FAQs

How is this different to “Timeshare”?

LeisureNet Properties offers “Fractional Ownership” in specific assets – being shares in titles to land, bricks and mortar. This is quite different to “Timeshare” where rights are usually related to ownership in units of time that may not necessarily be associated with any one specifically identifiable piece of land or property. Under a “Fractional Ownership” scenario, you enjoy direct and transparent access to any property value growth.

What legal instruments will govern the acquisition / divestment of shares and the operations of a property company?

Each Company will be governed by a Shareholder Agreement that covers all matters relating to shareholder rights, obligations and liabilities, access and use of a property, and the management of the property by the Company. Acquisition / divestment of shares will be managed by way of a Share Sale Agreement, and a Deed of Covenant that binds a new shareholder to the Company Shareholder Agreement.

How is the price of the independently owned shares defined?

The trading price of each of the twelve 1/13th shares available to independent shareholders will reflect 1/12th of a company valuation. A company valuation will comprise the property acquisition costs, furnishing / equipment / improvements costs, the initial project fee and market value adjustments. All these costs are capitalised and form the basis for determining share prices. Company valuations and recommended “benchmark” share prices will be issued annually that reflect annual independent market appraisals.

Can I expect value growth in my investment?

Any growth in the value of a share will be dependent on property market and general economic conditions.  LeisureNet Properties aims but cannot guarantee to establish properties that represent solid investments with growth potential. The fractional structure established by LeisureNet Properties does, however, enable investors to capture 100% of any growth in the market value of a property.

Are there any fees associated with acquiring a share?

LeisureNet Properties will raise an initial project fee of between 12.5% and 15.0% of the costs required to establish a property. This project fee will be capitalised and contribute to the company valuation. Hence, the project fee is rolled up into the share price.

Are there any fees associated with selling a share?

There are no fees raised by LeisureNet Properties should you choose to sell a share, except for a small administration fee charged at cost to prepare share transfer documents and new share certificates. However, LeisureNet Properties offers a service to market a share through appropriate real estate agents, for which a standard real estate sales commission will apply.

What do the project fees cover?

The project fees are intended to cover LeisureNet Properties costs for activities such as:

Property search and selection activities
Preparation of individual property management plans
Managing preparation of property for shareholder use
Accounting and legal support
Company establishment
Cost of funds provided by LeisureNet Properties prior to shareholder contributions
Development of property management systems

How are the running costs of a property apportioned?

Running costs will be apportioned to each of the twelve independently held shares as 1/12th of the total running costs of a property company. Running costs will be raised quarterly in advance, and adjusted subsequent to actuals.

Will a shareholder be required to contribute further capital?

The Directors of a property company will have the option to request capital contributions up to no more than 1.5% per year of the annually reported tangible asset value of the property company. Such funds would be directed towards minor capital improvements or replacement items such as furniture and other chattels. In the event of a proposition for further capital contributions, then this would be subject to greater than 70% shareholder interest approval.

What happens if the shares are not fully subscribed?

All shares will be held by LeisureNet Properties until the shares available to independent shareholders have all been acquired. Until such a time as the shares are all fully subscribed, then LeisureNet Properties will bear a share of the property company costs in proportion to their held shares – thus, independent shareholders will not be affected in this regard and in respect of their ongoing cost liabilities.

What control does a shareholder have over the management of a property company?

A key objective of LeisureNet Properties is to avoid cumbersome and lowest common denominator decision making. Accordingly, at least two representatives of LeisureNet Properties will be the sole Directors of each property company and will have the authority to manage each company without approval from shareholders. However, the Directors will of course be subject to relevant company laws and will have fiduciary duties at law to ensure that each company is operated and run in the best interests of all shareholders. Ultimately, however, the shareholders may elect to instruct a “wind-up” of a company” with a greater than 70% shareholder interest approval.

Will a shareholder register and details of other shareholders be available to all shareholders?

There will be a shareholder register. But unless a shareholder gives their approval, then only the name in which a share is held will be published. With shareholder approval, then contact details such as email addresses and phone numbers will be made available to other shareholders.

What happens if a shareholder defaults in respect of shareholder obligations or mistreats a property?

In the that event that corrective steps are not actioned by a shareholder within prescribed times or in the case of obvious mistreatment of a property by a shareholder or their representative(s) who may occupy on their behalf, the Directors of each property company will have the right to withdraw a share(s) from a shareholder and compulsorily acquire such share(s) at a price based on the tangible assets of the property company less any costs required to correct or repair the actions of a shareholder or their representative(s).

What happens if a property company is wound up?

In the event of a company wind-up, then the net tangible asset value of the company’s assets less costs to effect wind-up will be determined and hence the net value of each 1/13th share determined. The independent share holders will receive at least this price, however, the LeisureNet Properties commitment to its shareholders is that if such price is below a unit share’s acquisition cost, then the value returned will be topped up to the extent required to return the original share price albeit limited in aggregate to the value of the 1/13th share held by LeisureNet Properties. Such top-ups would be distributed pro-rata any share value deficits over the 12 independently held shares.

Will the property be furnished?

Yes – each property will be quality furnished in keeping with the property. Other chattels may also be provided for use by the shareholders.

Will I have somewhere to store some possessions?

Yes – lockable storage facilities will be provided for each shareholder that will be suitable to accommodate some limited clothing and personal effects; we would expect available volume to be in the order of 400 – 500 litres each.

Will I have any tax liabilities?

All tax and stamp duty liabilities applicable at law that relate share transactions and any income receipts derived by virtue of owning or trading a share shall be to each shareholder’s account. A property company will otherwise be liable to pay on taxes or other statutory levies relating to the operations of a company.

What information will be available to support my decision to acquire a share in a property?

An investor is always responsible for undertaking their own due diligence; however, LeisureNet Properties will provide an information package for each property that will typically include an overview of the property, an independent market valuation, and a letter from an independent accountant that confirms the basis for the asset value and legal structure of each property company.