COVID-19 FAQ – Skyline Wealth Management Inc
Q: Which Skyline investment products are affected by this redemption limitation?
A: All the Skyline investment products are affected. At a joint meeting, the Trustees of Skyline Apartment REIT, Skyline Retail REIT, Skyline Commercial REIT and Skyline Clean Energy Fund (the “Funds”) all unanimously agreed on a temporary basis to strictly apply the monthly redemption limits of $50,000.00 that have always been provided for in their respective Declarations of Trust. For the time being, the Funds will no longer facilitate redemption requests on an exception basis as had been the case since inception of each of the Funds.
Q: If I submit (or have submitted) a redemption request, what does this mean for me?
A: Effective immediately, all redemption requests that are processed will be under the monthly limit provisions. An aggregate monthly cash payment of $50,000 per Fund will be paid on a pro-rata basis for all tendered requests for redemption for each Fund. In the case your pro-rata share of this cash payment is not equal to your redemption request, you will receive an interest-bearing Trust Note for the remaining balance. Trust Notes will be for a term of 8 years (subject to Trustee approval to reduce the term from 10 years as provided in the Declarations of Trust) and bear interest at the rates provided for in the Declaration of Trust for your Fund which interest will be paid monthly in arrears on the 25th day of each month. If you require more details on the applicable rate for your Fund, please speak with your Skyline Wealth Advisor. Cash payments and the issuance of Trust Notes for redemptions will occur on the 25th day of each month for redemptions tendered in the prior month. (i.e. on April 25, cash payment and Trust Notes for redemptions tendered in March will occur)
Q: What does pro-rata mean?
A: Pro-rata means that all investors who have tendered for redemption for a particular Fund will be paid proportionally based upon the number of Units they have requested to redeem against the total number of Units tendered for redemption in relation to that Fund.
Q: If I proceed with a redemption while the Monthly Limits are being strictly adhered to, when will I receive my full redemption amount?
A: As noted above in Q2, the Trust Notes will have a term of 8 years (subject to Trustee approval to reduce the term from 10 years as provided in the Declarations of Trust) which is the maximum amount of time before you would receive the remaining balance of your redemption value, subject to Board approval which is pending. The Trust Notes are open for full or partial repayment at any time and it is the intention to ensure Trust Notes are paid off as quickly as possible as circumstances allow. Senior Management as well as the Board of Trustees of each Fund are continually assessing the ongoing nature and sentiment of the financial markets and that of our investors. We are committed to reassessing this regularly and will send out communication regarding any updates as it relates to repayment of the outstanding notes.
Q: What if I want to change my mind after my redemption has been processed and I’ve received my cash payment and Trust Note?
A: Trust Notes cannot be converted back to Units once the cash payment and Trust Note have been issued.
Q: Are there tax implications in choosing to move forward with my redemption and being issued a Trust Note?
A: Interest payments from the Trust Note are taxed as interest income.
For non-registered accounts, the conversion from an Equity Unitholder to a Debt Trust Note holder will trigger capital gains at the time of conversion.
For registered accounts (RRSP, TFSA, RRIF, etc.), the conversion from an Equity Unitholder to a Debt Trust Note will trigger registered plan taxes to be withheld at the time of the conversion as the Trust Note cannot be held in a registered plan as it does not meet the qualified investment criteria for registered plans under the Income Tax Act.
We recommend speaking with your accountant or tax advisor for more details.
Q: Do I still receive my distributions while I wait for my full redemption amount?
A: No. Any redemptions that are submitted under these conditions will not participate in any distributions, nor any applicable capital growth. The Fund Units that have been tendered for redemption are no longer an equity position, rather a debt position and are treated as such – see question 2 for interest payment information.
Q: When will ‘normal’ redemption procedures resume?
A: Senior Management as well as the Board of Trustees of each Trust are continually assessing the ongoing nature and sentiment of the financial markets and that of our investors. We are committed to reassessing this regularly and will send out communication regarding any updates as it relates to redemption procedures.
Q: I didn’t know that this was possible, why is this happening?
A: All redemption limitations are outlined in the Offering Memorandum and Declaration of Trust for each Fund.
The Board of Trustees voted to strictly apply this monthly maximum to help protect investors. It is our duty to protect the value of the existing assets within the Fund and the corresponding cash flows to offer stability to those wanting to remain invested. This is a protection measure to ensure the Funds remain stable during turbulent times.
Q: If I submit a redemption request, what does this mean for me?
A: We encourage you to speak to your Skyline Wealth Advisor for further information concerning your redemption request.
Q: I want to continue and submit a redemption request, what do I do?
A: Please contact your Skyline Wealth Advisor and they will send you the required paperwork to do so.
Redemption Conditions Example:
There is $50,000 per Fund available monthly to facilitate all tendered redemptions for that Fund
If only one investor requested a $200,000 redemption in one Fund under these conditions, they would be paid $50,000 and receive a $150,000 Trust Note bearing interest at the applicable rate (promissory note bearing interest) due no later than 8 years (subject to Trustee approval to reduce the term from 10 years as provided in the Declarations of Trust) from the date of issuance.
If twenty investors came forward each requesting $200,000 redemptions from the same Fund under these conditions, they would each get paid $2,500 and be issued Trust Notes for $197,500 bearing interest at the applicable rate due no later than 8 years (subject to Trustee approval to reduce the term from 10 years as provided in the Declarations of Trust) from the date of issuance.
Press releases are disseminated by Skyline Wealth Management Inc. (“Skyline Wealth”) on behalf of the Issuer as at the date of publication and Skyline Wealth does not undertake to advise the reader of any changes. Skyline Wealth has not taken any steps to verify accuracy.
The information provided within this Website is for general information purposes only, and does not constitute an offer of, or solicitation for, the purchase and sale of any securities, or advice under any circumstances. Skyline Wealth Management Inc. (“Skyline Wealth”) is an Exempt Market Dealer registered in the provinces of Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, Prince Edward Island, Québec, and Saskatchewan. Important information with respect to the funds are set out in their confidential offering documents, which should be reviewed prior to investing, as they include important information on fees and risk factors. Prospective investors must make an independent assessment of such matters in consultation with their own professional advisors. Sales of interests in any investments offered by Skyline Wealth are only made to certain eligible investors pursuant to regulatory requirements and available exemptions. Some of the investment products offered by Skyline Wealth are from related issuers. A full list of issuers related to Skyline Wealth and details of the relationship between them is available upon request. Information provided herein is current as at the date of publication and Skyline Wealth does not undertake to advise the reader of any changes.