UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act File Number: 811-3493
American Federation of Labor and
Congress of Industrial Organizations
Housing Investment Trust
(Exact name of registrant as specified in charter)
2401 Pennsylvania Avenue, N.W., Suite 200
Washington, D.C. 20037
(Address of principal executive offices) (Zip code)
Kenneth G. Lore, Esq.
Katten Muchin Rosenman LLP
2900 K Street, N.W., North Tower Suite 200
Washington, DC 20007
(Name and address of agent for service)
(202) 331-8055
(Registrant’s telephone number, including area code)
Date of fiscal year end: December 31
Date of reporting period: January 1, 2016 - December 31, 2017
Item 1. Reports to Stockholders.
A copy of the 2017 Annual Report (the “Report”) of the AFL-CIO Housing Investment Trust (the “Trust” or “Registrant”) transmitted to Trust participants pursuant to Rule 30e-1 under the Investment Company Act of 1940, as amended (17 CFR 270.30e-1) (the “Act”), is included herewith.
By any measure, we believe that 2017 was a banner year for the AFL-CIO Housing Investment Trust (HIT). The HIT put 19 projects under agreement, committing $422 million of investor capital to finance 6,243 housing units across the country. This represented the second largest year of housing production for the HIT since 2004, and the $1.46 billion in total development investment was the second largest in HIT’s history. The total estimated economic impact of these 19 projects plus three additional projects financed by the HIT’s subsidiary, Building America, was nearly $2 billion.
Investors continued to invest significant capital in the HIT. For the 6th time in the last decade, the HIT raised well over $400 million in new capital and reinvested dividends. These additions helped increase HIT’s net assets to $6.2 billion by year-end, which is nearly double its net assets at the end of 2002. It is also nearly 12 times greater than net assets when I began my tenure in 1992.
Over the past decade, the HIT and Building America have created an estimated 27,300 on-site union construction jobs. As the HIT grows, so too does its ability to create good paying union jobs and expand affordable housing. In 2017, 74% of the housing units financed by the HIT were affordable to low- and moderate-income families, bringing the total to more than 66,600 affordable units and nearly 94,000 total units financed in the last 25 years.
The HIT continued to provide competitive risk-adjusted returns in 2017, demonstrating its ability to perform and adapt across changing markets and investment environments. The HIT will continue to endeavor to invest capital responsibly and with maximum beneficial impact for America’s working men and women, and their communities.
Pensions & Investments recognized the HIT as a Best Place to Work in Money Management in 2017. Our senior management team is among the most talented and committed the HIT has ever had, and among the most diverse in the financial management sector.
Taken together – the returns, the affordable housing financed, the jobs created on-site and in the community – the HIT epitomizes what responsible investing means. We are grateful for your continued support and thank you for your investment in our fund.
Steve Coyle
Chief Executive Officer
ANNUAL REPORT 2017 1
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MESSAGE FROM THE AFL-CIO President “The HIT continues to affirm the commitment it made decades ago to create family-supporting union jobs, finance quality affordable housing, and generate competitive returns for its investors.” |
The HIT proved itself once again to be a champion of the labor movement’s values in 2017. Thousands of families will live in the more than 6,200 quality housing units financed by the HIT during the year. Members of the building and construction trades from coast to coast will receive paychecks with benefits from the 3,600 on-site construction jobs created on the projects financed by the HIT. Children will grow up in safe communities revitalized by HIT investments, and seniors, included union retirees, will have an affordable home in which to spend their golden years.
The HIT continues to affirm the commitment it made decades ago to create family-supporting union jobs, finance quality affordable housing, and generate competitive returns for its investors. This virtuous cycle helps keep our members employed and contributes to the health of our pension funds. I am particularly proud of the HIT’s recent commitment to the Midwest, at a time when this region of our country needs investment more than ever. The HIT’s investments created good paying union construction jobs across 10 Midwestern communities in 2017 alone, bringing much needed affordable housing and economic stimulus to the region. In less than two years, the MidWest@Work Initiative is a third of the way towards its goal—with 18 projects financed—demonstrating that when the HIT lays out a plan, it can deliver.
The HIT has a strong track record of putting money where labor’s values are – good union jobs, quality affordable housing, and responsible stewardship of retirement capital. An investment in the HIT is an investment in our values. Thank you for your support.
Richard L. Trumka
President, AFL-CIO
Trustee, AFL-CIO Housing Investment Trust
2 AFL - CIO HOUSING INVESTMENT TRUST
DISCUSSION OF FUND PERFORMANCE (unaudited) |
PERFORMANCE & CONSISTENT STRATEGY
For 2017, the HIT returned 3.58% on a gross basis and 3.17% on a net basis versus 3.54% for its benchmark, the Bloomberg Barclays US Aggregate Bond Index (Barclays Aggregate or Benchmark). While lagging the Benchmark on a net basis for 2017, the HIT has outperformed on a gross basis for 24 of the past 25 calendar years, and on a net basis for 15 of those years. In 2017 the HIT also surpassed $6 billion in net assets. We believe HIT’s track record of competitive risk-adjusted returns stems from its consistent and patient execution of a strategy focused on high credit quality multifamily mortgage-backed securities (MBS). This strategy should continue to provide value to fixed-income investors over the long term.
HIT’s investment strategy is to construct and manage a portfolio with greater yield and higher credit quality than the Benchmark. It invests in government/agency quality multifamily MBS with prepayment protection, in lieu of corporate debt and most Treasury securities in the Benchmark. Multifamily MBS generally provide higher yields than securities of similar credit quality and interest rate risk. The HIT is therefore designed to produce competitive risk-adjusted returns versus
the Benchmark. Further, with superior credit quality and no corporate debt, the HIT can offer diversification.
HIT’s overweight in multifamily securities (68% at year-end) helped generate competitive returns despite a challenging environment where riskier fixed-income securities significantly outperformed Treasuries. Multifamily MBS spread tightening and HIT’s income advantage helped offset strong performance of corporate bonds and lower credit quality securities, which the HIT did not hold. HIT’s slightly short duration position also contributed positively as interest rates rose on the short to intermediate parts of the yield curve.
The HIT maintained its overweight to the highest credit quality assets despite many investors chasing yield. At year-end, 96.2% of the HIT's portfolio was Government/Agency/ AAA-rated compared to 71.2% in the AAA component of the Barclays Aggregate. A comparison of HIT's performance to the AAA component of the Benchmark shows the value of its consistent strategy, specifically its overweight to mutlifamily MBS. The AAA component of the Benchmark has comparable credit risk and interest rate risk to the HIT. However, for 2017 the HIT outperformed this component by 1.17% (gross) and 0.76% (net), as well as over longer periods, as set forth on page 6.
Past performance is no guarantee of future results. Economic and market conditions change, and both will cause investment return, principal value, and yield to fluctuate so that a participant’s units, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. Performance data current to the most recent month-end is available at www.aflcio-hit. com. Gross performance figures do not reflect the deduction of HIT expenses. Net performance figures reflect the deduction of HIT expenses and are the performance figures investors experience in the HIT. Information about HIT expenses can be found on page 1 of the HIT’s current prospectus. The Barclays Aggregate is an unmanaged index and is not available for direct investment, although certain funds attempt to replicate this index. Returns for the index would be lower if they reflected the actual trading costs or expenses associated with management of an actual portfolio.
ANNUAL REPORT 2017 3
DISCUSSION OF FUND PERFORMANCE (unaudited) |
2017 MARKET ENVIRONMENT
Against a backdrop of steady global expansion, low volatility, and moderate inflation, U.S. GDP grew at an annual rate of 3.2% and 2.6% in the third and fourth quarters of 2017, respectively, with an average rate of 2.3% for the year. Job growth remained healthy and the unemployment rate fell to 4.1% in the fourth quarter the lowest rate since July 2000. Equities performed very well on fairly strong economic indicators, generally good corporate earnings, and the anticipation of the US. tax cuts, which were passed on December 22, 2017. Equity valuations continued to climb during 2017 (Dow Jones, S&P 500, and NASDAQ indices rose 25.1%, 19.4%, and 28.2%, respectively) and corporate credit spreads pushed tighter. With the economy close to full employment and the anticipated fiscal stimulus, the Federal Reserve continued on a path of gradually normalizing monetary policy and unwinding its balance sheet.
INTEREST RATES
Treasury rates rose for short and intermediate maturities as the markets priced in more Federal Reserve tightening. Ongoing low inflation expectations kept longer term rates steady as the
Treasury yield curve flattened significantly, with shorter-term rates rising and longer-term rates generally remaining within a range or slightly lower. The Federal Reserve hiked the fed funds rate three times – by 25 basis points in each of the meetings in March, June, and December – and continued to normalize monetary policy by starting to shrink its $4.5 trillion balance sheet in October. From year-end 2016 to year-end 2017, 2-, 3-, and 5-year Treasury yields rose by 70, 52, and 28 basis points, respectively, while 10- and 30-year yields fell by 4 and 33 basis points, respectively.
SPREADS
As investors chased higher yields, spreads to Treasuries for spread-based assets continued to contract. Corporate bond spreads had continued to tighten since February 2016 and ended 2017 near pre-financial crisis levels, as shown below.
Spreads on the high credit quality multifamily MBS that are HIT’s focus tightened, albeit not to the same extent. For FHA/ Ginnie Mae permanent and construction/permanent MBS, and Fannie Mae DUS 10/9.5 securities in HIT’s portfolio, spreads tightened by approximately 13, 33, and 19 basis points, respectively.
4 AFL - CIO HOUSING INVESTMENT TRUST
DIRECTLY SOURCED MULTIFAMILY INVESTMENTS
2017 was a successful year for HIT’s direct sourcing and capturing of multifamily investments. With nearly $422 million committed to 19 transactions, it was HIT’s largest volume since 2010. During the year, FHA financing was attractive to some developers and sponsors in some of HIT’s key markets. The availability of FHA investments was positive for the HIT, because FHA product can provide relative value for the portfolio and has represented nearly 60% of the total HIT multifamily volume in the past five years.
Construction-related securities help the HIT generate competitive risk-adjusted returns as the investments are funded over an 18-24 month construction period. Further, as the Ginnie Mae/FHA construction mortgage securities in HIT’s portfolio approach conversion to permanent securities, the spreads to Treasuries compress and values increase. In addition to these financial benefits, HIT-financed projects create union construction work, affordable and workforce
housing, and additional community benefits as the impacts of the construction ripple through local economies.
“The Lynn project is an example of how to invest pension money, get competitive returns, put our members to work, and recapture market share outside of our core areas.”
–Lou Antonellis, Business Manager, IBEW Local 103 at Gateway North worker appreciation lunch, Lynn, MA
HIT’s newest initiative, the MidWest@Work Investment Strategy, commenced in 2016 to spur economic development in the industrial Midwest as it invests in securities that are attractive to its portfolio. Since it was launched, the HIT has invested $357.8 million and Building America CDE, Inc. has provided $17.5 million in New Markets Tax Credits. Together these investments represents over one-third of the $1.1 billion MidWest@Work investment goal. To date, the HIT has financed 2,690 housing units, with 72% affordable housing.
![]() | “I proudly support HIT’s success in investing workers’ pension capital to create well-paying union construction jobs, and positively impact working families and entire communities across the country.”
–Sean McGarvey, President, North America’s Building Trades Unions; Trustee, AFL-CIO Housing Investment Trust |
2017 PROJECT IMPACTS* | |
22 projects (19 HIT and 3 Building America) | $421.7M HIT capital invested; $24.5M New Markets Tax Credits from Building America |
$1.9B total economic benefit | $1.7B total development investment |
4,530 union construction jobs; 9.1M hours of union construction work | $702M personal income generated |
10,500 total jobs across industries | $307M union wages & benefits |
6,243 housing units, with 74% affordable | $205M local, state & federal tax revenue |
*Economic impacts such as jobs, personal income, and tax revenue estimates are derived from an IMPLAN model. See inside back cover for additional detail.
