Syd, partner since 2017 (Toronto, Ontario)
This week in charts
Imports and exports
Return on capital by region
On Tuesday, Romspen informed investors in its flagship Mortgage Investment Fund that their monthly distribution was cut to two cents a unit, down two-thirds from July, 2022.
As a private mortgage lender, Romspen raises cash from individual investors, then lends the money out to real estate companies, often in the form of short-term construction loans. The company has $2.7-billion in assets under management and has delivered an average annual yield of 7.3 per cent in its Mortgage Investment Fund over the past 10 years.
Because of its high payout, Romspen’s assets swelled over the past two decades as investors searched for yield when benchmark interest rates were close to zero. Yet the real estate industry is now adjusting to central banks’ aggressive rate hike campaigns, and the development sector that Romspen specializes in is one of the most hobbled.
With troubles mounting, Romspen froze redemptions from its fund in November, an act known as “gating” in the investment industry, to conserve cash. But it wasn’t enough, and multiple distribution cuts have also been necessary. The fund now yields 2.5 per cent annually, roughly half of what investors can earn from ultrasafe guaranteed investment certificates.
Romspen also told investors in a quarterly report earlier this month that 2023 is proving to be “one of the most challenging for the fund since the mid-90s.”
Romspen’s portfolio is largely comprised of construction and predevelopment loans across the United States and Canada. Because the borrowers are often higher-risk development companies, Romspen occasionally has to take control of some properties when their associated loans aren’t repaid.
In a normal market, Romspen would sell the properties to recoup the cash it is owed, but commercial real estate transactions have slowed considerably. “The challenge these days is not so much signing a purchase agreement, but finding the funds to close,” Romspen explained in its quarterly commentary.
Even when buyers emerge, banks are much less likely to extend the financing to complete the purchase. “We have already seen two anticipated unconditional sale transactions fall through this year, each with seven figure deposits forfeited,” Romspen explained.
To this end, Romspen has been locked in a court battle with its largest borrower this year after multiple loan defaults allegedly totalling $333-million. To recoup the money, Romspen asked the Ontario Superior Court to appoint a receiver to take control of three properties that underpin the distressed loans, and then sell them. The three affected properties are located in Toronto: Woodbine Mall and Rexdale Mall, in the city’s northwest corner, and 1500 Birchmount Rd., in the city’s northeast corner.
This week’s fun finds
EdgePoint Football Club finishes its first season
While the season ended with a loss in penalties during the consolation final, the team met its pre-season goal of making the playoffs. The squad is looking forward to recovering from injuries and building on their experience during the fall season starting next week!
EdgePoint – even faster and more furious
Several partners made their way to Bowmanville to live their racing dreams on the asphalt. In the final race of the day, Ruairi edged out Teddy and Norm for the gold.
Why Everyone's Worried About Their Attention Span—and How to Improve Yours
Most people without chronic attention issues could likely focus fairly well if given a task in a quiet, empty room—but they'd probably perform worse if they did the same task in a room where people are talking and music is playing. In modern life, [professor of psychiatry and behavioral sciences Margaret] Sibley says, we’re essentially living in a room filled with distractions all the time, thanks to the competing demands of work and home life, societal stressors like the pandemic, and the constant temptation of phones, social media, and the internet.
Human brains want novelty, excitement, and social connection, and devices play into those desires. Checking a notification flashing across your screen can provide a small hit of dopamine, creating a sense of reward that keeps you coming back for more.
Despite the draw of technology, Barbara Shinn-Cunningham, director of the Neuroscience Institute at Carnegie Mellon University, says she’s not convinced we’re losing the ability to focus. Instead, she says, we’re using devices in exactly the way tech companies want us to: constantly. “I’m not sure that it’s changing how our brains operate,” Shinn-Cunningham says, "but [rather] leveraging how our brains operate to keep us engaged with our electronics."
In [co-director of the Center for Attention, Learning, and Memory at St. Bonaventure University Adam] Brown’s opinion, there’s one adjustment that’s more important than any other: “Remove the device. In times of needed focus, take that device and put it someplace else,” he says. Turning your phone facedown isn’t always enough; research suggests that simply having a phone within eyesight can make it harder to focus, and the buzz of a single notification can ruin concentration.
When you have a big task at hand, putting your phone in another room is the best option, Brown says. But it’s also important to learn how to be around screens without letting them derail your concentration, a process that he says largely comes down to muscle memory. Just as you get used to constantly checking your phone, you can build a habit of not looking at it all the time, Brown says. “When your phone goes off, you want to go look at it,” he says. “But over the course of weeks and months, if you deliberately ignore it…you will get better at focus.”
It’s also important to assess your priorities and focus your energy there, rather than trying to split your limited time and attention in a million directions, Sibley says. That might mean dropping non-crucial commitments in pursuit of being fully present for the ones that really matter to you, she says.
