If you don’t find an answer to your question below or in our other documents, please feel free to contact us.
Part 1: Debentures and Capital Raise
I don’t live in Castlemaine, can I join and invest in the Hub?
Yes. Anyone who shares the Co-op’s values can apply for membership and any member can invest.
Can institutions invest?
Yes. Both institutions and individuals can be members of the Co-operative, and any member can invest, including associations, companies, Self-Managed Super Funds, trusts, foundations, and other co-operatives.
How much annual interest will I get for my debenture?
You choose: 0%, 1%, 2%, 3%, or 4%.
Our business modelling assumes paying 4% interest each year, but choosing a lower percentage supports the Co-operative’s goals further.
What if I want to cash out my debenture early?
The initial debenture amount will be paid back at the end of the term that’s chosen when applying (5, 10, or 15 years).
You can sell or gift your debenture to another member or bequeath it in a will. Transfers must be approved by the Co-operative board. We can help match a member who wants to sell their Debenture early with another who wants to buy, but there’s no guarantee a sale will be possible.
What happens if the Co-operative cannot raise enough to buy the Hub?
There is a minimum fundraising target listed in the Disclosure Statement. If this is not reached by the closing date (June 29), all deposits will be refunded, and the fundraising will be cancelled.
If this happens the Co-operative will seek another investment.
Will the Co-operative pay interest to Debenture holders every year, regardless of the performance of the Co-op?
The plan is to pay interest every year. However, the Disclosure Statement allows interest payments to be deferred for a limited time if necessary – for example due to an unexpected downturn in income.
Will the Co-operative keep members informed about the progress of the capital raise in June?
Yes. There will be updates across June via emails to members, Facebook, and the website.
What happens if you are oversubscribed?
Being “oversubscribed” (i.e. raising more funds than needed) is a problem that we’d love to have!
If we reach our maximum capital raising target early then the capital raise would be stopped at that point, and the Co-operative would buy the Hub.
Can I see the details of the offer?
Yes. Read the full Disclosure Statement and seek financial advice before deciding.
Part 2: The Hub
Will the Co-op really be able to buy the Hub?
Yes. We’ve reached an agreement with the current owner that includes a purchase price and a time frame. The minimum capital raising target covers this price, other costs related to the purchase, and initial operating costs.
Are you sure that you have a good price?
Yes. We paid an independent commercial property valuer to evaluate it. They gave us a detailed report, and the owners agreed on the price.
Is the building good quality?
Yes. We paid for independent building and pest inspections, finding that the building is in good condition for its age with no pest issues. Some wear and tear and maintenance issues were identified but none are urgent or costly and we have budgeted for these.
More information about our maintenance budget can be found in the Business Plan.
Is the Co-operative engaging with the tenants?
Yes. The tenants are part of the reason the building is valuable to us and the community. We’ve kept them informed and we plan to maintain the existing tenancy arrangements, including professional property management.
What are the risks?
The three biggest identified risks are:
- Unexpected building repairs. To mitigate this we have undertaken independent building and pest inspections. Our budget includes contingency for maintenance exceeding the historical average maintenance costs provided by the current owners.
- Sustained vacancies. The current owners have provided historical information about occupancy rates of the offices, which have been high. Our conservative cashflow and repayment projection is based on a sustained lower occupancy rate than the historical average. The Co-operative will set aside funds to cover temporary periods with higher vacancies.
- An inability to raise new investments when debentures expire. Our first debentures will come to term in 5 years at which time we will run a new capital raise. We have structured the debentures so they will not all expire at the same time.
More complete risk information is available in Attachment C of the Disclosure Statement.
What about capital gain / long term value of the Hub?
Any capital gain on the building belongs to the Co-operative to be reinvested in the community. In the long term, equity in the Hub could be leveraged for future purchases that the members agree to make.
There is no way under our current rules, Australian Cooperative Law, and the conditions of the debentures, members could “sell out” for a big personal payout. Because the Debentures are a kind of loan with a fixed interest rate, they’re not dependent on the value of the building or the financial performance of the business. Once all Debentures are paid back, the Co-operative will own the building outright, on behalf of all members.
As a non-distributing Co-operative, we are non-profit, and can’t distribute surplus funds to members. We must invest those funds back into the community.
What would happen to the building if the Co-operative had to sell or folded?
We could sell the building to pay back debenture holders. In the worst-case scenario, the sale might not cover all the money due, and the Co-operative would be forced to wind up as insolvent.
Part 3: The Co-op
How will the Co-op balance the decision making of the broader membership with that of the investors in the Hub purchase?
Every member has one vote and that broad membership will be the ultimate decision makers of the Co-op. Investor members will be able to make recommendations to the general members about the properties they have invested in to ensure that the members are informed about the preferences of investor members.
There are specific rules about making substantial changes to the business of the Hub itself (see next question).
What stops the Co-operative from making bad business decisions about the Hub?
The Disclosure Statement sets out the limitations of what the capital raised for the Hub can be used for. As a democratic organisation, members vote and make decisions about the future of the Co-operative but any substantial change to the proposed Business Plan and management of the Hub would need to be approved at a meeting by a majority vote of both the Co-operative members and the Debenture holder members, independently.
Is a volunteer community organisation capable of running the Hub and meeting tenants’ needs?
Yes. We will keep the day- to-day management contracted to a professional property manager, as per the current arrangement.
The Co-operative will still be responsible for major decisions about the building, selecting tenants based on applications, etc. We expect these tasks will be handled by the Board (who is elected by the members), or some may be delegated to volunteers.
How is the Co-op encouraging people to become members even if they can’t afford to invest? What are the benefits of membership and involvement?
We are partnering with The Hub Foundation to enable member benefits. The Hub Foundation is responsible for many community initiatives, such as the bulk solar buy. The Foundation is a charity with deductible gift recipient status, so we can raise money (including some Co-op income) to further develop membership benefits.
Who runs the Co-operative?
The Co-operative is run by a volunteer board of directors elected by members. The Board oversees strategy, governance and compliance, and can delegate operational matters to professionals where appropriate—such as property management for the Hub. Directors are drawn from the local community and bring a mix of lived experience and professional skills. All significant decisions that the cooperative needs to make (new investments, changes to current investment strategies, etc) are put to a vote of the membership.
The details of the investment are provided in our disclosure statement. Please read it, seek financial advice, and join us.