ROI Capital Assesses Effect on Listed Funds of the Proposed Extension of Transition Rules for Character Conversion Transactions

TORONTO, July 26, 2013 /CNW/ - On July 11, 2013, the Department of Finance announced a proposal to extend the transition relief period for  character conversion transactions, announced in the March 2013 federal budget to December 31, 2014. This proposed extension applies to funds with existing derivative forward agreements in place prior to March 21, 2013. ROI Canadian Mortgage Income Fund ("RIL.UN") and ROI Canadian Real Estate Fund ("RIR.UN"), managed by Return On Innovation Advisors Ltd. ("ROI Capital") will be impacted by the proposed extension.

As a result of the extension, once the current forward agreement for RIL.UN matures on November 1, 2013, RIL.UN intends to enter into one or more forward agreements as outlined in the extension, with a final settlement date of no later than December 31, 2014. It is expected that the RIL.UN scheduled monthly distributions will consist primarily of capital gains for taxable unitholders in 2013. Due to the proposed extension, scheduled monthly distributions in 2014 are expected to consist primarily of capital gains for taxable unitholders, instead of ordinary income. Following the expiration of the final forward contract on or about December 31, 2014, future scheduled monthly distributions are expected to consist principally of ordinary income.

RIR.UN's current forward agreement matures on March 25, 2014. Due to the extension, RIR.UN intends to enter into new  forward agreements ending no later than December 31, 2014. It is expected that the RIR.UN scheduled monthly distributions will consist primarily of return of capital and capital gains for taxable unitholders in 2013 and primarily of capital gains in 2014. After the last forward agreement expires on or about December 31, 2014, scheduled monthly distributions are expected to consist principally of ordinary income.

ROI High Income Mortgage Fund ("RIH.UN"), also managed by ROI Capital, is not impacted by the proposed extension as its forward agreement matures on January 16, 2017. It is expected that the RIH.UN scheduled monthly distributions will continue to be treated as return of capital and capital gains for taxable unitholders until its forward agreement matures on January 16, 2017. After the maturity of the forward agreement for RIH.UN, the schedule monthly distributions are expected to consist primarily of ordinary income.

ROI Capital is continuing to work with lawyers and tax advisors to assess the impact of the proposed extension for RIL.UN, RIR.UN, and RIH.UN ("the Funds") and its unitholders  ROI Capital will continue to examine the potential implications of the proposed changes and will continue to act in the best interest of unitholders.

About ROI Capital
Established in 2002, ROI Capital is a Canadian investment firm that specializes in commercial mortgages, loans and private real estate. With a deep understanding of the fundamentals of the commercial real estate market, ROI Capital strives for capital preservation while seeking to deliver returns for investors. This is achieved by primarily focusing on income-producing properties in large urban markets. ROI's senior team has been together since the firm began managing commercial mortgages and real estate investments. Its members have an average of 20 years' experience in the financial services industry, as well as deep relationships with banks, institutions and brokers. Today, ROI manages approximately $1.3 billion across 11 funds of which RIL.UN, RIR.UN and RIH.UN are listed on the Toronto Stock Exchange.

Certain statements included in this news release constitute forward-looking statements. The forward-looking statements are not historical facts but reflect current expectations regarding future results or events. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations and, accordingly, readers are cautioned not to place undue reliance on such statements due to the inherent uncertainty therein. Return On Innovation Advisors Ltd. undertakes no obligation to update publicly or otherwise revise any forward looking statement whether as a result of new information, future events or other such factors which affect this information, except as required by law. Investment funds are not covered by the Canada Deposit Insurance Corporation or by any other government deposit insurer. There is no guarantee that an investment in a Fund will earn any positive return in the short or long term nor is there any guarantee that a Fund's investment objectives will be achieved or that the net asset value per unit will appreciate or be preserved.

SOURCE ROI Capital




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