Hi ,
Recently we came across this investment opportunity, which is kind of like REIT but in a smaller scale and not listed at Bursa Malaysia.
Please read this article thoroughly because every investment has its pros and cons. You will get to know two different experts’ opinion on this investment scheme.
- Avenue Hotel Property Scheme (PDF) - Size: 5.3 MB (right-click and “save file”)
- Woolley Development (zip) - Size: 3.6 MB (right-click and “save file”)
- Company Website: Avenue Properties Bhd.
What is Avenue Hotel Property Scheme? How it works?
by Michael Tsen
Raja Uda is a very upcoming location in Butterworth, Penang. Basically Wolley Development has been building on a 60 acre site there called Woolley Avenue over the years. Many shops and commercial landmarks have been built there over the years. Now it has reached the time to build a hotel there called Nova Boutique Hotel. Expected to complete in 2013.
Generally there are 2 ways sourcing capital from public, one is through public listed stock regulated by Bursa, the other is public interest scheme regulated directly under SSM. This one “Avenue Hotel Property Interest Scheme” is an approved scheme with a prospectus dated at 10 Oct 2011. I have done my part checking the legitimacy parts for myself and I am satisfied.
Very much like buying a stock, you don’t buy the hotel directly. You are buying an ‘investment unit’ and enter into a contract with the scheme owner ( same as the land owner, developer and future hotel operator, all will be under the same group). So instead of the normal high property price, each unit is price at a much more affordable rate to most (general public).
Investors also do not need to have specific knowledge on property investment nor do they need to know how to run a hotel etc. It will be truly a passive investment. In return, the scheme owner shares certain part of the risks by offering guaranteed returns in initial years.
Full info of the scheme can be found at
http://avenuepropertiesberhad.
or more specifically the prospectus can be downloaded here
http://avenuepropertiesberhad.
Investment Summary
- Affordable: RM 4,800 per unit
- Safe: Guarantee RM 336 annual return per unit until 2025
- Invest in Future: Then profit sharing with the hotel until 2046
- Capital Gain: After that, hotel will be sold and profit share with all investors
- liquidity: investor can transfer the unit to another person 2 years later with a fee of RM 100
- Low & Fix Fee: No other hidden fee except annual maintenance fee of RM20 which will be deducted from the guarantee annual pay out
This is just a personal opinion summary, you are advised to read and understand their Prospectus before subscribing with them!
Comment from OngKL (Real Estate Investment Consultant)
Actually I quite agree with KC that a dividend stock or REIT might be better than this scheme based on the following standpoints:
1. From a risk-reward standpoint, a 7% annual return without potential appreciation on capital (since there will be no growth in return) for 13 years may not be attractive to most active investors who are constantly looking for growth in their wealth, especially when inflation could be as high as 5%.
2. From the liquidity standpoint, the first 2 years lock-in and the cost to exit (transfer of share) give investors the least flexbility to manage their investment fund.
3. Although it may be a small investment, leaving your investment fund to a team of hotel operator who just operates a single business without stringent supervisory system such as Bursa on public listed companies, it is just like being a sleeping partner in a company where you don’t know most of the people running it. Normally only when you are familiar with a business or people who run it then you will consider to invest in the business. Here I would rather use “business” instead of “property” as the nature of investment under the scheme.
4. No leverage is allowed for such investment, compared to other real estate investments which allow investors to grow their investment in a faster way.
However, as Michael mentioned, this scheme provides small investors an opportunity to enjoy a relatively high and yet fixed return with small capital. I would say it might be suitable for retirees who may not have many options in leveraging their investments and prefer fixed/stable income-generating investment with the least maintenance. A 7% return is definitely better than any FD and should be able to shelter them against inflation in near future. One thing to note here is the scheme doesn’t seem to guarantee capital protection like FD. So I believe that will be the only risk concerned by this type of investors.
Just to share some of my personal views with you..
Comment from Michael Tsen (personal finance blogger)
on #3) interest scheme like this is closely guarded by SSM together with the help of a trustee. However, the most powerful watch dogs are actually the investors ourselves. While stock investors have limited venue to launch their complaints (not much things can get done once legal matters kick in, public stock investors are the last one being paid out etc.), scheme investors can launch complains directly to SSM and KPDNKK where investors/consumers actually can get more favorable reply from these governmental agency bypassing all legal matters etc. SSM/KPDNKK always side on the public.
