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ACM Commercial Mortgage Fund Announces 2015 Fund Highlights and 2016 Distribution Setting

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2015 Fund Highlights

ACM Advisors Ltd. (“ACM”) is pleased to announce for the year ended December 31, 2015, ACM Commercial Mortgage Fund (the “Fund”) grew to $675.5 million. The total number of investments in the Fund increased to 80 as a result of 26 new mortgages totaling $292.0 million and 9 repayments totaling $38.2 million. This growth further diversified the Fund both by asset class and geography. The portfolio remains conservative with an overall loan-to-value ratio of 62% (61% as of December 31, 2014) and debt service coverage ratio of 1.52 times (1.43 times as of December 31, 2014). Importantly, all loans are current and being repaid as agreed.

Over the course of 2015, the yield on the 5 year Government of Canada bond decreased by 0.54% to 0.78% while the yield on the 10 year Government of Canada bond decreased by 0.34% to 1.46%. This trend of declining rates has been sustained through the start of 2016.

Yield Curve-website

The Fund’s total returns are comprised of two components: income (interest payments earned less Fund expenses incurred) 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. Credit spreads in the commercial mortgage market widened slightly during 2015, a trend experienced in the broader credit markets. The downward movement of underlying bond yields and the upward movement of credit spreads resulted in a +0.33% change in the net asset value of the Fund. Overall, the Fund’s total returns, net of all fees and expenses, for the year ended December 31, 2015 were:

Class Income Change in NAV Total Return
F and I 4.32% +0.33% 4.66%
A 4.06% +0.33% 4.40%
B, C, D, and E 3.85% +0.33% 4.19%

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

 

2016 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 this continued low interest rate 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 adjust monthly distributions as of February 1, 2016 as follows:

Class I and Class F from 40.0 to 32.5 cents per unit
Class A from 37.6 to 30.0 cents per unit
Class B, Class C, Class D, and Class E from 35.7 to 28.0 cents per unit

 

Establishment of Independent Governance Committee

On September 30, 2015, an Independent Governance Committee (the “IGC”) was formed to contribute to the governance and oversight of the Fund. The IGC’s key responsibilities are to review potential conflict of interest matters relating to the Fund, review proposed material changes to the Fund’s trust agreement, and receive and review the Fund’s reporting and annual audited financial statements. The inaugural committee members have extensive experience in the financial services industry and include: Mr. Rob Morris, Chairperson (former Chair of Steadyhand’s Independent Review Committee); Ms. Kathy Leavens (former Chief Compliance Officer of Connor, Clark & Lunn); and Mr. Paul Wagler (current member of ACM Mortgage Fund One and ACM Mortgage Fund Two’s independent Investment Committees).