Oliver Wine County
BC, Canada

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Oliver Landing Phase 2 & 3 Development Corporation
May 29, 2019 Webinar Replay

43 people registered for this live webinar and their questions were answered at the end. Materials referenced in the webinar includes:

Offering Memorandum (May 27) Download

Business Case (May 27)

Summary and video timestamps as follows: 

00m:00s - Promo Video

02:14 - Webinar Starts with disclaimer & Sam discusses the Oliver, BC economics - more economic data and a 30min video available here: https://www.investoliver.ca/Discover-Oliver-Economics.

12:40 - Thomas expands on Oliver as a great place to live, and provides details on the land (Lot 1)

19:24 - Thomas updates on sales and construction of Phase 1 and planning of Phase 2 & 3.

22:40 - Investment offering is to acquire shares in a development corporation to acquire the land (Lot 1), and to build 28 townhouses.  Hurtle rate is 15% p.a., and there is a profit split as well. Projected total ROI is now 42% for investors in a targeted 24 months, due to higher sales data on comparable units. Investment is eligible for RRSP / TFSA (and other registered accounts). 

24:50 - Updated business case, costing model and timetable. 

26:29 - A key advantage of this offering over other development projects is the payout priority of proceeds:

- investor capital is returned 
- hurtle rate of 15% p.a. is met, i.e. the preferred dividend is paid to investors (1.25% per month from the date of investment)
- deferred equity of $460,000 is paid to Thomas (a return of his investment capital)
- profits are split with 50% to investors, 25% to Thomas, and 25% to Sam

This structure really aligns the developer (Sam and Thomas) interest with investors. Compare to the structure of many other developments where people take their profits upfront by inflating the land value.  They will install some services, and then sell the land for a big lift to the syndication (cash investors). This results in the developer being cashed out up front, and the risks of the development being offloaded to the investors. 

28:10 - Presale progress, construction progress and construction management team is discussed. 

29:20 - Chad Willox, the General Contractor and owner of Spur Construction is a very strong member of the team.

[Aside: You can see a video of him touring Sam around the site by clicking here. Chad's website displays hundreds of successful projects and his broad experience in over 25 years in business, including:
- hundreds of millions in new construction projects
-  the total gut and renovation of 120 units in Canmore completed in 6 months,
- millions in renovations at Hyatt Regency hotels in Alberta,
- large renovations at car dealerships, and industrial work at mine sites]

Sam recently awarded Chad a $828,000+ repair contract for his apartment building that sustained a major loss due to a kitchen fire.  This was after Chad's services were recommended by the insurance company ahead of the other bidders (restoration companies). The fact Chad won this bid ahead of regular industry players in the insurance world speaks volumes to his management and communication abilities, and is confirmed by a long list of references.  

30:32 - The site supervisor Reinhold Schoett is thought very highly of by the local realtors (Paul Dumont) from previous work together building airport hangers.  Picking the right sub-trades is critical and is what was missing from Phase 1. 

31:24 - Thomas' track record includes over $250M in rental real estate, and various small developments and subdivisions. [Sam's track record dollar value is about 10% the size of Thomas'.] 

32:40 - New renderings unveiled (by the Giroux Design Group) and current site photos of sold units in Phase 1. 

37:05 -  New design for Phase 2 & 3 has a more functional layout, is more efficient to build, and is more attractive to target customers, based on the profile of the existing buyers in Phase 1 (mature couples / retirees from Vancouver, Alberta and Kelowna). 

41:10 - There is proven demand for these units.  There is a real upside here, and there is a very efficient builder here. 

42:45 - Compare Riverside Place (28 of 30 units sold) to Oliver Landing:

Riverside Place   Oliver Landing P 2&3
typecondo apartmentsemi detached / townhouse
fenced yardnoyes
strata fee$270$170
bed / bath2 / 23 / 2.5
SqFt15001800 plus garage

Anecdotally, contractors working on the jobsite are frequently interrupted while doing their work by people inquiring about buying a unit.  We believe plan for Phase 2 & 3 as conceptualized and based on lessons applied from Phase 1 offers the best value on the market in a "recession proof" market.  We are of the opinion that presales and sales will be very easy due to high demand, and that this will be a profitable development for everyone involved.  

45:25 - Fundraising update and details on RRSP / TFSA program. 

