DomaCom has temporarily withdrawn the product disclosure statement (PDS) of its DomaCom fund for new business.
The DomaCom Fund allows investors to pool money into a single property by purchasing units in a managed fund.
DomaCom has a diversified business model that provides investors with the ability, through fractional ownership, to invest in a wide range of assets, each segregated in individual subfunds.
In a statement, the firm said: “The trustee of the DomaCom Fund has requested that the product disclosure statement be temporarily withdrawn for new business and the secondary market temporarily ceased to be offered at the request of the trustee.”
The move will allow DomaCom to enhance the control environment of the fund.
On 8 July, an article was published in the Australian Financial Review which stated the fund manager was unable to find tenants for properties associated with the National Disability Insurance Scheme (NDIS). This meant a number of its subfunds could be wound up and 14 properties could be sold.
At the time, DomaCom chief executive Steve James said: “We are very aware that certain NDIS related sub-funds within the DomaCom Fund have had difficulties finding tenants. We acknowledge that this is affecting the returns of investors in those subfunds. We are taking all possible actions to address this position and where required will be seeking to sell the underlying properties.”
The trustee, MSC Trustees, has now taken the decision to temporarily withdraw the PDS. James said DomaCom is working collaboratively with the trustee.
He said: “We are disappointed that the trustee is requiring the temporary withdrawal of the PDS to new business and temporary suspension of the secondary market. DomaCom has been working collaboratively with the trustee to continue to enhance the compliance and risk monitoring regime.
“A number of non-performing subfunds highlighted in the recent AFR article have caused the trustee to effectively suspend the taking on of new business. For a period of time already we have been acting to deal with the non-performing subfunds through potential alternative strategies as well as developing new business opportunities outside of NDIS.
“We look forward to resolving any identified control issues and further enhancing our processes to allow the reopening to new business in the shortest possible time frame to ensure the restructuring of the business is not further impacted by the restrictions imposed by the trustee.”