I am working something on the leverage part at point #4 together with a few bankers but that would probably increase the risk and not suitable to general public. Which by that case, direct property investment is much better, hence I am hesitant to promote that for this scheme yet.
Yes Capital guarantee will be an issue if one think a hotel in Raja Uda will not appreciate in 35 years .
One extra note for your recommended target market, 35 years may be too long for a retiree. In that case, the investor can name a nominee as the benefitiary after his departure …
How to invest?
This investment is no longer available.
This article does NOT form part of the contract in whatsoever way if any. We are solely sharing our own personal opinions on this particular investment opportunity base on our best knowledge on this matter which may be limited in certain aspects that we are not aware of at the time of this article posted.
We make no warranty or representation about the content of on this page although we try to provide the most accurate info available to us. It is your responsibility to independently confirm its accuracy & completeness. Any projections, opinions, assumptions or estimates used are for example only & do not represent the current or future performance of the property. If you have questions or concerns regarding this issue conduct further inspections by a qualified professional.
The information provided on or within this website or in documents available herein is for assistance only and is not intended to be and must not be taken alone as the basis for an investment decision. Each recipient of this information should make such investigations as it deems necessary to arrive at an independent evaluation of an investment in the securities offered hereby, and should consult its own legal counsel and financial, accounting, regulatory and tax advisors to determine the consequences of such an investment.
Leave A Reply (8 comments So Far)
Peter Lim
I’m more concern on the the basic fundamentals of the business (to the management).
Since the management guarantees about 7% for more than 20 years, how / where do they get the income for it?
Hotel business might be making less than 7% yearly. If that happens, where the money comes from to pay the investors? Then what happens when that happens many years in a row? How if the hotel makes losses?
As for the company who guarantees the payment, how much capital does the company have? Bo point having a guarantee by a RM 2 company (or even RM 1 million company for that matter). At the end of the day, NO business can survive over long term if the “inflow” is less than the “outflow”.
So, I’m more worried that it might be a SCAM since I can’t convince myself of the viability from the point of view as the promoters of the scheme.
And if some says that the company bears the risk of guaranteeing and losing money (at the expense for investors to get guaranteed returns), then why do they take the risk and we take the upside? Makes no sense to me. Might as well finance it elsewhere where the company keeps all the upside.
Michael
Hi Peter, very fair comment. It was exactly my same concern when I first heard about this. But after I dig around a bit, I found that all my questions ( now your questions too) are answered in the prospectus on their web site. In short, all these are achieved with the help of a trust deed, almost exactly like how insurance, mutual fund and REIT are operated ( all governed by a “TRUST” ).
The good thing for the developer to employ a scheme like this is pretty much the same as why a company want to be listed in Bursa, to source for public funding. Once public funding is in and “current” project can be operated on its own, the developer can use his own money to develop another project. In return, they share a portion with the investors. Honestly I think they are only sharing a very ‘small’ portion …
However no matter how good an investment is, if you are not familiar with it or do not trust it, then you should probably NOT invest in it. After all, the world is big and everyone will have a cup of their own tea
Personally, I only move some of my FD here since nowadays banks are not really any safer than a scheme like this.
Peter Lim
After digging further, it worries me even more! Before that, let’s start with a number of things which i don’t agree with Michael’s comments.
1) I can’t agree with the statement, “In short, all these are achieved with the help of a trust deed, almost exactly like how insurance, mutual fund and REIT are operated ( all governed by a “TRUST” ).” because Mutual Funds and others alike uses Licensed Trustee (like HSBC Trustee, Mayban Trustee, Amanah Raya Bhd, etc.), but this scheme is using MyPremier Trustee, which isn’t in the list of registered trustee here: http://www.sc.com.my/eng/html/resources/stats/RegisteredTrustees.pdf
2) Also, the statement, “The good thing for the developer to employ a scheme like this is pretty much the same as why a company want to be listed in Bursa, to source for public funding.” which isn’t true most of the time.
