I lost all my investment in the conb project we were told first mortgage investors got10 to 12 per cent but second mortgage investors lost their entire investment this is really fair.Of course it is never their fault be careful of this company.You say we were greedy but your sales people advised to go second mortgage without telling us about the risk.You totally left us out to dry thanks for nothing.
Yes, this is true - 1st Mortgage position always has a priority over 2nd Mortgage. For example, if you sell your house - even for a loss - the bank in 1st Mortgage receives their principal and outstanding interest before anyone else. If there was a 2nd Mortgage registered but insufficient proceeds from the sale to pay the 2nd Mortgage, then the 1st Mortgage still gets paid first.
In this case, the first mortgage backed investors will likely receive most of their original investment including a portion of their interest (actually 11-13%) because they chose a lower interest rate and a more secure position. At the time that we offered both first and second mortgage backed investments, the second mortgage backed opportunity sold well before the first. This was a sign of the times when the general appetite for risk was greater than it is today for example. Today people are looking for stability and returns based on current cash flow, but in 2007, people were looking for the highest possible return - and with high returns comes additional risk. At the time, these investments were all expected to perform as indicated but as you know, many returns and many investments did not perform as hoped throughout the economic downturn.
Just as investors are changing their investment strategies, so are we. Future offerings will be based on what people want today - stability, cash flow, and preservation of capital. The returns offered won't be as high as those offered in the past. The world has changed and so has the way we all invest. I look forward to answering any other questions you may have.
Knowing that Lethbridge Fairview is going to be foreclosed due to Stratum not meeting its mortgage payments, does anyone know what the status of Stratum and SCI on the Bridge II project (Okotoks)?
Why does Signature Capital, SCI not admit to any mismanagement on this or other projects?
It is very obvious to me that the project did not have any room for any changes/market or otherwise - such as the FACT that you were not able to secure the city's support to do what you said you were going to do. The RED FLAG in the beginning was asked of you "what do you have to lose if you have no money in this project?" and the answer was 'nothing' but you created this offering with all the upside in that if the project did make any money SCI would not be sharing with those who trusted you and took the risk. You would take all the gains.
Have you any idea how this has hurt people?. SCI projects have devastated many. SCI continues to offer investments even when those same people who were going to invest had lost in CONB and yet you did not reveal this. I believe you knew of the CONB loss long before you released any 'real information' to the investors - things were going poorly yet you did not indicate this to us clearly. You indicated that SK was a great market to be in. That you were looking after our investment. Right from the beginning, there were issues with the co that managed this and you had to change them out, but they were paid - that is part of our loss as 2nd holders. Will you explain to your investors by letter where the total dollars were spent?
In fact, now SCI has removed all it's updates from it's website on the projects - why?
The details of how the CONB project did not result in the originally intended return have been outlined to investors by way of a monthly letter direct to each investor. We have been open and transparent about every aspect of this and all other investments and continue to do so. If you would like a complete history and breakdown of the entire project, I invite you to do something you likely can't do with any other investment company around - pick up the phone and speak to the President of the company. Simone has been answering every investor's questions and addressing all/any concerns with each investor directly. We are meeting with people on a daily basis and have been more than upfront with all information.
The question of "what do you have to lose" was asked many times by investors. We have been very upfront that with the number of investments we place clients into and the sheer volume of dollars involved, we can not possibly invest in each investment like our investors do. We have also made it clear that when deposits for acquisition or even shortfalls throughout the project occur, we provide unsecured financing with our own capital to the projects in order to get them started or in some cases make interest payments.
Ask your institutional broker how much he/she has invested in each investment they place you in... The difference is that we offer investments to clients and they make the decision to invest or not. We don't rely on high-pressure sales tactics and we have always been upfront with investors about what they are investing in. In any real estate investment there is risk. When the world economy flips on it's head, many real estate deals went with it. For an example, just look at all the stalled real estate projects out there - some investor likely lost money in each deal. That's not to say that it was necessarily "mismanaged" or that the people involved were crooks, in most cases it was a number of events during the economic recession that caused the project to become economically unfeasible.
Because we have spoken to investors one-on-one throughout this period, we know exactly how much this has impacted people. I think you would be hard pressed to find a lot of people who haven't been impacted in one way or another by the events of 2009. I know I have been impacted, many of our staff has been impacted, our investors have been impacted and many other people in the world have been impacted. At one point, we all have to understand the difference between loosing money and having money stolen from you. It's a big one. With weeks upon weeks of headlines revealing one Ponzi scheme after another, people immediately assume that every investment they are in could be another Ponzi scheme. Believe it or not, there are some honest, trustworthy, humble, and truthful people out there who don't steel people's money. There are companies that do care about their clients. Ask yourself one question... if we didn't have anything to lose and there are no profits left in these projects, why would we be going to all the effort we are in trying to do the right thing for our investors? Why would the President of the company block off two weeks of her time to answer every investor call personally? Why would I be answering these forums? It's because we care and we are trying to do the right thing for everyone. We feel a moral obligation that goes beyond the paycheque and is part of our core.
A few people have suggested that because one investment that we provided funding on has losses for investors that we should not be offering any other investments. Again, if this was realistic, any broker who placed someone's RSP in a losing Mutual Fund, or any bank who had a mortgage go bad shouldn't be offering services any longer. Then you would only be able to buy investments from people who have a spotless track record of success. No investor would ever lose on a risky investment and perhaps we would finally enjoy world peace. Of course this is a ridiculous scenario. Investors invest in the stock market over and over again despite losses - because some times they win - and hopefully over time they come out ahead because investing is a long-term strategy, not to be judged on a short-term loss or gain. Just because I hit a 100% return on a stock doesn't mean I can't lose on my next buy, right?
We have removed our updates on previous projects from our website for two reasons. First, we are providing investors in these projects detailed updates via letter each month with a current status of affairs so they are 100% in the loop at all times. Second, we are updating our website with a new project update format that is easier to understand and easier to update. We would also like to include our past successes. Many people forget that we funded six very successful investments that fully paid out investors with returns in the 11-18% range annually. We also have two projects underway that are doing very well - the Resorts (RV park conversions) and the US Sunbelt Investment Fund where we acquired our first building not long ago. Each project and each investment is completely separate and has it's own merits and it's own set of risks. Investors in one project are not effected by investments in another. Raising capital in these projects is more challenging than ever as many investors feel they are somehow connected. In order to address this, each Offering Memorandum (or OM) is being updated - in fact the USSB has now been re-launched for it's second year and includes AUDITED financials.
When investors don't have all the facts, they assume the worst and things tend to spiral down-hill. I encourage each investor to get the facts! Give us a call. Schedule an appointment and come sit down with us. Ask us the tough questions. If we had something to hide, we wouldn't be talking to people. We don't spend our time in Honduras or Palm Springs, we spend our time here at the office working hard for investors. The choice is always yours as to which investment company you put your money with. I wish we could still say we have a 100% track record, but we can't. That's unfortunate but it's a reality. What I can say is that we work hard for people, we are honest and transparent, and we represent investors to the best of our ability.
Pablo,
I think you answer questions very well, it is always very concise and professional. However, I do think that you are in this predicament today not only because of the current markets but due to the lack of experience in the industry. Your largest deals are the ones that you are currently pitching and prior to that you had never been on the financing side of the industry. After reviewing the bios of your team from an earlier posting I can understand why you were not more forthcoming with the information. It is a little light on the experiences whether it was success or failure. Investing in a management team should be weighed by both success and failure. If someone has a 100% success rate I would not invest with them, most likely due to hubris they will be due for a failure. If someone has many successes and a few failures, the most important thing is to understand what they learnt from their failures. When you are relying a 100% on consultants there will always be mistakes. I do not believe that SCI is out to rip anyone off and to your defence majority of investors today need to point the finger at someone for the losses they have suffered. This is normal when the economy goes to **** that it wont take long for the lynch mob to form. I also do believe that you lack the experience in this particular industry, the only way for investors to believe in you is if you are invested alongside them or if you have your neck on the line. In the projects that you have, not one of your management team has anything at risk, not capital or personal guarantees. Should anything not go as planned the only people at risk are your investors. Yes, I agree you are working very hard to help investors to make the best out of the situation but that is also because you need to stick through this or your business would end. You are in a tough position Pablo and I wish you the best but don't ever think of closing your doors, Calgarians don't need to lose anymore money than they have because of a flaky management team.
