share register.
17. Preparing an annual budget for the Company and presenting the budget to the Board for approval (the approved budget being the Annual Budget). The Annual Budget must include details of: a. income; b. expenses; and c. capital expenditure.
18. Circulating a copy of the Annual Budget to the Company’s shareholders once it has been approved.
19. Procuring insurance for the Property.
13.2 PROPERTY MANAGEMENT SERVICES
1. Acting as the principal point of contact for tenants.
2. Managing all tenancies.
3. Advertising and arranging new tenancies as necessity arises.
4. Acting as the Company’s agent under the terms of the Residential Tenancies Act 1986.
5. Collecting rents on the Company’s behalf and assisting in rent reviews.
6. Collecting and approving the repayment of bonds in accordance with the provisions of the Residential Tenancies Act 1986.
7. Repairing and maintaining the Property.
8. Managing disputes with tenants.
14. MORE INFORMATION
The Offer will only be accepted via Collinson Crowdfunding's website. More information about the offer and OHC1 will be disclosed and updated via the Collinson Crowdfunding website (https://ccfl.co.nz) and the Opoly website (https://opoly.co.nz) The Offer does not constitute, and is not intended to be, an offer in any places or to any persons outside of New Zealand where such an offer is not authorised or is illegal. Anyone receiving this offer outside of New Zealand must ensure that they fully comply with all applicable laws in their own jurisdiction before accepting an offer. Without limiting the previous statements, OHC1 and Collinson Crowdfunding reserve the right to decline any acceptance or notice of intention to make an offer from a person outside of New Zealand.
15. WARNING STATEMENT
Equity crowdfunding is risky.
Issuers (companies issuing shares) using Collinson Crowdfunding ’s facility include new or rapidly growing ventures. Investment in these types of businesses is very speculative and carries high risks.
You may lose your entire investment and must be able to bear this risk without undue hardship.
New Zealand law normally requires people who offer financial products to give information to investors before they invest.
This requires those offering financial products to have disclosed information that is important for investors to make an informed decision. The usual rules do not apply to offers by issuers using Collinson Crowdfunding to raise funds. As a result, you may not be given all the information usually required. You will also have fewer other legal protections for this investment. Ask questions, read all information given carefully, and seek independent financial advice before committing yourself to any investment.
16. INVESTMENT PROCESS
Visit the Opoly website (www.opoly.co.nz) to find out more details about the Offer.
Investors’ subscription monies will be held in a trust account established by Collinson Crowdfunding Limited from subscription to the date on which Shares are issued.
If you need any assistance with the application process, or if you have any questions please feel free to contact Felix Watkins on 022 128 2088 or Isaac Williams on
021 0859 2760
Alternatively, you can get in touch via email at: