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ACM Commercial Mortgage Fund Announces 2014 Fund Highlights and 2015 Distribution Setting

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2014 Fund Highlights

ACM Advisors Ltd. is pleased to announce for the year ended December 31, 2014, ACM Commercial Mortgage Fund (the “Fund”) grew to $417.8 million representing a 39% increase in the net assets of the Fund.

With the economies of scale realized from this larger asset base, the annual expense ratio for the Fund has decreased as follows:

Class I and Class F      from 0.77% to 0.74%
Class A       from 1.04% to 1.00%
Class B, Class C, Class D, and Class E      from 1.25% to 1.21%

 

The total number of investments in the Fund increased to 63 as a result of 25 new mortgages totaling $168.9 million and 6 repayments totaling $18.6 million.  The portfolio remains conservative with an overall loan-to-value ratio of 61% and debt service coverage ratio of 1.43 times. Importantly, all loans are current and being repaid as agreed.

The Fund’s total returns are comprised of two components: income (interest payments received less Fund expenses) and the change in net asset value. The net asset value of the Fund is impacted by changes in underlying bond yields and credit spreads.  Over the course of 2014, the yield on the 10 year Government of Canada bond decreased by 1.00% and the 5 year Government of Canada bond decreased by 0.64%.  The decline in interest rates accelerated toward the end of the year, with the yield on the 10 year and 5 year Government of Canada bonds decreasing by 0.34% and 0.27%, respectively, during the fourth quarter alone.  This trend of declining rates has been sustained through the start of 2015.

The lending market also experienced a tightening of credit spreads over the course of the year. The combined effect of lower interest rates and tighter credit spreads resulted in a 3.00% increase in the net asset value of the Fund. The table below summarizes the total returns of the Fund, net of all fees and expenses, for the year ended December 31, 2014:

Class Income Change in NAV Total Return
Class I and Class F 5.17% 3.00% 8.32%
Class A 4.91% 3.00% 8.05%
Class B, Class C, Class D, and Class E 4.70% 3.00% 7.83%

Returns are compounded monthly and assume all distributions are reinvested in the Fund.

 

2015 Distribution Setting

As a mutual fund trust, the Fund distributes all income to its unitholders. The monthly distribution per unit is set based on an estimate of the Fund’s income for the calendar year and is reflective of the portfolio, interest rates, credit spreads and anticipated Fund growth.

Given the Fund’s mandate of generating stable income flows while protecting investor capital, ACM remains focused on lending opportunities that fit the Fund’s conservative underwriting criteria. In order to support the Fund’s current distribution level in today’s environment, additional risk would need to be taken and we are not prepared to deviate from our lending discipline.  As a result, we deem it prudent to proactively decrease the Fund’s monthly distributions by 7.5 cents per unit.  Effective February 1, 2015, the Fund’s monthly distributions will be as follows:

Class I and Class F 40.0 cents per unit
Class A  37.6 cents per unit
Class B, Class C, Class D, and Class E     35.7 cents per unit