FREQUENTLY ASKED QUESTIONS
What is the minimum investment in the Purple Sand Development Trust?
The minimum investment is $50,000 and it can rise in $10,000 increments.
Can any investor invest in this Trust?
The Purple Sand Development Trust can only accept investment from wholesale investors, and this includes investors that are classed as wholesale investors in Australia for the purpose of an investment in the Trust.
If an investor invests $500,000 or more, then the investor and the investment would be classed as wholesale.
Professional investors which meet the ASIC definition can invest. Generally, a professional investor either holds (or operates) under an AFSL, controls more than $10m in invested funds, or is within an ASX listed group.
Where an investor meet the definition of sophisticated investor, that investor can invest. Sophisticated investors are one type of wholesale investor. To be a sophisticated investor, a person can meet any one of the following tests:
A client for the last two financial years has $250,000 in annual income or
$2.5 million of net assets.
Generally the client’s accountant will certify this.
If the Purple Sand properties rise in value after construction, will that increase the value of my units?
The value of all Purple Sand properties (meaning properties held by the Trust) will be valued every six months, in June and December, by a professional valuer.
The total valuation, and the valuation per investor unit, taking into account cash and debt held by the Trust, will then be published to investors in July and January of each year.
LIQUIDITY OF UNITS
If I want to sell part or all of my units after a few years as I need the money, can I do this?
Units in the Trust will not be liquid, they will not be listed on an exchange, nor will the Trustee be able to redeem units on request.
You can however offer your units to other current, or prospective investors, provided they qualify as wholesale investors and satisfy KYC requirements.
The Trustee will invite investors in July/ August and in February of each year to express their wish to buy or sell units, and then will match prospective buyers and sellers.
We anticipate this will be an opportunity to sell units, should an investor wish to.
SALE OF UNITS
As an investor, am I allowed to sell my units to another investor?
Yes, you may sell your units at any time to another investor in the Purple Sand Development Trust, or to a person the Trustee approves to be an investor.
You can only transfer your units to another person if the Trustee approves, and this will be after the Trustee has completed the KYC (know-your-customer) process.
Is there a fee for the transfer?
Yes the Trustee will charge a transfer fee for the administration, but the fee will be nominal.
If I want to invest more in the future will I have to pay more per unit?
The value of units in the Trust can rise or fall depending on the progress of construction, market conditions, and other risk factors listed in the Information Memorandum.
We anticipate that units will rise in value as Purple Sand buildings are complete construction, and are handed over to the property management function for rental to tenants.
Based on these plans, units purchased or subscribed for later in the life of the Trust will be at a higher price than investing at the commencement of the Trust.
How is Purple Sand funding the buildings it constructs? What is the proportion of equity and debt?
Purple Sand, as the Investment Manager, will buy the properties using investor’s funds. Then the development process begins, with planning and design moving forward.
The Investment Manager will arrange loan funds for construction of Purple Sand buildings, and we expect most or all of the construction will be funded by debt finance.
How does Purple Sand keep its costs within budget?
Purple Sand manages most of its functions in house, it retains people that are skilled and good at what they do.
We save money because we in-source, and our people get paid for the work they do. This allows Purple Sand to run with less overhead, and we get fast response times.
The people within Purple Sand have close relationships and we pride ourselves on expertise and cost efficiency.
Where do investors rank in the LVR? What is the LVR Policy?
In line with bank and other lenders’ requirements, the lender will have a first mortgage on each property. To the extent possible, the Investment Manager will arrange for the a loan on a property to only have recourse to that property, and not other assets of the Trust, the Investment Manager, or anyone else.
What is the LVR Policy?
The LVR policy will depend on lending policy, we expect lending to be 50% or more of the value of each property.
Are the assets/title held by the Trustee?
Yes, CTS as the Trustee owns the properties and holds the legal titles on trust for the investors.
Is the money protected and how?
All funds invested are managed by a Trustee regulated by ASIC and the holder of an Australian Financial Services License and all invested monies paid out are paid out in accordance with the rules of the trust.
When will I receive my estimated 3.5% annual return payments?
Distributions are paid quarterly in arrears and by the 5th Business Day immediately after the financial quarter end.
If I invest $100,000, what could I expect as a financial return over the period of the life of the fund?
Purple Sand does not guarantee an amount of financial return, but we are focused on targeting greater than a 300% return on capital over the life of the fund; which is about 10-12 years if you invest in the early period.
THE PURPLE SAND COMMUNITY
Will I be able to see the projects and what is built?
Yes, the Purple Sand Development Trust is constructing its buildings in Victoria. We will set up a VPN so investors can see the actual building during construction.
This level of access will only be offered to investors, as you can appreciate there is valuable know-how in how we design and construct our buildings and we wish to preserve that for the benefit of the Trust and investors.
How do I keep up to date with the projects Purple Sand is working on?
Investors will be updated regularly on the forward projects and returns and will have video access to see the projects being constructed.