Domacom excluded from raising real estate funds

“In view of The Australian Financial Review “Due to the non-compliance with the article and ongoing compliance and risk monitoring, the trustee and the responsible body of the fund have requested that the product information statement for new business be temporarily withdrawn,” Domacom said.

“The trustee has also requested that the secondary market for the fund be temporarily suspended.”

Run by former Liberal leader John Hewson since April 2022, Domacom allows investors to purchase managed investment programs. The company manages about $200 million in more than 100 funds, mostly tied to NDIS-linked properties.

These properties were designed to attract tenants who were eligible for subsidised rents through the special disability housing program under the NDIS and the investment opportunity was marketed by ASR Wealth.

However, due to an oversupply in certain regions, some properties are vacant. ASR Wealth’s funds have performed so poorly that Domacom had to recommend liquidation to its trustee, Melbourne Securities.

Monday’s statement said the trustee felt compelled to go further, while Domacom chief executive Steve James expressed his disappointment.

“Domacom has worked with the trustee to further improve the compliance and risk monitoring system.”

Mr James said a “number of distressed sub-funds that have been in the recent AFR Articles would have resulted in the trustee effectively stopping accepting new business.”

“We have been working for some time to address the distressed sub-funds through possible alternative strategies, as well as
Developing new business opportunities outside of NDIS,” he said.

The company will improve its processes “to enable new business to resume as quickly as possible and to ensure that the restructuring of the business is not further hampered by the restrictions imposed by the trustee.”

The Review of finances had previously warned that investors could face losses in 2022, and operators of disability care homes warned that investment marketers are buying up cheap land – and targeting the properties at patients who require the highest level of care and therefore receive the highest subsidies – even when there is no corresponding demand in those locations.