Gentai Capital Corporation, the asset manager, sources, underwrites and administers the GMIC’s mortgage portfolio. The corporation principals and management are experienced in sourcing, underwriting and managing mortgage secured by both residential and commercial real estate including retail, industrial, office and multi-family residential properties-market segments that are often under-serviced by banks and other large financial institutions. Genesis Mortgage Investment Corporation commenced operation on Oct 16th, 2012 as a Mortgage Investment Corporation established under the laws of the British Columbia. This pooled investment vehicle is available to the qualified investors. The interest earned by the mortgage portfolio is distributed quarterly to the shareholders.
GMIC is qualified as a MIC and we must satisfy the requirements in subsection 130.1(6) of the ITA throughout the taxation year. The main requirements are:
GMIC can only invest or manage mortgage and cannot manage or develop real property.
GMIC cannot own debts secured on real property situated outside Canada, debts owing by non-residents unless such debts were secured on real property situated in Canada, shares of the capital stock of corporations not resident in Canada, or real property situated outside of Canada or any leasehold interest in such property.
No shareholder (together with related persons, as defined in the ITA) may hold more than 25% of the GMIC’s total capital.
At least 50% of GMIC’s assets must be residential mortgages, and/or cash and insured deposits at Canada Deposit Insurance Corporation member financial institutions.
The cost for tax purposes of any interests in real property (including leaseholds but except real or immovable property acquired by foreclosure after default by the mortgagor) may not exceed 25% of the cost of all of our property.
GMIC is a flow-through investment vehicle and distributes 100% of its net income to its shareholders. Dividends received with respect to directly held shares, not held within RRSPs or TFSAs, are taxed as interest income in the shareholder’s hands
There are certain restrictions as to GMIC’s maximum debt-to-equity ratio.
GMIC’s annual financial statements must be audited.
Investors have the choice of investing in preferred shares of GMIC directly, either personally or through their corporation, including non-residence. The investors’ funds are placed in a diversified pool of mortgages receivable. This diversification allows Gentai’s investors to reduce the risk of their investments compared to lending directly to any one borrower. All of Gentai’s investment in mortgages are secured by Canadian real estate and most include borrower’s personal or corporate guarantees. Investing in Gentai allows investors to diversify from stock, bonds, and other fixed income securities and invest into the real estate sector. Investors have the comfort of knowing that their investments are secured by real property and are professionally managed with a track record.
The Office of the Registrar of Mortgage Brokers at the Financial Institutions Commission regulates the mortgage brokering and lending activities of Mortgage Investment Corporations (MICs) under the Mortgage Brokers Act. The Registrar and the Mortgage Brokers Act do not regulate the capital raising and investment marketing activities of MICs which are subject to securities legislation and regulation.