3) Again, i have to disagree with the statement, “… nowadays banks are not really any safer than a scheme like this.” because the bank’s capital is Guaranteed not just by the bank, but also by the Govt. Before focusing on “Return On Capital”, i believe it’s much wiser to focus on “Return Of Capital”. When the capital isn’t safe, well,……. let’s just put it as my view is different from Michael’s.
Now, let’s come to the main RED FLAGS.
1) From the prospectus (http://avenuepropertiesberhad.com/pdf/avenueproperties_prospectus.pdf), look at page 40. The company’s RM 5 Million paid up capital is NOT funded by cash, but by Director’s words that he owes the company RM 5 Million. Then, at page 40, it says that amount is unsecured, interest free and without fixed repayment terms. In other words, this is a RM 2 company in disguise. To stretch that matter further, i can even create a company which is owned by me and my wife, paid up capital of say…. RM 100 Billion, with the only asset of the company that i owed the company RM 100 Billion.
How much is a “guarantee” worth if that person don’t have any assets and no income? Do you think the bank would lend such person Millions (or for that matter, even thousands) ? Why would we treat this company differently?
2) The Trustee they use (My Premier Trustee) is not registered (http://www.sc.com.my/eng/html/resources/stats/RegisteredTrustees.pdf). Why don’t they use registered trustee ? I asked the same question to a so called “Property investment company”, and his answer was, “Tell you what, you form one with the same terms using registered Trustee, and i’ll invest with you.”.
Today, that company is no longer around (after separating quite a number of ignorant and possibly greedy people from their money). hhmm……
3) Look at My Premier’s Trustee’s company profile ( http://www.mpt.com.my/Company%20Profile%202011.pdf) . Then, take a look at the companies they worked with. Notice none are companies u heard of. Next, google those companies. And……
3a) AZZ Marketing. Some headlines when u search in google (in 1st page) are,
– “AZZ Marketing Tidak Bayar Hasil Pemilik”
– “Azz Marketing menipu jutaan ringgit duit rakyat”
– “AZZ Marketing Berhad Pelaburan Ikan Keli Penipu!”
- Facebook Group – bongkar AZZ Marketing. (http://www.facebook.com/group.php?gid=155223407845386).
The funny thing is, My Premier Trustee on their website says that they’re not trustee for AZZ Marketing Enterprise, but only for AZZ Marketing Bhd. But when you go to main page of AZZ Marketing Bhd (http://www.azz4u.com/) , and you clicked on the bottom link http://www.kppazzmarketing.blogspot.com/ , that page wrote in their title , “KESATUAN PEMILIK PAKEJ AZZ MARKETING ENTERPRISE “. I might not be smart, but definitely i’m Not dumb to know that AZZ Marketing Bhd is related to AZZ Marketing Enterprise, and My Premier Trustee is related one way or another.
3b) Arowana Ventures Sdn. Bhd. – Google it, and the scam has been a few years ago. I remembered surfing their website, and it’s closed. Now, it’s reopened again, promising a certain guaranteed return.
– Read the lowyat’s forum (http://forum.lowyat.net/topic/2100249/all). I’m surprised they Recycle the same scam again.
– Posted in June 2009 in investlah.com (http://www.investlah.com/forum/index.php?topic=3234.0). Search for “Arowana”.
Same guarantees with all companies in MPT’s portfolio, different product. I wonder does “Ikan Keli” is the malay word for Arowana Fish. If that is so, that scammer really good in Recycling.
3c) Search ” Prestige Diary Farm Berhad” on google, and on the main page, you’ll get:
- [SCAM] Prestige Dairy Farm (M) Sdn Bhd (832757-A) [Archive …” (http://www.carigold.com/portal/forums/archive/index.php?t-57912.html)
- “Prestige Dairy Farm memang scam – Topix” (http://www.topix.com/forum/world/brunei/TCM4J1NON9DPOE8UH/p34)
- “Scam or Not? Prestige Dairy Farm” (forum.lowyat.net/topic/834067/+60)
– “Skim cepat kaya versi baru : Labur dalam syarikat penternakan” (http://www.saifulsham.com/2008/skim-cepat-kaya-versi-baru-labur-dalam-syarikat-penternakan/)
Also, forumers commented that the person behind “Prestige Diary Farm” and “Arowana Ventures” is the same person.
