Glossary

Glossary
ABN Australian Business Number as issued by Australian government bodies.
Accredited Investor See Wholesale investor definition.
ACN Australian Company Number as issued by Australian government bodies.
AFSL Australian Financial Services License.
AML Anti Money Laundering.
Amortisation Amortisation refers to each repayment consisting of both principal and interest.
Asset backed loan An asset-based loan is a loan secured by collateral assets. In this case real property.
Australian resident An Australian resident is a person who resides in Australia and has permission to remain permanently - either because they are: an Australian citizen; the holder of a permanent visa; or a protected Special Category Visa holder.
Basis Point A basis point (bps) is a unit that is equal to 1/100th of 1%. 1 basis point = 0.01% and therefore 1 basis points = 1%.
BSB Bank State Branch (BSB) is the name used in Australia for a bank code, which identifies the branch of a bank.
Capital Stack The Capital Stack ranks the seniority of claims to any securities and cash of an entity.
Capitalised Interest Capitalised interest is interest on loans that is paid at the end of the loan or partially during the loan. When a loan is capitalised, the borrower pays interest on the interest commonly referred to as compound interest.
Cash Units Cash Units are actual cash which can be withdrawan at any time.
Closing Date The closing date is the date by which the required funds for a particular deal need to be raised.
Committed Units Committed Units are investments made in a deal prior to the deal closing. If an investment in a deal is unsuccessful, then committed funds will be released and made available for further investment or withdrawal.
Compound Interest Interest paid on the original principal and also on any accumulated (accrued) and unpaid interest.
Construction loan A construction loan is a loan where the intended use of funds is to finance construction of some kind. In this case real property.
Corporations Act The Corporations Act 2001 (Cth) is an act of the Commonwealth of Australia that sets out the laws dealing with business entities in Australia at federal and interstate level. It focuses primarily on companies, although it also covers some laws relating to other entities such as partnerships and managed investment schemes.
Credit Report An evaluation of a person's or entity's capacity (or history) of debt repayment.
Crowdfunding Crowdfunding is the practice of using small amounts of money from a large number of individuals to finance an equity investment.
CTF Counter Terrorism Financing.
Debt Debt is an amount of money borrowed by one party from another.
Default Failure to fulfil an obligation, especially to repay a loan.
Development Development is the process of building or adding to existing structures to increase the value of a property.
Distributions Payments made to investors either from profits or interest payments.
Due Diligence A reasonable effort to obtain accurate and complete information. In real estate, this usually refers to the process considering the physical, financial, legal structure as well as other characteristics of the investment and its expected performance.
Earnings Earnings are typically your before-tax income from your investments.
Equity Equity is the value of capital contributed by the borrower/sponsor entitling them to a share in the profits.
Facility Limit The maximum amount that a borrower can borrow. Mainly used in loans that have capitalised interest paid generally in arrears.
First (1st) Mortgage A first mortgage is a loan in a first lien position on the property that secures the loan. A first mortgage loan has priority over all other loans or claims on a property in the event of default.
Foreign Investor Foreign investor as defined by the Foreign Investment Review Board (FIRB) means:
  • (a) an individual not ordinarily resident in Australia; or
  • (b) a corporation in which an individual not ordinarily resident in Australia, a foreign corporation or a foreign government holds a substantial interest ; or
  • (c) a corporation in which 2 or more persons, each of whom is an individual not ordinarily resident in Australia, a foreign corporation or a foreign government, hold an aggregate substantial interest ; or
  • (d) the trustee of a trust in which an individual not ordinarily resident in Australia, a foreign corporation or a foreign government holds a substantial interest ; or
  • (e) the trustee of a trust in which 2 or more persons, each of whom is an individual not ordinarily resident in Australia, a foreign corporation or a foreign government, hold an aggregate substantial interest; or
  • (f) a foreign government; or
  • (g) any other person, or any other person that meets the conditions, prescribed by the regulations.
Funding Goal The total amount of funds required to be invested for the investment to proceed.
