The company is now assessing properties in Sydney for a second Rent-to-Own transaction as it continues to provide a discount to investors while gifting equity to tenants each year using the developer distribution margin.
As of June 30, 2020, FUM was A$71.4 million, a strong 11.2% increase during the quarter and the company's cash position at the end of the quarter was A$1.45 million.
DomaCom’s cash position at the end of the June quarter was A$1.45 million.
Advertising and marketing costs increase
DomaCom continued to carefully control costs during the quarter while remote working arrangements have been maintained due to the COVID-19 pandemic.
Staff and administrative costs fell to $709,000 compared to $716,000 in the previous quarter.
Advertising and marketing costs increased to $143,000 in the quarter compared to $90,000 in the previous quarter as the company introduced the market to new product offerings.
The company has refreshed its placement capacity through the EGM that was conducted on July 22 and discussions are progressing with an institution regarding a placement to top up the cash position.
“Products starting to gain traction”
Chief executive officer Arthur Naoumidis said: “While the current environment is a challenging one, we are pleased that several of our key products are starting to gain traction in this environment.
In particular, the ability to complete our first RTO syndication in the middle of the pandemic is a promising result.
“Encouragingly, we have seen significant investor interest in further RTO syndications and we are currently assessing potential acquisitions in Sydney.”
Product development ramps up
During the quarter DomaCom made progress across four products in development - Rent to Own, Essential Worker, Equity Mortgage and Senior Equity Release.
The Essential Worker product is progressing its affordable housing product with one of Australia’s leading Community Housing Providers.
This product aims to leverage the Government’s affordable housing lending facility to deliver an RTO product for essential workers with a 25% discounted rent.
The product is expected to be attractive due to low vacancy risk stemming from the security of the tenants’ employment (nurses, firefighters, teachers, police) in addition to the emotional impact of supporting essential workers at this time.
The targeted launch period for this product is during the current quarter.
Equity Mortgage work is ongoing to deliver a Shariah-compliant mortgage product that is targeting Australian Islamic communities who, in accordance with their religion, are prohibited from borrowing money.
This product is believed to be less exposed to the current negative property environment as it is aiming to provide a method of obtaining leverage for those who wish to purchase a home but cannot borrow.
Discussions are ongoing with a key B2C partner whilst the company seeks regulatory approval for changes this product requires.
The targeted launch period for this product is between late 2020 and early 2021.
The company’s Senior Equity Release product has progressed with a dozen advisers having completed accreditation.
Direct marketing campaign
DomaCom has started a direct marketing campaign aimed at retirees to help identify those needing equity from their homes.
COVID-19's recent impact on self-funded retirees’ income has increased the market for this product and the company is seeking to obtain regulatory clarity on how the SER product works with the Government’s Downsizer legislation