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A Mortgage Investment Corporation (MIC) provides a way to invest in the real estate market, mitigating the time and risk of investing in individual mortgages. A MIC allows investors to pool their money through the purchase of securities in the MIC and the funds raised by the MIC are used to lend money, principally to individuals, for the purpose of acquiring, developing, maintaining or upgrading primarily residential real estate, against the security of a mortgage granted on such property. MICs are companies created by virtue of Section 130.1 of the Income Tax Act, a federal statute, to enable investors to invest in a pool of mortgages. As a Mortgage Investment Corporation we also borrow from a bank or other lender, employing both the shareholders’ capital and loan proceeds to fund its mortgage portfolio. The MIC’s mortgage portfolio is continuously managed, with newly invested share capital, and the proceeds of repaid and discharged mortgages, being utilized to fund new mortgages.
The MIC’s management is responsible for all aspects of the company’s operations, including the sourcing of suitable mortgage investments, the analysis of mortgage applications, and the negotiation of applicable interest rates, terms and conditions, instruction of solicitors, mortgage portfolio and general administration. Like an investment fund, the Mortgage Investment Corporation’s manager is paid a management fee, typically calculated as a percentage of assets under administration.
The Income Tax Act requires that 100% of a MIC’s annual net income, as verified by external audit, be distributed to its shareholders, in the form of a dividend. This dividend is taxed as interest income, in that it primarily represents a flow-through of the interest earned on the Company’s mortgage portfolio. Since a MIC pays all of its net profit to its shareholders each year, the MIC itself is not taxed. Like any company, a MIC’s net income is equivalent to its revenues, less its expenses. A MIC’s revenues are comprised of mortgage interest and fee income. Expenses are predominantly comprised of management fees, audit and other professional fees, and loan interest.
Disclaimer
Certain statements herein, as they relate to Abbey Ridge Mortgage Investment Corporation (the “Corporation”) and its respective views or predictions about possible events, conditions or results of operations that are based on assumptions about future eco mnomic conditions and courses of action and includes future-oriented financial information with respect to prospective results of operations, financial position or cash flows that is presented either as a forecast or projection, are “forward-looking statements” within the meaning of that phrase under applicable Canadian securities laws.
Although the Corporation believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, levels of activity, performance or achievements. Forward-looking statements are based on the current expectations, estimates and projections of the Corporation, and involve a number of known and unknown risks and uncertainties which could cause actual results or events to differ materially from those presently anticipated, including those risks described in the accompanying offering memorandum under “Item 8 – Risk Factors”.
The forward-looking statements herein are made as of the date hereof. Except as otherwise required by law, the Corporation does not intend to, and assumes no obligation to, update or revise these or other forward-looking statements it may provide, whether as a result of new information, plans or events or otherwise. Investors are cautioned not to place undue reliance on these forward-looking statements as there can be no assurance that the conditions, events, plans and assumptions on which they are based will occur.
The contents of this website should be read in conjunction with the offering memorandum of Abbey Ridge Mortgage Investment Corporation dated July 15, 2021, a copy of which is accessible in the Investors Strategy Section of this website.