TORONTO, ONTARIO--(Marketwired - Dec. 4, 2013) -
NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES.
U.S. Housing Recovery Fund (the "Fund") is pleased to announce its regular monthly distribution for December, its monthly distribution target for 2014, a special distribution and a treasury offering (the "Offering") of Class A Units and Class F Units (collectively, "Units") of the Fund.
Regular Monthly Distribution and Monthly Distribution Target for 2014
The Fund has declared a regular monthly distribution for the month of December of $0.05 per Unit (the "Regular Monthly Distribution") to be paid on January 14, 2014 to Unitholders (defined below) of record on December 31, 2013. BMO Nesbitt Burns Inc., the administrator of the Fund (the "Administrator"), has also announced a target distribution of $0.05 per Unit per month ($0.60 per Unit per annum) for the 12 months ending December 31, 2014, representing a yield of 6.11% based on the closing price of the Class A Units (USH.UN) on the Toronto Stock Exchange (the "TSX") on December 3, 2013. While the Fund does not have a fixed distribution, the Administrator annually determines in November of each year an indicative distribution amount for the following year based upon the prevailing market conditions and the estimate by Aston Hill Capital Markets Inc., the portfolio manager of the Fund (the "Portfolio Manager"), of distributable cash flow for the year.
The Fund has also declared a special distribution of $0.88 per Class A Unit and $1.11 per Class F Unit (collectively, the "Special Distribution", together with the Regular Monthly Distribution, the "December Distributions"), to be paid on January 14, 2014 to Unitholders of record on December 19, 2013. The Special Distribution was declared because the net income of the Fund for tax purposes (including the full amount of net realized capital gains) exceeds the amount of regular monthly distributions declared in 2013.
Treasury Offering and Additional Information About U.S. Housing Recovery Fund
A preliminary long form prospectus dated December 4, 2013 has been filed by the Fund with respect to a treasury offering of Units. The syndicate of agents for the Offering is being led by BMO Capital Markets and includes CIBC, National Bank Financial Inc., Scotiabank, TD Securities Inc., Canaccord Genuity Corp., GMP Securities L.P., Raymond James Ltd., Desjardins Securities Inc. and Mackie Research Capital Corporation.
As of the close of business on December 3, 2013, the closing price of the Class A Units on the TSX was $9.82 per Class A Unit and the Fund's net asset value per Class A Unit was $10.2711 and per Class F Unit was $10.6988. To ensure that existing holders of Units ("Unitholders") are not diluted at the time pricing is established, the price per Class A Unit and Class F Unit offered will be equal to or exceed the net asset value per Class A Unit and Class F Unit, as applicable, as at the date of the final prospectus, less the amount of the December Distributions, plus the Agents' fees and the expected expenses of the Offering payable by the Fund. As closing of the Offering will occur after the record dates for the December Distributions, purchasers of Units pursuant to the Offering will not receive the December Distributions. Two trading days prior to the record date for each of the Special Distribution and the Regular Monthly Distribution, the net asset value per Unit will be reduced by the amount of the Special Distribution and the Regular Monthly Distribution, respectively.
The Fund was created to provide investors with an opportunity to gain exposure to the anticipated recovery in the U.S. housing sector.
The investment objectives of the Fund are to provide Unitholders with: (i) the opportunity for capital appreciation; (ii) monthly distributions; and (iii) lower overall volatility of portfolio returns than would be experienced by owning securities of Housing Issuers (defined below) directly.
The net proceeds of the Offering will be invested in a portfolio (the "Portfolio") of equity securities of 30 companies operating in sectors that have direct or indirect exposure to the U.S. housing sector, including homebuilders, building products, home improvement and houseware and appliances ("Housing Issuers"). The Portfolio was equally weighted at the time of initial investment and is rebalanced semi-annually within 15 business days following the last business day of April and October of each year, including most recently on November 20, 2013.
In order to seek to earn income from option premiums to supplement the dividends and distributions generated by the Portfolio and to lower the overall volatility of returns associated with the securities held by the Portfolio, the Portfolio Manager writes covered call options from time to time on up to 25% of the Portfolio as selected by the Portfolio Manager from time to time.
Aston Hill Capital Markets Inc. (formerly Connor, Clark & Lunn Capital Markets Inc.) acts as portfolio manager of the Fund and is responsible for implementing the Fund's investment strategies including executing and maintaining the Fund's option writing activities. The Portfolio Manager is a leading provider of investment products having raised over $2.5 billion in assets. The Portfolio Manager is part of Aston Hill Financial Inc., a diversified asset management company with a suite of retail mutual funds, closed end funds, private equity funds, hedge funds and segregated institutional funds. The company is also engaged in the administration of Argent Energy Trust. Aston Hill Financial has offices in Calgary, Toronto and Halifax. As at September 30, 2013, Aston Hill Financial Inc. had over $7.9 billion in assets under management.
BMO Nesbitt Burns Inc. is the promoter of the Fund, one of the agents in connection with the Offering and acts as the administrator of the Fund.
This press release shall not constitute an offer to sell or the solicitation of an offer to buy securities in the United States, nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful. The securities of the Fund have not been registered under the U.S. Securities Act of 1933, as amended (the "1933 Act"), or any state securities laws and may not be offered or sold in the United States or to a U.S. person absent registration under the 1933 Act or an applicable exemption from the registration requirements of the 1933 Act and applicable state securities laws.
A preliminary prospectus containing important information relating to these securities has been filed with securities commissions or similar authorities in each of the provinces and territories of Canada. The preliminary prospectus is still subject to completion or amendment. Copies of the preliminary prospectus may be obtained from any of the agents listed above. There will not be any sale or any acceptance of an offer to buy the securities until a receipt for the final prospectus has been issued.