ANNUAL REPORT 2017 5
DISCUSSION OF FUND PERFORMANCE (unaudited) |
With $6 billion in assets and growing, we believe that the HIT has achieved a critical mass in order to affect America’s communities, while also generating portfolio assets that allow it to execute its investment strategy.
LOOKING AHEAD
Because we believe that HIT’s concentration in government/agency quality multifamily MBS can provide very low credit risk, stable income, and higher yield than similar credit quality securities, we believe that the HIT can be considered as an option for investors who seek to diversify their portfolios. In the current unpredictable environment, we continue to see value in multifamily MBS and believe HIT’s portfolio will remain attractive on a relative basis.
As the $422 million of multifamily commitments made in 2017 continue to fund during their respective construction periods, the HIT should realize additional yield for its portfolio during 2018. The HIT continues to build a pipeline of additional multifamily investments for 2018 and beyond in an effort to
seek to add additional higher-yielding assets to the portfolio. With $6 billion in assets and growing, we believe that the HIT has achieved a critical mass in order to affect America’s communities, while also generating portfolio assets that allow it to execute its investment strategy.
Taking into account elevated geopolitical uncertainty as well as monetary policy normalization and historically low interest rates, the HIT plans to continue executing its long-standing strategy and managing its duration to be slightly shorter than the Barclays Aggregate. This duration position should help contribute to HIT’s performance relative to the Barclays Aggregate if interest rates rise, while keeping the duration long enough to aid in its efforts to seek to generate competitive absolute returns if interest rates fall. However, if HIT’s market expectations change, it may alter its duration strategy.
6 AFL - CIO HOUSING INVESTMENT TRUST
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HIT NET ASSETS EXCEED $6 BILLION
1991 through 2017 in $ Billions
RISK COMPARISON
As of December 31, 2017
HIT | Barclays | |
Credit Profile | ||
U.S. Government/Agency/AAA/Cash | 96.2% | 71.2% |
A & Below | 0.1% | 25.0% |
Yield | ||
Current Yield | 3.20% | 2.97% |
Yield to worst | 2.87% | 2.66% |
Interest Rate Risk | ||
Effective Duration | 5.45 | 5.80 |
Convexity | 0.07 | 0.10 |
Call Risk | ||
Call Protected | 75% | 72% |
Not Call Protected | 25% | 28% |
Source: Haver Analytics, Bloomberg L.P. and the HIT
The calculations of the HIT yield herein represent widely accepted portfolio characteristics information based on coupon rate, current price and, for yield to worst, certain prepayment assumptions, and are not current yield or other performance data as defined by the SEC in Rule 482.
ANNUAL REPORT 2017 7
2017 MULTIFAMILY INVESTMENT HIGHLIGHTS (unaudited) |
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FOUNTAINS OF ELLISVILLE, Ellisville, MO
• $17.5 million HIT purchase of Ginnie Mae MBS • $18 million expansion of 160-unit senior apartment community built in 2004 • Estimated 175,000 hours of union construction work
“[The HIT can provide] solid returns for our pensioners while providing 100% union projects and work hours for active members who pay into the pension.”
–Brandon Flinn, Business Manager/Secretary-Treasurer, LIUNA Local 42
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PENN SOUTH COOPERATIVE, Manhattan, NY
• $55 million HIT purchase of Ginnie Mae MBS • $191 million total development investment to maintain affordability and make capital improvements to 2,820-unit historic cooperative • Creating an estimated 474,000 hours of union construction work
“We are very proud to be involved in this project that has a strong connection to labor history here in New York and is home to so many working families and retirees.”
–Gary LaBarbera, President, Greater New York Building and Construction Trades Council (B.C.T.C.)
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UNION FLATS, Saint Paul, MN
• $31 million HIT purchase of Ginnie Mae MBS • $68 million new construction of 217 affordable units • Estimated 616,000 hours of union construction work
“We are pleased to be working on another HIT project that shows that investing union pension dollars can create good paying construction jobs with healthcare and retirement benefits.”
–Don Mullin, Executive Secretary, Saint Paul B.C.T.C.
