SIMILAR CULTURE: CEO of East Coast Mortgage Trust Scott Collis.
SIMILAR CULTURE: CEO of East Coast Mortgage Trust Scott Collis. Jay Cronan

East Coast Mortgage Trust ready for La Trobe vote

FOR a period in the noughties, property trusts came into their own, returning more to investors than any other asset class.

How times change.

This week 3500 East Coast Mortgage Trust investors, who are owed about $80 million, will vote on whether to let Melbourne-based La Trobe Financials take over the winding down of the trust and the distribution of funds.

It will be the last of the two-locally based trusts to disappear.

East Coast froze new investment in the fund and limited payouts as it struggled with investors wanting to withdraw funds after a drop in value of underlying assets.

East Coast follows Mayne Investments and many other trusts across the nation that were hit by the GFC and the government guarantee on bank deposits that made banks much more competitive than trusts.

Many East Coast investors were pensioners who were relying on an income stream from the fund. For many, the questions in this vote are:

  •  Who is La Trobe?
  •  Is it up to the job of protecting savings while they are returned over the next three to four years? and
  •  How stable is the company, given so many have gone under?

East Coast chief executive Scott Collis said the board recommended La Trobe because of its similar culture, conservative investment strategy and investor-first focus.

La Trobe has 110,000 investors and borrowers with $1.6 billion under managment.

La Trobe's chief wealth management officer Randal Williams said it survived the GFC because of its conservative investment approach.

"Our motto is we would like lots of smaller loans to reduce our risks and because we lend nationally we have that geographic diversification as well," he said.

If investors agree to the offer, the funds will be transferred to La Trobe by next month and held in a separate fund within the institution's mortgage fund, for which it won Money Magazine's Best Mortgage Fund in Australia for the past four years.

Mr Williams said there were a number of loans within the East Coast portfolio that needed refinancing, and flagged the possibility of La Trobe funding them.

"There are 33 loans at different stages, some are performing, some aren't," he said. "What we will do is manage those loans and as we get money in we will distribute and that may take three or four years.

He said the company would appoint a local authorised representative.

"The benefit to us (of this deal) is that we get an investor base of 3500 and it's in our interests as we wind that fund down to make sure the investors are looked after because if you do a really good job, when investors get their money back they may look to us to re-invest," Mr Williams said.



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