Tuesday, October 20, 2009
Dear Member-Partners,
If you've been keeping track of our updates, you'll know of the successful launch of our IGW Income Priority Units (IPUnits). To those averse to investment volatility, these can provide a most welcome investment option.
However, with interest rates at historically low levels, the time to subscribe for IPUnits at their current fixed rates of return is soon coming to an end. When we next update the IGW REIT's Offering Memorandum in December, we will cease offering the existing IPUnits and begin offering new series of IPUnits with different rates.
Right now, these tax-efficient fixed cash flow investments are available in one-year, three-year and five-year terms, with current yields of 6.5%, 8.0% and 9.25% respectively, and handily beat other fixed-term investments*:
More Cash Flow...
-
For a $100,000 investment in
the One-Year IPUnits, Member-Partners receive $541.67 per month -- for a
total of $6,500 for the year.
-
For a $100,000 investment in
the Three-Year IPUnits, they receive $666.67 per month -- or $8,000 for
each year.
-
For a $100,000 investment in
the Five-Year IPUnits, they receive $770.83 per month -- or $9,250 for each
year.
More
Tax-Efficient Than Interest Income...80% More!
We assume that the Income Priority Units
will be 80% tax-efficient. This means that whereas distribution from a
traditional interest-bearing investment would be 100% taxable, only 20% of the
cash flow you receive from IPUnits are taxable in the year you receive it; the remaining 80% is treated as a tax-deferred return of capital. That, of course, means more
money you can spend, save, or re-invest as you wish.
An
After-Tax Case Comparison...
Assuming a marginal tax rate of 44% and a
tax-efficiency of 80%, the after-tax return from the One-Year IPUnits is 5.93%.
The after-tax return from the Three-Year IPUnits is 7.3%, and the after-tax
return from the Five-Year IPUnits is 8.44%. To get that net return from a traditional
interest-bearing investment, you would have to earn 10.59%, 13.03% and 15.06%
respectively!
More
Dependability and Security...
Distributions paid on the Income
Priority Units are fixed -- not variable. They are backed by the REIT's legal
obligation to pay the return for the duration of the investment.
Time is running out!
The good news, however, is that if you purchase IPUnits before November 25th, you can still benefit from the current rates. Thereafter, we will cease offering these series of IPUnits and begin offering IPUnits with different rates.
If you wish to seize this opportunity, call your Member Services Manager, or if you have any questions about IPUnits, please do not hesitate to contact me.
Warmest regards,
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