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WEST TOWN HOUSING PRESERVATION, Chicago, IL
• $60 million HIT purchase of Illinois Housing Development Authority Bonds • $121 million rehabilitation of 318 affordable units across 68 buildings • Creating an estimated 1.1 million hours of union construction work
“We appreciate HIT’s commitment to and support of union construction at numerous projects that have put our members to work in the Chicago area for nearly 30 years and recognize the benefits this commitment has provided to the workers and the community.”
–Michael Macellaio, Secretary-Treasurer, Chicago and Cook County B.C.T.C.
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8 AFL - CIO HOUSING INVESTMENT TRUST
OTHER IMPORTANT INFORMATION (unaudited) |
EXPENSE EXAMPLE
Participants in the HIT incur ongoing expenses related to the management and distribution activities of the HIT, as well as certain other expenses. The expense example in the table below is intended to help participants understand the ongoing costs (in dollars) of investing in the HIT and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period, July 1, 2017, and held for the entire period ended December 31, 2017.
Actual Expenses: The first line of the table below provides information about actual account values and actual expenses. Participants may use the information in this line, together with the amount they invested, to estimate the expenses that they paid over the period. Simply divide the account value by $1,000 (for example, an $800,000 account value divided by $1,000 = 800), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Six-Month Period Ended December 31, 2017” to estimate the expenses paid on a particular account during this period.
Hypothetical Expenses (for Comparison Purposes Only): The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the HIT’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the HIT’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses a participant paid for the period. Participants may use this information to compare the ongoing costs of investing in the HIT and other mutual funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other mutual funds.
Please note that this example is useful in comparing funds’ ongoing costs only. It does not include any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. The HIT does not have such transactional costs, but many other funds do.
AVAILABILITY OF QUARTERLY PORTFOLIO SCHEDULES
In addition to disclosure in the Annual and Semi-Annual Reports to Participants, the HIT also files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. The HIT’s reports on Form N-Q are made available on the SEC’s website at http://www.sec.gov and may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information relating to the hours and operation of the SEC’s Public Reference Room may be obtained by calling 800-SEC-0330. Participants may also obtain copies of the HIT’s Form N-Q reports, without charge, upon request, by calling the HIT collect at 202-331-8055.
PROXY VOTING
Except for its shares in its wholly owned subsidiary, HIT Advisers, LLC, and shares in mutual funds holding short-term or overnight cash, if applicable, the HIT invests exclusively in non-voting securities and has not deemed it necessary to adopt policies and procedures for the voting of portfolio securities. The HIT has reported information regarding how it voted in matters related to its subsidiary in its most recent filing with the SEC on Form N-PX. This filing is available on the SEC’s website at http://www.sec.gov. Participants may also obtain a copy of the HIT’s report on Form N-PX, without charge, upon request, by calling the HIT collect at 202-331-8055.
Expenses Paid During | |||
Beginning Account Value | Ending Account Value | Six-Month Period Ended | |
July 1, 2017 | December 31, 2017 | December 31, 2017* | |
Actual expenses | $ 1,000 | $ 1,010.10 | $ 1.98 |
Hypothetical expenses (5% annual return before expenses) | $ 1,000 | $ 1,023.24 | $ 1.99 |
*Expenses are equal to the HIT’s annualized expense ratio of 0.39%, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
ANNUAL REPORT 2017 9
OTHER IMPORTANT INFORMATION (unaudited)
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2017 HIT PARTICIPANTS MEETING
The 2017 Annual Meeting of Participants was held in Washington, D.C., on Wednesday, January 24, 2018. The following matters were put to a vote of the Participants at the meeting through the solicitation of proxies:
Helen R. Kanovsky was elected to chair the Board of Trustees by: votes for 3,472,267.479; no votes against; votes abstaining 158,859.996; votes not cast 1,878,308.075.
Ernst & Young LLP was ratified as the HIT’s Independent Registered Public Accounting Firm by: votes for 3,472,267.479; no votes against; votes abstaining 158,566.665; votes not cast 1,878,308.075.
