Do I have to live in Castlemaine to invest?
No
Can institutions invest?
Yes, but the institution needs to be a member of the Co-operative.
What if I want to cash my debenture early?
Investments will be paid out when the debenture expires (as chosen by each investor). This is a risk that should be considered when seeking financial advice.
It is possible to sell your debenture to another member, if the transfer is approved by the Co-operative board.
What about capital gain?
The capital gain on the building belongs to the Co-operative to be reinvested in the community.
What are the risks?
The three biggest identified risks are:
- Unexpected building repairs. To mitigate this we have undertaken an independent building report and 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 would happen to the building if the Co-operative had to sell or folded?
We could sell the building in order to pay back debenture holders. In the worst-case scenario, the sale might not cover all of the money due and the Co-operative would be forced to wind up as insolvent.
What happens if the Co-operative cannot raise the initial investments to buy the building?
All deposits paid by members who applied for debentures will be refunded and the fundraising will be cancelled, if the minimum fundraising amount is not met by the closing date (June 29). After this the Co-operative will seek another investment.
How will the Co-operative ensure it has funds to pay back debenture holders when their term expires?
We anticipate that each time a debenture is paid back the Co-operative will increase its ownership of the Hub, until it owns it outright. As each Debenture term comes due, the Co-operative will pay back Debenture holders in retained cash where possible and make new Debenture offers to members in order to cover the remainder.
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. 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 something like the Hub, and meeting tenants’ needs?
Yes. We will keep the day- to-day management contracted to a professional property manager as is the current arrangement.
The details of the investment are provided in our disclosure statement. Please read it, seek financial advice, and join us.