Funds Committed See Committed Units.
GRV Gross Realisable Value is the Gross amount of sales the project could achieve or the end value of the property at completion.
Guarantor A guarantor is a person who personally guarantees to pay for the debt if the borrower should default on a loan obligation. A guarantor acts as a co-signor of sorts, in that they pledge their own assets in the event of a default.
IM Information Memorandum.
Income distributions See Distributions.
Investor Account Means an investors account in the Trust where investor money that is not committed to a Select Investment is held.
Investor Account Class The class of Units which is attributed to the Investor Account.
Investor Mandate Means an investment mandate based on pre-defined investment parameters selected by the investor.
KYC Know Your Customer.
Land bank Land banking is the practice of purchasing parcels of land for future sale or development.
Liquidity The ease with which assets may be converted into cash.
Loan Interest Interest is the cost for the benefit of borrowing money, typically expressed as annual percentage rate.
Loan Trust Means the trust known as the PropertyShares Loan Trust established by deed dated on or about 19 May 2015, as amended, varied or replaced from time to time.
Loan Trust Trustee Means the trustee of the Loan Trust being, at the time of this IM, PropertyShares Holdings Pty Ltd
Loan Units Loan Units are investments made in a deal. Loan units cannot be withdrawn until the maturity date has been reached.
Loan-to-Cost Ratio (LTC) The Loan-to-Cost Ratio is the ratio of a loan used to help finance a project compared to the total cost of building it.
Loan-to-Value Ratio (LVR) The Loan-to-Value Ratio (LVR) is the amount borrowed compared to the value of the property. The LTV is a risk assessment ratio that lenders perform when considering a real estate loan.
Market Value "Market value" is the estimated amount for which an asset should exchange on the date of valuation between a willing buyer and a willing seller in an arm's length transaction, after proper marketing, wherein the parties had each acted knowledgeably, prudently, and without compulsion.
Marketplace lending (peer-to-peer) Marketplace lending (peer-to-peer) is the practice of using small amounts of money from multiple individuals to finance a debt investment. It does not necessarily mean that there is any direct lending between peers. Please click here for more information.
Maturity Date The maturity date is the expected date on which the principal and interest amount of a loan or other debt instrument becomes due and is repaid to the investor.
Mezzanine Finance Mezzanine Finance is generally an unsecured loan on the property. Generally it ranks senior to any equity, but junior to the senior loans (1st and 2nd mortgages) on the property.
MIS A Managed Investment Scheme (MIS) is a 'financial product' and is regulated by the Corporations Act 2001.
Mortgage debt A mortgage is a debt instrument, secured by the collateral of specified real estate property, that the borrower is obliged to pay back with a predetermined set of payments.
Net Asset Value Means assets less the liabilities of the Trust or the class (as applicable).
Peer-to-peer Refer to Marketplace lending (peer-to-peer).
Personal Guarantee See Guarantor.
Platform Means the cutting edge online marketplace lending (peer-to-peer) platform owned and operated by PropertyShares which includes the PropertyShares website, the Trust and the Loan Trust.
Politically exposed Person A Politically Exposed Person includes a head of state or government, government minister or senior politician, senior government official, judge, governor of a central bank or any other person who holds a position of influence with a reserve bank, senior foreign representative, high ranking member of the armed forces or board chair or senior executive of a state owned enterprise or the immediate family member or associate of any such persons.
Portfolio A group of investments.
Preferred Equity Preferred Equity, is an unsecured loan on the property. Generally it ranks senior to any equity, but junior to the senior loans (1st and 2nd mortgages) and any other mezzanine finance on the property. Generally in a Preferred Equity investment, all profits are paid back to the preferred equity investors (after all debts have been repaid) before equity investors.
Principal Principal is the amount borrowed or the amount still owed on a loan and is separate from interest.
Profit Sharing Profit sharing is a structure whereby the participants receive a direct share of the profits.