The Participants voted their intentions regarding any other matter properly coming before the 2017 HIT Participants Meeting as follows: votes for 2,463,857.624; votes against 734,587.496; votes abstaining 432,682.355. In an exercise of their best judgment, the individuals appointed by Participants to vote Proxies voted for the award of the honorary title of Chairman Emeritus to Richard Ravitch, retired Chairman of the Board of Trustees.
The following Trustees were not up for reelection and their terms of office continued after the meeting: Vincent Alvarez, James Boland, Sean McGarvey, Elizabeth Shuler, Marlyn J. Spear, and Tony Stanley.
THE TABLE BELOW DETAILS VOTES PERTAINING TO TRUSTEES WHO WERE ELECTED AND REELECTED AT THE ANNUAL MEETING:
Trustee | Votes For | Votes Against | Votes Abstaining* | |
Kenneth W. Cooper | 3,473,902.269 | 0 | 157,225.206 | |
David B. Durkee | 3,473,902.269 | 0 | 157,225.206 | |
Richard L. Trumka | 3,473,902.269 | 0 | 157,225.206 | |
Bridget Gainer | 3,470,419.834 | 0 | 160,707.641 | |
Deidre L. Schmidt | 3,470,419.834 | 0 | 160,707.641 | |
William C. Thompson, Jr. | 3,470,419.834 | 0 | 160,707.641 | |
Kenneth E. Rigmaiden | 3,473,902.269 | 0 | 157,225.206 | |
Jack Quinn, Jr. | 3,470,419.834 | 0 | 160,707.641 | |
* Votes not cast: 1,878,308.075 |
10 AFL - CIO HOUSING INVESTMENT TRUST
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Report of Independent Registered Public Accounting Firm
The Board of Trustees and Participants of American Federation of Labor and Congress of Industrial Organizations Housing Investment Trust:
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities of American Federation of Labor and Congress of Industrial Organizations Housing Investment Trust (the Trust), including the schedule of portfolio investments, as of December 31, 2017, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Trust as of December 31, 2017, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and its financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Trust’s management. Our responsibility is to express an opinion on the Trust’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Trust in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Trust is not required to have, nor were we engaged to perform, an audit of the Trust’s internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Trust’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2017, by correspondence with the custodian, brokers, and counterparties. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
We have served as the Trust’s auditor since 2002.
Tysons, Virginia
February 22, 2018
12 AFL - CIO HOUSING INVESTMENT TRUST
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Statement of Assets and Liabilities
December 31, 2017 (dollars in thousands, except per share data)
Assets | |||||
Investments, at value (cost $6,241,473) | $ | 6,275,408 | |||
Cash | 574 | ||||
Accrued interest receivable | 18,510 | ||||
Receivables for investments sold | 181 | ||||
Other assets | 2,024 | ||||
Total assets | 6,296,697 | ||||
Liabilities | |||||
Payables for investments purchased | 55,227 | ||||
Redemptions payable | 33,517 | ||||
Income distribution and capital gains payable, net of dividends reinvested of $15,699 | 1,955 | ||||
Refundable deposits | 118 | ||||
Accrued salaries and fringe benefits | 5,153 | ||||
Other liabilities and accrued expenses | 1,502 | ||||
Total liabilities | 97,472 | ||||
Other commitments and contingencies (Note 4 of financial statements) | — | ||||
Net assets applicable to participants’ equity — | |||||
Certificates of participation—authorized unlimited; | |||||
Outstanding 5,548,292 units | $ | 6,199,225 | |||
Net asset value per unit of participation (in dollars) | $ | 1,117.32 | |||
Participants’ equity | |||||
Participants’ equity consisted of the following: | |||||
Amount invested and reinvested by current participants | $ | 6,167,352 | |||
Net unrealized appreciation of investments | 33,935 | ||||
Distribution in excess of net investment income | (2,062 | ) | |||
Total participants’ equity | $ | 6,199,225 |
See accompanying Notes to Financial Statements.