The bottom line is that Signature Capital has lost millions of investor dollars on this project alone.
ALL of your CONB investors lost 100% of their money.
You DID NOT communicate MONTHLY with investors as you say - I have kept your letters.
You DID NOT communicate immediately when there were problems with the developer nor when the city did not approve this project. (Actually some investors were shocked to get your last letter outlining options - invest more or lose it all. 'Take the capital loss for your taxes' - not an option if one invested registered retirement money.)
Honest, transparent, dedicated?
It doesn't change my reality: SIGNATURE CAPITAL HAS LOST 100% OF MY INVESTMENT
Regarding the lack of experience in the industry - non of the principals of SCI ever represented that we were experts in the industry. In fact, the OM's (Offering Memorandums) all contain our background and history and clearly outline the fact that we were not part of the financial industry prior to Signature Capital. We presented investment alternatives to investors. Some decided to invest, others didn't. Throughout we acted with the utmost professionalism, transparency, and honesty. We answered every question without a "sales pitch" answer and let investors make a decision.
The main reason I am responding to people now is that I really do care about our investors. While many losses in 2nd mortgages are occurring, people feel the need to blame someone. I clearly remember speaking to investment brokers (institutional) in October and November of 2008. They faced the wrath and anger of many of their investors looking for answers. Even worse was that they are actual ADVISORS and advised their clients to invest in certain mutual funds or markets. Then when investors saw the market crash, they didn't blame it on the unsustainable society that we all enjoyed so much from 2005-2008, but rather on the advisor who put them into an investment that eventually failed. Much the same way, investors point the finger at the group that stood up and offered them an alternative to the 2% GIC and other "traditional" investments. I fully understand that people feel the need to direct their anger somewhere and that because we answer the phones and respond to forums, we are the easiest to blame. Over the past few weeks, we have dealt with everything from tears to death threats. Sometimes I really wonder if people realize that the staff and owners of Signature Capital are real people who come from humble backgrounds and just want to do the right thing all the time. We have families and children and have been impacted just as much as everyone else. I have heard so many stories lately and empathize with them all. Hindsight is 20/20 as they say. At the time we promoted the investments we did, we whole-heartedly believed that they had a chance of being very successful. We never would have knowingly placed investments if we thought anyone would lose a dime. Just as the institutional brokers wouldn't have put you into that Mutual Fund that went down 40% during the market crash.
I agree with you - we are in a tough position. I have received many emails and letters of support and our staff thanks those who understand all of the issues we face together. I have received an equal amount of accusatory letters that are full of unsubstantiated rumors and wild accusations. I suppose my only wish is that people just ask us questions rather than come to conclusions based on here say. Then, presented with "our side of the story", do your research and substantiate those answers. We have always contended that we were here to "represent the investors". We stood by investors during the good times and have continued to communicate through the difficult times. With a reduced staff, we are doing the best we can to speak to everyone. Sometimes it seems, your best just isn't good enough for some. I can assure you that we are learning more lessons through this period than we ever would have hoped to learn!
The best way to reach me is by email: pablo "at" sci "dot" ca (I write it this way to avoid spam emails). I will do my best to get back to you as soon as possible.