45:45 - Question: Will investors get preference of a townhouse to purchase,  or a discount to purchase? A: We think we will offer investors a 2.5% discount, and preference of units (riverfront are the most popular).  We have yet to firm up the details, but investors will get first look at disclosure documents before pre-sales are marketed to the public. 

48:05 - Question: Can funds come from Compushare? Also my EMD doesn't have this product on his shelf?  A: We are already set up with Olympia Trust. It would probably take longer to get approved through Compushare to sell our shares than it would be to transfer your funds over. If you need help with the admin paperwork we can help with that.  About the EMD, we are not using one in an effor to save costs. We are also only employing one salesperson in the prairie provinces (David Sim) to save costs. We are "light and fast", and a relatively small equity raise, so selling shares without an EMD prevents your investment dollars from being eroded upfront (fees of 10%+) as they can be with other development projects that use EMDs

49:51 - Question: What was the rate of return for Phase 1 investors? You mention cost overuns in Phase 1? A: Thomas was the sole investor in Phase 1 and lost money due to poor management and execution. The previous manager was replaced in the June of 2018.  With professional management now in place, Phase 2 & 3 remain a very profitable venture, which is why it's now being offered to outside investors. If Thomas has the funds to continue on his own, he would likely not offer this to other investors.  This offering provides a solid investment opportunity for investors, and allows Thomas to mitigate his losses in Phase 1 / Lot 1, so it's truly win/win. 

52:25 - Question: Will Phase 2 & 3 start after a certain number of pre-sales, or will you start regardless of presale volume? A: It's a function of bank financing. We need the 50-75% presales to get construction financing, but we don't foresee any issues obtaining presales based on the aforementioned info. Plan B could be to sell the improved / firmed up plans to another developer, because there has been significant interest from them. The investor hurdle rate is secure in our opinion due to purchasing the land at appraised value, with the deferred equity acting as a large buffer. The plan to build and sell townhouses is the most profitable and remains at the forefront because it is in everyone's best interest. "Recession Proof" product in the South Okanagan is anything priced below $550,000 (opinion of local professionals).

56:53 - Question: What made you decide to change the design and company between Phase 1 and the upcoming Phase? A: The first phase had cost overruns due to an inefficient design (very overbuilt), expensive building materials and poor execution.  Examples include partition walls made of concrete instead of wood frame, decks over living spaces requiring expensive spray-foam insulation, roofing membrane not approved for residential use, triple paned glass sliding doors, and very expensive siding. Management has been replaced, and the safest course for Phase 2 & 3 investors was to invest in a brand new clean company that doesn't have the history of phase 1 (ie. possible liability for future defects under the new home warranty program.)

59:27 - Question: What is the status of the Development Permit and Building Permits on Phase 2 & 3. A: The development permit for Phase 2 expired due to delays in the transition of the old management and Thomas taking over, but will be quick to renew. We now have the new townhouse design, we need to tweak it for the next week or so, then we will then start on the re-application for permits and in parallel we will be updating disclosure documents. See timelines on updated business plan. Discussions with Giroux Design Group have us breaking ground in September 2019 on Phase 2. 

1:00:50 - Question: Are there any possible issues that could delay completion of construction? A: Yes, please read disclosure documents in Offering Memorandum for details of this and our risk mitigation strategies.  The 1.25%/mo preferred dividend continues to accrue regardless of any delays.  It's worth restating that Thomas and Sam are working hard to keep timelines so they ensure they get their share of the profits. The structure of this offering, in our opinion, puts investor interest first.  

1:02:35 - Question: Was Chad involved in Phase 1 problems? A: No, Chad Willox from Spur Construction was brought in to fix the mess Thomas was left with in the summer of 2018, and he's done a great job advancing the project. See his track record above.

1:04:35 - More photos of Phase 1 and webinar end. 

1:09:00 - Promotional video: Town of Oliver

1:12:30 - Promotional video: NK'MIP Golf Course

1:14:55 - Promotional video: Mt Baldy

"The thing that was magical about coming here was, it seemed like a secret. Unless you knew it was here, you were never going to trip over this place."

"The mountain we were at was a little bit too big, and crowded, and sometimes dangerous, and we wanted to come to a mountain that was chill, you know with enthusiasm, so I felt that special vibe [at Baldy]."

"I remember the moment I fell in love with Baldy. It was sunshine and powder!"

1:20:05 - Promotional video: Area 27 Promo Video

"Area 27 is a full size race track designed by Jacques Villeneuve, his number is 27 so that is why we call it Area 27." - Racing and Supercar Enthusiest

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