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ZorroAMG
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Strathmore Investment/Development Opportunity quote:

Fellow Beyonders/Investors/Real Estate tycoons/E-Ballers!

I have been posting a bit about our development in Strathmore in that Fort McMoney2 thread and some RRSP threads lately and thought I'd finally offer up the whole information to those of you looking for a serious return investment opportunity.

I have generated a lot of interest already from a few of you on here and one of your beloved mods has already invested. Here are the main points summarizing our development.

------ We (Cancorp Property Group, www.cancorppropertygroup.com) have 226 acres of land in Strathmore, Alberta, located 40 km east of Calgary. We bought the land 2 years ago and will have the development permits this July, where we will be breaking ground immediately afterwards. This is the last quality piece of land to be developed in the town limits.

------ We are raising $19.5 Million ($9 million already raised since January '08) to service phase one into 462 lots to sell to the builders eager to get into Strathmore. It has a population of 13,000 with infrastructure for 40,000 including a full hospital and many bigger city amenities minus the negatives.

Here is the site plan:




Here is the current aerial photo of the actual land. The space next to our site is the golf course:



------ The 19.5 Million is being raised through a syndication of private investors (you). Minimum investment is $10,010; A $10,000 rsp eligible, land secured 5yr bond at 8% and $10 in shares of the development totalling 35% of the profit. Total return is conservatively projected at 27%/yr or it's also broken down as follows:

$10,010 investment will net you $23,758 total, including initial investment. This is a %137 ROI over 5yrs including the 8%/yr returning bond. Again, an annual rate of return of 27%

------ There are 3 ways to invest:

1. Transfer existing rsp's to our bond. This way there is no major cash drain and it's the easiest way to begin investing

2. Make a new rsp contribution.

3. Cash investment. This is the best way if you want your return AND initial investment to be accessible for future investing



TAX BENEFIT

This investment also has a tax benefit as the shares are taxed as a dividend income at a top marginal rate of 14.6% instead of your standard income bracket.

TIME FRAME

We are syndicating Phase 1 and although the bond maturity date is 5yrs, we are in the ground this summer and are more realistically looking at a 2-3yr term.

DEADLINE FOR INVESTMENT

Obviously this is a pressure-free opportunity, the only deadline being once we've raised the full 19.5 Million, the opportunity is closed. That is for Phase 1. I would not recommend waiting for Phase 2 if you have the means to invest in the first as we may not even require additional funding to servive phase 2. We will be self sufficient with the revenue/profit generated from this current phase.

STRATHMORE

Sleeper communities are becoming much more desirable as Calgary grows and with all the new industrial development east of Calgary, many employment opportunities will present themselves. Strathmore is prime real estate for this influx and the builders recognize this. We haven't committed to the interested builders as we want to maximize the value of the land before selling to them. This is in the best interests of ours and the investors. It also allows us to plan how we release the lots as we do NOT want to flood the market. The community is working side by side with us to make this happen quickly, properly and efficiently as they are in NEED of lots and growth. Visit www.strathmore.ca for more info and to see what a great community it is shaping up to be!

FUTURE OPPORTUNITIES

Many of our investors have been following us from past projects and they continue to roll profits over and over. This is a perk we are offering as we always have new deals/developments in the works. Hassle free investing is what people have come to expect from us. Returns may vary from project to project but quality profitable developments have been our M.O. from day one.

PAST DEVELOPMENTS
Here are a few other residential developments we have done in Alberta that many of you will recognize:

Penhold Army Base Development near Red Deer


Paradyme Condos 15th Ave and 9th St. SW



205 Riverfront condos in Eau Claire



For more details, again visit www.cancorppropertygroup.com where you will also find information on our company, all of our past projects and the principals involved.

If you have personal/private finances questions or need flexible investing methods, feel free to PM me.

Last edited by ZorroAMG on 10-17-2008 at 11:05 PM

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Old Post 05-05-2008 10:42 PM
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lint
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quote:

I didn't see anything on the site regarding past projects except for pictures of buildings and locations. Any numbers on projected vs realized returns for past projects?

