/NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR DISSEMINATION IN THE UNITED STATES./
TORONTO, Oct. 23, 2012 /CNW/ - Connor, Clark & Lunn Capital Markets Inc. (the "Manager") is pleased to announce the closing of the initial public offering of U.S. Agency Mortgage-Backed REIT Advantaged Fund (the "Fund"). The Fund raised gross proceeds of $31 million from the sale of 3.1 million Class A Units and $1.7 million from the sale of 167,910 Class F Units. The Fund has granted to the agents an over-allotment option, exercisable for a period of 30 days from the closing date, to offer an additional 465,000 Class A Units. The Class A Units are listed on the Toronto Stock Exchange ("TSX") under the symbol USM.UN.
The Fund's investment objectives are to (i) provide tax-advantaged quarterly cash distributions consisting primarily of returns of capital; and (ii) provide low-cost exposure to a notional portfolio (the "Portfolio") comprised of the 10 largest (by market capitalization) publically traded U.S. Agency Mortgage REITS through a forward purchase agreement (the "Forward Agreement"). The Fund will not have a fixed distribution policy, but intends to make quarterly distributions on the last day of the months of January, April, July and October based on the Manager's expected returns on the Portfolio for the period. Based on current estimates and assumptions, 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 8.0% per annum.
The Fund will seek to achieve its investment objectives by obtaining exposure to the Portfolio through the Forward Agreement. U.S. Agency Mortgage REITS are real estate investment trusts which 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. U.S. Agency Mortgage 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.
Connor, Clark & Lunn Capital Markets Inc. will act as Manager of the Fund. The Manager is part of the Connor, Clark & Lunn Financial Group, a multi-boutique asset management firm whose affiliated managers are collectively responsible for the investment of over $42 billion in assets as at September 30, 2012.
The Units were offered for sale by a syndicate of agents co-led by BMO Capital Markets and CIBC World Markets Inc., and includes Scotia Capital Inc., Raymond James Ltd., Canaccord Genuity Corp., GMP Securities L.P., Macquarie Private Wealth Inc. and Mackie Research Capital Corporation.
SOURCE: U.S. Agency Mortgage-Backed REIT Advantaged Fund
For further information:
For more information, please visit www.cclcapitalmarkets.com or contact:
Vice President & CFO
Connor, Clark & Lunn Capital Markets Inc.
(416) 214-6182 or 1 (888) 276-2258