Vancouver-based Connor, Clark & Lunn Capital Markets Inc. (CC&L) reports that a final prospectus for U.S. Agency Mortgage-Backed REIT Advantaged Fund has been filed with Canadian securities regulators.
The closed-end investment fund proposes to offer class A and F units at $10.00 per unit. The maximum amount of the offering is $100 million and is expected to close on or about October 23.
The Toronto Stock Exchange has conditionally approved the listing of the class A units under the symbol USM.UN. Class F units will not be listed but may be converted into class A units on a weekly basis.
CC&L says the Fund will obtain exposure to a portfolio of the 10 largest publicly traded U.S. Agency Mortgage REITs by market capitalization. U.S. Agency Mortgage REITs are real estate investment trusts that invest primarily in mortgage-backed securities that are issued or guaranteed by the U.S. government or a government-sponsored enterprise thereby minimizing their credit risk associated with the underlying mortgages. The REITS comprising the portfolio will be weighted based on their market capitalization, subject to a limit of 25% of the portfolio being invested in any one Agency Mortgage REIT, at the time of investment or rebalancing. The portfolio will be rebalanced at least semi-annually.
Based on current estimates and the assumptions set in the preliminary prospectus, the fund’s initial distribution target is expected to be $0.20 per unit per quarter, representing an initial yield on the unit issue price of 8% per year consisting primarily of returns of capital.
CC&L will act as manager of the fund.
The units are being offered for sale by a syndicate of agents co-led by BMO Capital Markets and CIBC, and including Scotiabank, Raymond James Ltd., Canaccord Genuity Corp., GMP Securities L.P., Macquarie Private Wealth Inc. and Mackie Research Capital Corporation.