__________________
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Old Post 05-05-2008 11:10 PM
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Jlude
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quote:

Originally posted by lint
I didn't see anything on the site regarding past projects except for pictures of buildings and locations. Any numbers on projected vs realized returns for past projects?



+1

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Old Post 05-05-2008 11:19 PM
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ZorroAMG
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quote:

The developments in the past projects section have either been Cancorp-internal acquisition-hold-reno-re lease situations or bank financed/Joint Venture developments. These were not syndications with investors outside of Cancorp's principals and the banks and therefore the information on profit/return is not public information.

The past projects section does not exist for us disclose what those non-investor projects generated for returns, but merely to demonstrate the scope of work Cancorp has been involved in. We are no strangers to large developments, as shown in our Springbrook/Penhold/Red Deer development

These projects were all in the black, generated positive return and that's what Cancorp is focused on.

Thank you for the inquiries!

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Old Post 05-06-2008 12:33 AM
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blownz
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quote:

So why this method this time? If it was a good project the banks would lend you money at less than 27% would they not?

If Cancorp has a decent credit history they should be able to borrow without a personal guarantee (which seems to be what you are avoiding) for under 20%. Personal guarantee should drop it by half.

I just don't understand why this system. I was involved with a small 10mil project 2 years ago. And we had no money and the 3 owners did not want to provide personal guarantees and we were able to borrow at less than 15%. I know the rates have gone up to about 20% were we borrowed since then due to recent events but that would still seem like a better way to go.

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Old Post 05-06-2008 03:28 PM
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Canmorite
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quote:

"Paradyme Condos 15th Ave and 9th St. SW"

I live very close to this place, and I've seen some units for sale inside of it. Super nice. I think Zorro had a place in there

More info on the bonds if you have any. 8% paid semi? Annually?

Originally posted by blownz
So why this method this time? If it was a good project the banks would lend you money at less than 27% would they not?

If Cancorp has a decent credit history they should be able to borrow without a personal guarantee (which seems to be what you are avoiding) for under 20%. Personal guarantee should drop it by half.

I just don't understand why this system. I was involved with a small 10mil project 2 years ago. And we had no money and the 3 owners did not want to provide personal guarantees and we were able to borrow at less than 15%. I know the rates have gone up to about 20% were we borrowed since then due to recent events but that would still seem like a better way to go.



If things go sour in the way your are suggesting, wouldn't Cancorp be responsible for all the money lost? If units are sold off to investors, I think less of the risk would lie on Cancorp's shoulders. If Cancorp could get a loan for less then ~20% they would most likely go that way, since their margins would be larger.

Correct me if i'm wrong Zorro...

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Last edited by Canmorite on 05-06-2008 at 07:19 PM

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Old Post 05-06-2008 07:08 PM
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ZorroAMG
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quote:

Syndicating investment capital is becoming a new trend for growing development companies.

We are in GREAT standing with the banks and have borrowed from them in the past and will borrow in the future. At the moment, banks do not lend on vacant land, which is what we have. We are raising capital to service the land. The banks have many restrictions, want monthly interest and they also want pre-sales of lots. Again, bare land, no lots, no banks. Pre sale also creates an issue with builders wanting lower prices for the lots and they try to take advantage of us, we have to cave because we need presale and that translates to less profit.

This way, WE control the situation, not the bank and its guidelines. We can sell when we are ready to the builders, for a higher price. This means more profit for us and the investors.

That being said, we are not just doing this one project, we have numerous developments in Montreal and Alberta and this is ANOTHER way to raise capital. Don't think of it as an either or scenario, they go together. We bought the land outright 2 years ago. Our goal has been to amass a following of investors that trust we will make them good money and they will roll their earnings into future projects time and again.

It's about growth for us, not simply padding the bank's pockets

Canmorite, the bond is 8% annually and yes, I did own at the paradyme for a period.