3d) Look at ICT Venture – the structure looks about the same as all the rest too.
Now, what does all these companies have in common:
1) They give Guaranteed Return.
2) The Return is way higher than FD (otherwise, how to lure the greedy + igporant people from “safe” bank?).
3) THey give referral fee for promoting it, or it’s promoted by 3rd party marketeer.
4) THEY USES MY PREMIER TRUSTEE.
5) And lastly, … after a few years, the company is gone, like David Copperfied’s magic trick.
Now, let’s assume we’re not sure “Avenue Hotel Property Scheme” is a scam or not. If that is so, then that means we’re not sure we might get back our Capital or not. Now, at 7% return, it’ll take 15 years for us to get back all our capital. Forget about Opportunity Cost lost during this 15 years. If that is not long, well, i don’t know what is.
For the benefit of people who have already invested, i suggest you try to get back your refund. If can’t get back refund, then let’s pray that this is NOT a scam. After all, if it talks like one, acts like one, breath like one, smells like one, …… It might not be one.
p/s: Sorry if i offended anyone from this message. It is unintentional, and hope you accept my apologies.
Michael
Thank you Peter, good sharing and many good pointers. While some points are obviously due to lacking understanding on how a public company and government sectors are operated (try setup your company with whatever amount that you said you want to be and you should realize how far you could go ), but one crucial point about the trustee not listed on that web site does worry me. Thanks and I will check on that one.
Michael
Opps, didn’t need long. The web site you were looking at is a list of trustees for “mutual funds”. MyPremier, just like many REIT trustees, doesn’t have mutual funds in their portfolio. Not that relevant really.
I suppose its convenient to jump the gun and lump everything into the same category. Interest scheme isn’t easily understood due to the many scams out there like Peter has pointed out. But I do learn more about legitimate interest scheme from ctchoo so that I can distinguish between a real opportunity vs a scam. Hope his blog helps you too.
http://ctchoolawkl.blogspot.com/
Peter Lim
Since Michael replied that Interest scheme isn’t the same as Unit Trust but why does he compare that scheme to Insurance, Unit Trust, REIT at the 1st place? Truthfully, i thought the facts and research i’ve posted would be enough for a conclusion. Nevertheless, here’s more facts :
First, let’s look at REIT’s Trustees. I’ve found there are 14 REITs in Malaysia, and below are the REITs and the Trustee they used. Note that AR stands for Annual Report. All AR can be obtained (and verified) from http://www.bursamalaysia.com .
1. AMANAH HARTA TANAH PNB – Amanah Raya Berhad (page 2 of 2010′s AR)
2. AMANAHRAYA REAL ESTATE INVESTMENT TRUST – CIMB Trustee Berhad (page 4 of 2010′s AR)
3. AMFIRST REAL ESTATE INVESTMENT TRUST – Mayban Trustees Berhad (page 5 of 2011′s AR)
4. ATRIUM REAL ESTATE INVESTMENT TRUST – BHLB Trustee Berhad (page 15 of 2010′s AR)
5. AXIS REAL ESTATE INVESTMENT TRUST – OSK Trustees Berhad ( page 3 of 2010′s AR)
6. AL-HADHARAH BOUSTEAD REIT – CIMB Trustee Berhad (page 28 of 2010′s AR)
7. CAPITAMALLS MALAYSIA TRUST – AmTrustee Berhad (page 20 of 2010′s AR)
8. HEKTAR REAL ESTATE INVESTMENT TRUST – AmTrustee Berhad (page 32 of 2010′s AR)
9. AL-’AQAR KPJ REIT – Amanah Raya Berhad ( page 5 of 2010′s AR)
10. QUILL CAPITA TRUST – Mayban Trustees Berhad ( page 2 of 2010′s AR)
11. STARHILL REAL ESTATE INVESTMENT TRUST – Mayban Trustees Berhad (page 14 of 2011′s AR)
12. SUNWAY REAL ESTATE INVESTMENT TRUST – OSK Trustees Berhad (page 7 of 2011′s AR)
13. TOWER REAL ESTATE INVESTMENT TRUST – Am Trustee Bhd (page 3 of 2010′s AR)
14. UOA REAL ESTATE INVESTMENT TRUST – OSK Trustees Berhad ( page 5 of 2010′s AR)
How many of the 14 REIT uses Trustee that is listed in SC’s website? ALL !!!