Not directed at you stemp but investors here have to remember a couple of things
1) We willingly entered these investments knowing, as the risk form said, we could lose all of our money and it carried a big warning on that page
2) It also told us no securities regulator has reviewed these documents we were signing
3) I bet most did not read the entire offering memorandum
4) Were all of us able to put in more than the basic amount of 10K because we did meet the definition of being an able to invest in this
I am glad for a couple of things and I got this info from the Alberta Securities help desk. In hindsight the person was right. We were offered higher rates of returns becuase there was the chance we could lose all of our money. When the help desk told me I was not really an investor but the bank they were right. We supplied the money and we took the risk. Did you ever try to get money out of a bank in Canada? They make sure they do everything to cover themselves and sort of being the bank we should have done the same thing. These guys got paid regardless and we were left holding the bag.
I was also told the rules are changing and people working selling these "exempt securities" will have to begin to be licensed by September of 2010 so hopefully we will have people with expertise rather than a nice rosy bio with no substance. I was told they weill have to take the courses, write the exams and become licensed to work in this market. So having a nice polished bio won't mean anything unless they can pass the course and exams!
But we can't put all the blame on SIC because we signed these papers. When I think back it seemed kind of dumb expecting that kind of money. Oh well.
Pablo- i am an 1st mortgage investor in the Battlefords project.It seems the project has been transformed from a condo conversion into an outright sale of the property.The problem i have with this is that selling the project at this time is bad timing as the real estate market is near the bottom of the cycle. Could we not transform the project again and make due with the rental income and wait until the market turns around and sell at a more opportune time. Another advantage of this strategy is that all bond holders could realize a return on there investment.
scimisllead you said it perfectly SCI has lost our money and hundreds of others.I invested because of SCI so called expertise in real estate.SCI did not even check with city officials to see if they could do this before they took our money.Pablo you said your investors are not SUCKERS why do i feel like one!
Well, you guys are offering some good advices, thanks for that. Unfortunately, when something sounds too good to be true, there is something sleazy about it.
Hi Pablo, I am an investor with SCI on the failing Lethbridge Fairview project do you have any updates on what is happening on the project I have heard nothing since the Oct 9th letter. I have called and emailed the office a couple times but have heard nothing at this point. The Oct 20th deadline has come and gone.
True, the project could be held and then sold at a "more opportune time", however the timeline of the bonds due to investors has past. Given the option to receive a majority of their funds back now or wait for a "more opportune" time to maybe get more funds back - the decision was clearly communicated to us that most would prefer to get out now with what they can. In order to "hold on" to the project, there would need to be 100% consent from all investors to do so and since that was not the case, the decision was made to pursue a sale and liquidate the asset.
stemp,
Unfortunately, you have a few of your facts wrong... it is possible to convert the building and the developer did check into this, however it did not get done in the time allotted and it is now economically unfeasible to continue because the mortgage is in default. Expertise alone does not guarantee the results of a development project. Some of the worlds foremost experts in real estate and finance have experienced failed development projects. I don't think that this project failed due to a lack of expertise within SCI... but everyone is entitled to their opinions.
ellidavis,
I'm not sure I would have chosen the word "sleazy", but it is no secret that high returns are not without risk. The interesting thing about risk is that it can be accompanied by reward or failure. I don't think that people who invested in these opportunities were "suckers" for doing so... they took a calculated risk. Many people have done very well with us (and other groups in the past) by investing in higher return, higher risk investments. If people don't take risks, they may also find it hard to ever get ahead. The people at SCI (and the investors in turn) didn't invest because they thought they would lose money - they invested because there was a chance to make a high return and do better than the GIC's and other traditional investments were offering. Given the investment atmosphere at the time, the risk was warranted to many. It is extremely unfortunate that things didn't turn out as planned, however it wasn't because the people were "sleazy".
triumph1970,
Updates will be provided as soon as they are available. There isn't a lot to report on Lethbridge since the last update so nothing has been provided. With a limited staff and resources, it has been difficult to communicate as effectively as we had in the past. We are doing the best we can to manage through this difficult time. You will likely receive more communication in the next week or so.