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Old Post 05-06-2008 08:44 PM
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quote:

platinum equities has something similar but in Langdon, AB but with a minimum investment of 25K
im not sure if you have looked at this but I would like to know what makes this a better investment?
I am looking into one or the other
Please let me know

Thanks

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Old Post 05-06-2008 09:13 PM
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ZorroAMG
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quote:

I am not about saying our product is better than another. It's different. That being said, comparing project to project without all their info is tough.

Platinum equities stuff is decent, we are just offering the highest return at the moment. Considering our project is a $100 million deal, even if their percentage of profit return was higher, you still make more money in Wildflower.

Main points:

First off, the langdon development is "sold out" according to their site.

10k minumum vs 25k. Makes investing a lot more accessible to more people.

Most other syndications are put together before they've even ACQUIRED the land, pushing completion dates to more like 7-10years instead of 3-5 like ours since we bought the land 2 years ago. Nevermind all the planning and applying for permits that takes years....we will have ours this july.

If you have a particular project in mind, pm me and I can go over the pros and cons of both...

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Old Post 05-06-2008 09:49 PM
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Canmorite
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quote:

So go to the bank and borrow at prime (hopefully. Maybe go for a HELOC) and then put that money into this project. 8% interest from the bond will cover your interest expense on the investment loan, then write off the interest expense on your tax return.

I'm missing something...

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Originally posted by 89coupe
I do get great service there, especially when I mention my name, haha.

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Old Post 05-06-2008 10:24 PM
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ZorroAMG
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quote:

No, actually you aren't. That is common practice these days.

Also don't forget you are taxed as a dividend income on this investment...only 14.5% instead of your usual tax bracket...

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Old Post 05-07-2008 12:21 AM
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Blue Thunder
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quote:

Zorro, send me an email. I'm a contractor in Calgary who as also developed two subdivisions in Strathmore. Maybe we can strike a deal over construction costs. [email protected]

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Old Post 10-16-2008 03:09 PM
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turbotrip
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quote:

Originally posted by Canmorite
So go to the bank and borrow at prime (hopefully. Maybe go for a HELOC) and then put that money into this project. 8% interest from the bond will cover your interest expense on the investment loan, then write off the interest expense on your tax return.

I'm missing something...



the part ur missing is how u get raped if the project doesnt go quite as hoped, and doesnt yield the projected returns

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Old Post 10-16-2008 08:54 PM
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quote:

Originally posted by turbotrip


the part ur missing is how u get raped if the project doesnt go quite as hoped, and doesnt yield the projected returns



Then you get raped both ways!

It's exactly the same thing if you borrowed at 5% and invested it into a National Bank Bond paying 8+%. Doesn't seem so risky as you're just using leverage. Buy this in a margin account and depending on the equity, use it as margin and buy more! It all goes back to risk tolerance

Last edited by TYMSMNY on 10-16-2008 at 09:06 PM

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Old Post 10-16-2008 09:04 PM
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ZorroAMG
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quote:

Originally posted by turbotrip


the part ur missing is how u get raped if the project doesnt go quite as hoped, and doesnt yield the projected returns



Where does the rape happen?

If he doesn't want to go into the profit participation and is worried about "the market" he gets his loan at 6 or 7%, goes in on the 14% flex bond of our development with no profit sharing and has a nice, low risk day.

Or he can get his loan and do our 11% with quarterly payments..

I don't see the issue. This is strathmore. They NEED lots...the town MUST grow to support all the new infrastructure and we WILL develop this land. We have over 100million in unencumbered land in our portfolio, we aren't about to let a 20mil investment go sideways, seeing as we've owned and worked this deal for nearly four years.

This is not your run of the mill syndication where people make ridiculars claims before the even OWN the land let alone set the project in motion via development permits etc.

We are completely transparent and I urge you all to ask me anything you need to know...even come by our office...

Mark

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D. Dub
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quote:

Originally posted by turbotrip


the part ur missing is how u get raped if the project doesnt go quite as hoped, and doesnt yield the projected returns




Yup -- there is no free lunch and that's exactly the reason banks won't lend on raw land -- because the risk is way too high for them. LOTS of things can go wrong between land acquisition and development. The risks are super high which is why land developers make so much moola.

