DomaCom Limited (ASX:DCL) CEO Arthur Naoumidis talks about a range of innovative products, including direct ownership in commercial properties, buying property in super and the company's senior equity release solution.
Jessica Amir: Thanks for your company. I’m Jessica Amir for the Finance News Network. Today, I'm with DomaCom Limited (ASX:DCL) CEO, Arthur Naoumidis. Arthur, thank you so much for your time today.
Arthur Naoumidis: It’s great to be here again Jessica.
Jessica Amir: First up Arthur, since we last caught up, the company has achieved many significant milestones. And I’d like to cover what you just achieved with anchoring the new La Trobe Lending Facility?
Arthur Naoumidis: It’s been a long time coming, it’s taken us five years since we did our first transaction, to be able to find someone willing to lend to the DomaCom Fund. And the timing’s actually really, really good because as we’ve seen recently, the last of the major banks has pulled out of lending to SMSF’s. So DomaCom now has the ability to allow advisors and investors to access leveraged investments, at a click of a button, so really, really, excited for the next year.
Jessica Amir: Now can you tell us about the Senior Equity Release Product?
Arthur Naoumidis: We’ve been working on the Senior Equity Release Product for over 6.5 years. And as announced, we got approved in November by ASIC, for the relief instrument that enables the product to work. We’re now about two or three weeks away from launch and we get a lot of interest from advisors. Because now for the first time, advisors can provide financial product advice that includes being able to release equity from their home, to address the big problem, which is funding retirement lifestyles. There is a lot of asset rich cash poor retirees. And our product is really the only financial product that will be available to advisors, to address this issue. So we’re very excited.
Jessica Amir: Just tell us quite simply, what this actually means for advisors and end investors?
Arthur Naoumidis: Basically up until now, the only products available for people to release equity from their home have either been credit product, or real estate product. Both of which can’t be advised on by financial planners, because they’re not financial products. So, the DomaCom Equity Release Product will be the first and only equity release product that is available to financial planners, to do intergenerational wealth planning. To provide funds for retirees to live on or to start bequeathing, or to assist their children. In other words, to do multigenerational estate planning, so it’s going to be a very very exciting product.
Jessica Amir: What else can investors access via the platform?
Arthur Naoumidis: We clearly started off life with just fractional investing for residential property. We now have farms, we have land banking, our third transaction in Badgerys Creek is just being finalised I think, this week or next week. So we can do all sorts of property, commercial, industrial, residential. But we’ve also started doing fractional investing in direct mortgages, pooled mortgages, wind farms, solar farms. So at the end of the day, DomaCom is an infrastructure that allows our advisors and investors to target the asset, they wish to fractionalise.
And that’s the goal is to take lumpy assets that are difficult for retail people to access, and break it up into bite size chunks. Basically what you do for equities, you can now do for solar farms, wind farms, residential, commercial.
Jessica Amir: Staying on that property theme, the property market is in a downward trend. So how do investors access fractional investing to manage the risk?
Arthur Naoumidis: Basically it’s very similar to equities. So when there’s an equities downturn, one of the key things people know is they never ever spot the bottom. So what do you do? You dollar average, because you’ll only spot the bottom in the rear vision mirror. So with DomaCom, you can do precisely what you do with equities, which is say an advisor syndicates 10 clients to buy property in June, and then another one in September and another one in December etc. So, basically investors still get into the market, because as we all know, cycles are cycles. This one will end and we’re in a year and a half closer to the end, because it began a year and a half ago.
And also the other aspect is that when investing, if the price of the asset has dropped, which it has now, has the rent dropped? And the answer’s no, therefore, the yield has gone up for property. At some point in time, that equation will cause demand to come back into property. So this is where advisors play a big role, because they can tell their clients, this is a cycle and you’ll never spot the bottom. So go into the market slowly, without buying a whole house, buy a bit of a house. It’s called fractional investing.
Jessica Amir: Many investors use a platform to administer their investments. Can your investments be accessed via a platform?
Arthur Naoumidis: Yes, we already have clients using us through HUB24 and managed accounts, so directly. But also we’ve got our first MDA, he has put DomaCom sub funds on their models. These platforms only see the Fund, they don’t see the property. And that’s what we’ve done is we’ve taken an asset that’s not inherently a financial product, and we’ve made it a financial product. Therefore, we can appear on any platform in Australia.
Jessica Amir: Arthur Naoumidis, CEO of DomaCom, thank you so much.
Arthur Naoumidis: Thank you Jessica.