Frequently asked questions
For those new to property syndication it’s natural to have plenty of questions. We’re happy to talk you through the nuances of syndication, and you’re welcome to contact us anytime to do so. Below we’ve compiled a number of common questions to help you understand the process a little better.
There is a lack of an established secondary markets for sales of interests in commercial property syndicates. If you want to sell your interests, they will be offered firstly to other investors within the syndicate. If your offer isn’t taken up, your interests will then be offered to investors in other Quarry Capital syndicates or qualified parties on our investor database. There is no guarantee Quarry Capital will be able to find a buyer for your interests.
Lack of liquidity is one of the risks of investing in a property syndicate and you will be fully advised of this before investing. The return to investors is reflective of the risks, liquidity being one. However, if the syndicate continues its rate of distribution, outside investors will see it as an alternative to cash in the bank at falling interest rates, and in time new investors will seek out secondary sales.
Quarry Capital syndicates are typically Management Investment Schemes (MIS), established under the provisions of the Financial Markets Conduct Act 2013.
Our syndicates currently take the form of either a limited partnership or a proportionate ownership scheme (with a nominee company holding the property on behalf of the investors in the syndicate). Both structures allow for “pass through” tax treatment which means the investor is responsible for accounting for their own tax. There is no separate layer of corporate tax. Currently, none of our syndicates are PIEs.
Where our syndicates have been formed with a nominee company owning the property on behalf of the investors, our syndicates are governed by an Ownership and Management Deed ('OMD') between the Manager (Quarry Capital), the Nominee, and the Investors. The Manager is appointed to manage the property on behalf of the investors under the terms of the OMD.
Where our syndicates are structured as a Limited Partnership (’LP’), the LP owns the property and the Limited Partnership Agreement (‘LPA’) provides for governance of the syndicate. The LPA binds the Limited Partners (the investors) and the General Partner (a sole purpose Quarry related company) who are each partners of the LP. The General Partner then appoints Quarry Capital to manage the scheme.
Two of our larger syndicates engage an Advisory Board of up to 5 members representing the investors. Those Advisory Boards meet quarterly and are regularly informed of the relevant syndicate's performance in the form of a "dashboard". High level advice is provided and decisions relating to the property and tenants are made following consultation with the Advisory Board.
For syndicates managed by Quarry Capital, legal title to the syndicate’s property is typically held by a Nominee company or by the Limited Partnership itself, depending on the structure used. In the case of a proportionate ownership scheme the Nominee’s sole purpose is to own the property for and on behalf of the Investors in accordance with the OMD. In both cases the Investors retain beneficial ownership of the property in proportion to their number of interests.
Payment of your tax obligations varies depending on how the syndicate is structured, as well as your individual circumstances. For all Quarry syndicates, cash distributions are paid before tax and investors are responsible for paying any tax required. Annual tax certificates are issued for tax return purposes. With some schemes offered by other syndicators, tax is deducted before distributions are paid, which can benefit some investors.
We pay our cash distributions monthly. This is usually at the start of the month as payment of the distribution due for the prior month.
We recommend you seek independent advice on how to best structure your investment entities. Our syndicates are made available to companies, trusts, partnerships and individuals as investors.
No. We are not authorised to give financial advice. We always recommend that potential investors seek independent financial advice from their authorised financial adviser or accountant before making any investment decisions.
The AML/CFT Act came into effect in June 2013. The purpose of the Act is to detect and deter money laundering and terrorism financing; to maintain and enhance New Zealand’s international reputation with regards to these obligations; and to contribute to public confidence in the financial system.
The Act applies to Quarry as an Offeror of managed investment schemes and we are required to perform due diligence on all investors. This includes verifying your identity, proof of address and asking questions on your reasons for investing and in some situations obtain information regarding the source of wealth and funds. This may mean that we cannot accept your investment application until all of the necessary information is obtained.
While this may appear intrusive, it is a statutory requirement that we and other financial service providers must comply with and all personal information is kept secure and in strictest confidence.