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Commercial mortgages are not “the market”


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No loan losses in any
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ACM funds have generated over $700 million of income for our investors


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ACM Commercial Mortgage Fund Announces 2016 Fund Highlights and 2017 Distribution Setting

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2016 Fund Highlights

ACM Advisors Ltd. (“ACM”) is pleased to announce for the year ended December 31, 2016, ACM Commercial Mortgage Fund (the “Fund”) grew to $1.02 billion. Over the year, the total number of investments in the Fund increased to 96 as a result of 30 new mortgages totaling $389.4 million and 14 repayments totaling $53.8 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% (62% as of December 31, 2015) and debt service coverage ratio of 1.61 times (1.52 times as of December 31, 2015). Importantly, all loans are current and being repaid as agreed.

Over the course of 2016, the yield on the 5 year Government of Canada bond increased 38 basis points to 1.11% while the yield on the 10 year Government of Canada bond increased 33 basis points to 1.72%.

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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 tightened during 2016, a trend experienced in the broader credit markets. The upward movement of underlying bond yields and the downward movement of credit spreads resulted in a -0.93% 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, 2016 were: 

Class Income Change in NAV Total Return
F and I +3.73% -0.93% +2.76%
A +3.46% -0.93% +2.50%
B, C, D, and E +3.24% -0.93% +2.28%

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

 

2016 Special Year-End Distribution

ACM Advisors Ltd. is pleased to announce that the ACM Commercial Mortgage Fund will provide December 31, 2016 unitholders of record with a special year-end distribution of $0.242 per unit, in addition to their regular monthly distribution.  This special distribution represents additional interest and fee income generated by the Fund over the year.

2017 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 current and anticipated interest rates, credit spreads and Fund growth. As a result of these projections, the current monthly distribution levels will be maintained:

Class I and Class F 32.5 cents per unit
Class A 30.0 cents per unit
Class B, Class C, Class D, and Class E 28.0 cents per unit


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).

CFA Vancouver Luncheon

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Please join ACM Advisors at CFA Vancouver’s luncheon event on January 26, 2015. The event will feature a panel of representatives, including ACM’s Director – Business Development, Lezlie Mintz, from asset managers involved in private debt solutions. For more information or to register for the event, please click the link below.

http://www.cvent.com/events/private-debt-solutions-in-a-low-interest-rate-environment/event-summary-4df6a90b488f4e2990edd8f5c5606934.aspx

 

Private Debt Solutions in a Low Interest Rate Environment

Private market debt products are attracting investor interest in the current environment of low rates on sovereign and corporate bonds. This panel will look at the dilemma investors face in the low interest rate environment, and the potential solutions offered by diversifying into private debt. The panelists represent investment managers covering fixed income alternatives including infrastructure debt, levered loans and commercial mortgages.

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

ACM Commercial Mortgage Fund Announces 2013 Fund Highlights and 2014 Distribution Setting

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2013 Fund Highlights

ACM Advisors Ltd. (the “Manager”) is pleased to announce for the year ended December 31, 2013, ACM Commercial Mortgage Fund (the “Fund”) grew to $301.6 million representing a 49% 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 0.88% to 0.77%
Class A       from 1.16% to 1.04%
Class B, Class C, Class D, and Class E      from 1.38% to 1.25%

A total of $127.0 million in new mortgages were funded in 2013, representing 17 individual transactions.   These new loans further enhanced the diversification of the Fund and increased the total number of investments within the portfolio to 44.  Importantly all investments in the Fund remain current and are being repaid as agreed.

For the year ended December 31, 2013, the Fund generated the following returns, net of all fees and expenses:

 

Class I and Class F 3.46%*
Class A  3.21%*
Class B, Class C, Class D, and Class E     3.00%*

*Assumes all distributions are reinvested in the Fund.

 

During the year interest rates went up, with the yield on the 10 year Government of Canada bond increasing by almost one per cent.  With credit spreads remaining relatively flat over the course of the year, the increase in rates caused the Fund’s Net Asset Value (“NAV”) to decline by approximately 1.9%.  Given the shorter duration of the Fund (2.8 years as at year-end), the impact of increasing rates was lessened and the income generated by the portfolio more than offset this NAV decline as evidenced by the net returns above.

The effects from the increase in interest rates can also be seen in the annual performance of general Canadian bond market indices:

 

DEX Universe -1.19%
DEX 91-day T-Bil  l 1.01%
DEX Short Term 1.74%
DEX Mid Term -0.63%
DEX Long Term -6.16%
DEX Real Return -13.07%
DEX Corporate 0.84%
Source: PC-Bond

 

2014 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, we remain focused on accretive lending opportunities that fit our conservative underwriting criteria.   Notwithstanding the recent increase in interest rates, all-in mortgage coupon rates remain near historical lows.  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 and modestly decrease the Fund’s monthly distributions by 2.5 cents per unit.  Effective February 1, 2014, the Fund’s monthly distributions will be as follows:

 

Class I and Class F      47.5 cents per unit
Class A       45.2 cents per unit
Class B, Class C, Class D, and Class E      43.3 cents per unit