QS A Quantity Surveyor (QS) report is prepared by a qualified and registered professional. The Quantity Surveyor is tasked with evaluating the construction costs and contracts. They estimate and monitor construction costs, from the feasibility stage of a project through to the completion of the construction period.
Refinance To replace an existing loan with a new loan.
Retail Client Any investor who does not meet the Wholesale Investor test. It has the meaning as given in section 761G (Meaning of retail client and wholesale client) of the Corporations Act.
Retail Investor Any investor who does not meet the Wholesale Investor test.
Ring fenced Ring fencing is a legal structure ensuring funds allocated for a particular purpose will not be spent on anything else.
Second (2nd) Mortgage A second mortgage is a type of subordinate mortgage where another loan has higher priority to be repaid. In the event of default, the original mortgage would receive all proceeds from the liquidation of the property until it is all paid off. Since the second mortgage would receive repayments only when the first mortgage has been paid off, the interest rate charged for the second mortgage tends to be higher and the amount borrowed will be lower than for the first mortgage.
Security A 'Security' is something that is deposited, pledged or signed as a guarantee of the fulfilment of an undertaking or the repayment of a loan. The security is generally forfeited in the case of default. An example of a security is a mortgage over land or a fixed and floating charge over the assets of a Borrower.
Select Investment A Select Investment refers to any deal presented to investors on the PropertyShares platform.
Select Investment Class Means the class of Units which is attributed to a particular Select Investment.
Senior Debt Senior Debt is at the top of the capital stack. It is generally secured debt that must be repaid first.
SIA The Select Investment Agreement (SIA) is your legal contract investing in a particular deal.
SIM The Select Investment Memorandum (SIM) details the proposed investment to be funded. The SIM provides investors with information about the target interest rate, term and purpose of loan, the Borrower, any securities, any applicable guarantor, exit strategy and other information required to make an informed investment decision.
SMSF Self Managed Super Fund.
Sophisticated Investor See Wholesale Investor definition.
Subordinated loans Subordinated loans (also known as subordinated debt) is any debt which ranks after other higher ranking debts. Eg Senior Debt or Bank Debt.
Target Return Target returns are the return that the Manager aims to achieve in respect of a particular Select Investment based on actual loan terms negotiated with borrowers as reflected in transaction specific loan documentation. Target returns for each Select Investment will be disclosed in a transaction specific select information memorandum for each Select Investment, which will be made available to investors who have registered to invest on the website. Target income returns and capital returns are not guaranteed.
Term The lifespan of a given asset, project, loan or liability.
TFN Tax File Number (May have another name in other countries. Eg Australia = TFN, USA = SSN, UK = NI#, etc.).
Title In property law, a title is the rights to a piece of property in which a party may own either a legal interest or equitable interest. It also refers to a formal document, such as a deed, that serves as evidence of ownership.
Trust Means the trust known as the PropertyShares Investment Trust, established by the Trust Deed.
Trustee Means the trustee of the Trust being, at the time of this IM, Melbourne Securities Corporation Ltd.
Trust Deed Means the trust deed governing the Trust dated on or about 5 May 2017, as amended, varied or replaced from time to time.
Unit Means a unit of a particular class in the Trust, giving its holder an entitlement to a share of the capital and income of that class in the Trust.
Unlimited Personal Guarantee The Guarantor commits all their assets without limitation to cover any debts.
Valuation A valuation is a report prepared by an academically qualified and registered professional (Valuer) who specialises in the practice of valuations to estimate the value of a particular property at a specific point in time.
Valuer An academically qualified and registered professional who specialises in the practice of valuations.
Wholesale Investor A wholesale investor is a term used by the Australian Securities and Investments Commission (ASIC) and refers to an investor defined in section 761G or section 761GA of the Corporations Act. In general, this refers to investors who:
  • - invests more than $500,000,
  • - business which are not classified as small businesses under the Corporations Act,
  • - individuals who can provide accountants certification to state that they have more than $2.5 million in net assets or at least $250,000 gross income in the last 2 financial years or other institutional and professional investors This includes self-managed superannuation funds, trusts and companies.
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