Similar to a REIT, a Mortgage Investment Trust (MIT) is a financial product that uses pooled capital to purchase a stream of future cash flows. The main difference between the two is how the capital is used. In a REIT the pooled capital is used to purchase and own a tangible asset with the purpose of renting or leasing space to earn rental income from tenants. While a MIT uses the capital to provide financing in the form of mortgages for a variety of real estate projects to earn interest income and collect the outstanding balance of the loan at maturity.
Skyline Mortgage Investment Trust (SMIT), similar to a typical MIT, will focus on shorter-term (or bridge financing) mortgages that typically range between six months and three years. SMIT has been legally structured as a trust to allow the fund to omit corporate income taxes, meaning investors receive all the return.
When we first began considering adding a MIT to our investment product offering, we knew we would need to partner with a financial lender to source and underwrite the real estate properties. After speaking with a number of different lending partners we have worked with over the years, we are excited to announce that SMIT will be a joint venture between Skyline and one of our longstanding lenders, First National Financial LP (First National).
First National will use their expertise in the mortgage industry to source and underwrite real estate properties and present SMIT with the opportunity to provide financing. SMIT, with the aid of Skyline Asset Management Inc., will inspect the collateralized real estate asset. Together, they will determine if Skyline is comfortable with the level of commitment the borrower has made to the project, and assess whether the borrower has the ability to pay the mortgage installments. From there, they will consider if the covenant of the borrower combined with the value of the property is strong enough to recoup our loan should we be required to mitigate in the event of a default.
Skyline has nearly 20 years of experience in the real estate market, currently managing over $3.5 billion worth of real estate between the three REITs. This experience has provided our team with the skills and knowledge required to properly identify great lending opportunities, ensure they are backed by strong assets, and manage all aspects of the investment on behalf of our investors.
Visit our product page to find out more about SMIT and to see if it would be a great addition to your portfolio.