Last edited by D. Dub on 10-16-2008 at 11:43 PM

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Old Post 10-16-2008 11:26 PM
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ZorroAMG
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Exactly. That is why we bought the land 4 years ago and did the extensive due dilligence to make sure the project was a viable one for our company and the investors. We have the cash, we don't need the banks for this project and syndication is just the best way to be able to have a diverse portfolio and grow.

Again, this isnt in Calgary with all the competition, ABUNDANCE of product and shoddy workmanship. Strathmore absolutely NEEDS the lots and we are going to be super aggressive with the pricing to keep the absorption steady.

PS banks DO lend on raw land to companies with our track record....we just didn't want to pad their pockets anymore

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Old Post 10-17-2008 04:33 PM
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TYMSMNY
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quote:

edit: I see you're paying out 8% on the bonds. Cheap capital.

Last edited by TYMSMNY on 10-17-2008 at 04:46 PM

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D. Dub
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quote:

Originally posted by ZorroAMG
Exactly. That is why we bought the land 4 years ago and did the extensive due diligence to make sure the project was a viable one for our company and the investors. We have the cash, we don't need the banks for this project and syndication is just the best way to be able to have a diverse portfolio and grow.

Again, this isnt in Calgary with all the competition, ABUNDANCE of product and shoddy workmanship. Strathmore absolutely NEEDS the lots and we are going to be super aggressive with the pricing to keep the absorption steady.

PS banks DO lend on raw land to companies with our track record....we just didn't want to pad their pockets anymore



Originally posted by ZorroAMG
[B] At the moment, banks do not lend on vacant land, which is what we have. We are raising capital to service the land. The banks have many restrictions, want monthly interest and they also want pre-sales of lots. Again, bare land, no lots, no banks.



Let me reiterate -- the chartered banks don't lend on raw/vacant/undeveloped land that has no initial work done -- like municipal approvals and pre-sales -- which is where the huge risk lies.

You are sort of presenting this opportunity as a cakewalk -- it isn't. I worked in land development financing/commercial hard money mortgages for quite a few years.

This investment is plain and simply high risk. With a big emphasis on the high part. I'm not saying it's a bad investment -- but that it is not an investment for your average joe who cannot afford to lose the money.

I'm even interested a little myself.

Where is it at in terms of entitlement? (Are any municipal approvals in place yet for this project?)

Is the land already zoned appropriately for your project?

Does your company own the land outright or is there a charge against it? Who holds the mortgage if there is one.

Is ground broken at all yet? where is it at:

Geoscience?, Environmental? Surveying? Groundwork/Grading? Deeps?

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Old Post 10-17-2008 05:03 PM
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ZorroAMG
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quote:

Originally posted by D. Dub




Let me reiterate -- the chartered banks don't lend on raw/vacant/undeveloped land that has no initial work done -- like municipal approvals and pre-sales -- which is where the huge risk lies.

You are sort of presenting this opportunity as a cakewalk -- it isn't. I worked in land development financing/commercial hard money mortgages for quite a few years.

This investment is plain and simply high risk. With a big emphasis on the high part. I'm not saying it's a bad investment -- but that it is not an investment for your average joe who cannot afford to lose the money.

I'm even interested a little myself.

1. Where is it at in terms of entitlement? (Are any municipal approvals in place yet for this project?)

2. Is the land already zoned appropriately for your project?

3. Does your company own the land outright or is there a charge against it? Who holds the mortgage if there is one.

4. Is ground broken at all yet? where is it at:

Geoscience?, Environmental? Surveying? Groundwork/Grading? Deeps?




Yeah I should have elaborated that the Chartered banks don't LIKE to lend on raw land and usually don't. They HAVE made exceptions though

This is by no means a cakewalk for the development standpoint and for the investor even though there is risk, this particular investment (not grouping us into other syndications) is as low as they come.

I do appreciate your background/knowledge and I love the different questions...

I've pm'd the answers since the technical stuff is over most people's heads.

If anyone else wants these answers, I will be happy to PM you.

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