Every Scope Syndicate is standalone and established to acquire a single designated property. The syndicate is legally structured as a unit trust, with intending investors applying for Ordinary Units in the trust. Each unit holder is entitled to share in the income and capital of the trust, in proportion to their unit holding.
The Syndicate is established for a finite period (7-10 years). However, the property can be sold and syndicate wound up before this time if it is in the best interest of Unit holders to do so. Any decision to sell a property and wind up a syndicate will be put to the unitholders for voting on in line with terms outlined in the trust deed.
Scope is the holder of an Australian Financial Services License (AFSL) which imposes comprehensive obligations on the licensee. Principals of the licensee must possess extensive relevant experience and have the appropriate degree of expertise. The company is audited annually, with the auditors certifying that the company is complying with all its legal and statutory obligations. The auditors also audit the affairs of each Unit Trust.
Scope’s offerings are available only to sophisticated / educated investors, as defined in the Corporations Law. In brief, that requires each investor to obtain a signed confirmation from their accountant or taxation agent, confirming that the investor (and associates where designated) either own assets of greater than $2.5 million or have earned more than $250,000 in each of the previous 2 financial years.
Subject to valuation, the syndicate typically borrows between 50% and 65% of the purchase price of the property. Through this gearing strategy, the syndicate can maximize its net income and achieve excellent yields in relation to investors’ capital.
In its capacity as Trustee of the unit trust that acquires the property, the title is held in Scope’s name. Scope is also the borrower under the arrangements with the principal financiers. Under this form of “non-recourse” borrowing, Investors are not required to provide guarantees and have no liability either to the mortgagor, or to any trust creditors. There are sometimes occasions whereby Scope’s Directors are called on by financiers to provide Director guarantees. In these instances, the Directors are indemnified by the trust.
Management of the affairs of the Trust is in the hands of an associated company “Scope Property Management Pty Ltd (SPM)”. SPM is responsible for managing every aspect of the syndicate’s operations including property management. Accordingly SPM earns a monthly Syndicate Management fee and Property Management fee, and through the holding of Capital Units, the Directors participate in the capital gains of the syndicate.