Ann: Half Yearly Report and Accounts, page-37

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14/03/19

15:42

Post #: 37763239
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Originally posted by Names little: ↑

Hi Slogger, not sure if what you say re Super funds not being able to borrow is correct, refer attached re Limited recourse loans.

What is a Limited Recourse Borrowing Arrangement (LRBA)?

"An LRBA is a financial arrangement which enables an SMSF to purchase property or shares with borrowed money. It is limited recourse because if the trustee defaults on the loan, the lender’s recourse is generally limited to the asset acquired which protects the value of the other assets of the fund. "

"
What are the options at the end of the term?

Borrowings are typically from 1-20 years. The SMSF has the option to:

• repay the loan and acquire full ownership of the asset, or

• sell the asset during the term – with the proceeds applied to the outstanding loan and other associated costs, with any leftover going to the SMSF "

https://www.australianunity.com.au/...rement/borrowing to invest in smsf.ashx?la=en

Seems to protect the assets of the super fund in the event it isn't paid back, the lender only seems to have recourse to the assets acquired. Interesting, what happens if those assets aren't worth much in the event a default occurs, looks like the lender would wear the losses with no recourse to the fund other than on the assets acquired. Interesting.

Anyway, just a general comment in response to your comment on super funds inability to borrow, as it seems to be incorrect.

Thanks

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yep you are correct I was incorrect limited recourse loans are available for shares. but would doubt very much if MNS entered into a limited recourse arrangement with that superfund. but i guess worth throwing out there - why not.

MNS Price at posting: 24.5¢ Sentiment: None Disclosure: Held
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Ann: Half Yearly Report and Accounts, page-37

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