Or, let me rephrase the question differently. How many of the 14 REIT uses non-registered Trustee ? NONE !.
Just in case someone might say that this interest scheme by SSM is different from REIT or Unit Trust (since both REIT and Unit Trust uses registered Trustee which can be found in SC’s website), i’ve dug further to the SSM’s interest scheme companies.
There are currently 3 types of interest scheme in SSM, Sharefarming Scheme , Equipment Sharing and this Property Scheme. For convinience, let me list all the companies below, and the trustee they used.
- AZZ MARKETING BERHAD – MY PREMIER TRUSTEE
- GOLDEN PALM GROWERS BERHAD – AmTrustee Berhad – ( http://goldenpalm.com.my/auditors.html )
- PLENTIFUL GOLD-CLASS BERHAD – BHLB Trustee Berhad ( http://www.chgs.com.my/trustee.asp )
- AROWANA VENTURE BERHAD – MY PREMIER TRUSTEE
- SWIFTLET ECO PARK BERHAD – PB Trustee Berhad ( http://www.swiftletecopark.com.my/scheme_why_esris_5key.htm
- EAST WEST ONE CONSORTIUM BERHAD – Equity Trust (Malaysia) Bhd – ( page 10 of the company’s eprospectus here: http://www.eastwestone.com/downloads_eprospectus.html )
- ICT ZONE VENTURES BERHAD – MY PREMIER TRUSTEE
- AVENUE PROPERTIES BERHAD – MY PREMIER TRUSTEE
All companies uses Trustee that can be found in SC’s website (which are registered), except for 4 companies below:
1) AZZ MARKETING BERHAD
2) AROWANA VENTURE BERHAD
3) ICT ZONE VENTURES BERHAD, and
4) AVENUE PROPERTIES BERHAD
The 3 companies uses the SAME Trustee, which is My Premier Trustee, which is NOT a Registered trustee in SC’s website. Isn’t that alarming?
Before looking for Guaranteed return, why not ask a more fundamental question? Where does the money comes from to pay the Guaranteed return since the business’s Revenue, Cost and thus Profit (be it Computer Rental or Arowana or Property) is NOT Guaranteed?
As for CT Choo’s website, i googled further, and i found that this website of his ( https://sites.google.com/site/ctchoocap/home?pli=1 ) states that they’re working closely with My Premier Trustee.
And this website of My Premier Trustee ( http://mypremiertrustee.blogspot.com/ ) have only 3 post, created only in August 2010, but have one post which is sourced from CT Choo.
I’ll let you guys form your own conclusion.
p/s: For the promoters of this scheme, please tell these companies to change trustee to registered trustee. Or, get My Premier Trustee registered with SC. However, if you still believe that it’s a good scheme, i suggest you to invite your wife, parents, relatives and all close friends to invest besides you investing at least 10% of your Net Worth there yourself.
p/p/s: And if you own a house, you can actually get FREE money. How? Refinance your house to AIA or ING and get a fixed rate housing loan (say 30 years). Then take this lump sum and put (i avoid using the word “invest” since it doesn’t qualify as one as per Benjamin Graham’s definition) in this “Scheme”. Free money every year. HOWEVER, I STRONGLY ADVICE AGAINST THIS ! Being Greedy combine with Ignorant is bad enough. And if you add in Leverage to Greed and Ignorance , disaster awaits superbly soon!
Michael
thank you peter, u r very resourceful as complimented earlier. I have compiled your info and sent an query to SSM and MyPremier, lets see what their replies are.
Gong
u guys have the TOTALLY wrong impression on trustee. ie. XbigBrandX Trustee has nothing to do with XbigBrandX Bank itself. The bigger the group is the less they care about their small trust business. All they have is just a bunch of unqualified admin staffs ‘looking after’ your investments. Their only requirement is just to hire a fail lawyer as their legal representative.