Mosaic just announced its first military housing project on Joint Base McGuire-Dix-Lakehurst in New Jersey. It is the first Mosaic project that offers a variable rate of return based on LIBOR. If you are a Mosaic investor or a prospective investor thinking about investing and are unsure of what a variable rate of return is or what LIBOR is, then you have come to the right place.
A variable rate of return is an interest rate on a loan that will fluctuate over time based on a benchmark interest rate that changes periodically. When the benchmark rate increases, the interest rate on the loan increases, and the borrower pays more interest and the lender receives more interest. The opposite holds true for when the benchmark rate decreases.
In the case of Mosaic’s project at Joint Base McGuire-Dix-Lakehurst, the benchmark interest rate is the London Interbank Offered Rate, otherwise known as LIBOR. The LIBOR is the average interest rate that banks could borrow money from other banks in the London interbank market. This average interest rate is calculated on a daily basis for loans ranging from lengths of one night to one year.
Now for the specifics of this project on Joint Base McGuire-Dix-Lakehurst. The project offers investors a variable rate return of 1 month LIBOR + 2.25% per annum for the first four years, rising to 1 month LIBOR + 2.50% thereafter for the final three years of the seven year term.
Boyd Arnold is a member of Mosaic’s business development team. Prior to working at Mosaic, Boyd worked in investment consulting and has experience starting businesses. He graduated from the University of Colorado and has completed all three levels of the CFA. Boyd enjoys cycling, brewing beer, and baseball.