ANNUAL REPORT 2017 13
SCHEDULE OF PORTFOLIO INVESTMENTS December 31, 2017 (dollars in thousands)
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FHA Permanent Securities (2.6% of net assets)
Interest Rate | Maturity Date | Face Amount | Amortized Cost | Value | |||||||||||||||||
Single Family | 7.75 | % | Jul-2021 | $ | 5 | $ | 5 | $ | 5 | ||||||||||||
Multifamily | 3.65 | % | Dec-2037 | 9,222 | 9,426 | 9,069 | |||||||||||||||
3.75 | % | Aug-2048 | 3,965 | 3,961 | 3,927 | ||||||||||||||||
4.00 | % | Dec-2053 | 64,025 | 64,000 | 64,464 | ||||||||||||||||
4.79 | % | May-2053 | 4,759 | 5,006 | 4,849 | ||||||||||||||||
5.17 | % | Feb-2050 | 7,939 | 8,550 | 8,508 | ||||||||||||||||
5.35 | % | Mar-2047 | 7,214 | 7,223 | 7,242 | ||||||||||||||||
5.55 | % | Aug-2042 | 7,763 | 7,766 | 7,792 | ||||||||||||||||
5.60 | % | Jun-2038 | 2,370 | 2,374 | 2,381 | ||||||||||||||||
5.80 | % | Jan-2053 | 2,024 | 2,034 | 2,302 | ||||||||||||||||
5.87 | % | May-2044 | 1,745 | 1,744 | 1,787 | ||||||||||||||||
5.89 | % | Apr-2038 | 4,456 | 4,461 | 4,478 | ||||||||||||||||
6.02 | % | Jun-2035 | 4,087 | 4,088 | 4,108 | ||||||||||||||||
6.20 | % | Apr-2052 | 11,433 | 11,428 | 13,287 | ||||||||||||||||
6.40 | % | Aug-2046 | 3,746 | 3,748 | 4,038 | ||||||||||||||||
6.48 | % | Nov-2041 | 6,104 | 6,325 | 6,137 | ||||||||||||||||
6.60 | % | Jan-2050 | 3,328 | 3,356 | 3,795 | ||||||||||||||||
6.75 | % | Jul-2040 | 3,911 | 3,898 | 3,918 | ||||||||||||||||
7.20 | % | Oct-2039 | 2,774 | 2,779 | 2,794 | ||||||||||||||||
7.50 | % | Sep-2032 | 1,271 | 1,268 | 1,280 | ||||||||||||||||
7.70 | % | Dec-2048 | 5,277 | 6,054 | 6,198 | ||||||||||||||||
157,413 | 159,489 | 162,354 | |||||||||||||||||||
Total FHA Permanent Securities | $ | 157,418 | $ | 159,494 | $ | 162,359 |
Ginnie Mae Securities (24.9% of net assets)
Interest Rate | Maturity Date | Face Amount | Amortized Cost | Value | |||||||||||||||||
Single Family | 4.00 | % | Feb-2040 - Jun-2040 | $ | 3,821 | $ | 3,864 | $ | 4,038 | ||||||||||||
4.50 | % | Aug-2040 | 2,498 | 2,551 | 2,685 | ||||||||||||||||
5.50 | % | Jan-2033 - Jun-2037 | 2,524 | 2,513 | 2,803 | ||||||||||||||||
6.00 | % | Jan-2032 - Aug-2037 | 1,691 | 1,690 | 1,930 | ||||||||||||||||
6.50 | % | Jul-2028 | 55 | 55 | 63 | ||||||||||||||||
7.00 | % | Apr-2026 - Jan-2030 | 976 | 979 | 1,125 | ||||||||||||||||
7.50 | % | Aug-2025 - Aug-2030 | 508 | 514 | 590 | ||||||||||||||||
8.00 | % | Sep-2026 - Nov-2030 | 395 | 401 | 466 | ||||||||||||||||
8.50 | % | Jun-2022 - Aug-2027 | 309 | 309 | 345 | ||||||||||||||||
9.00 | % | Mar-2020 - Jun-2025 | 40 | 40 | 43 | ||||||||||||||||
9.50 | % | Sep-2021 - Sep-2030 | 32 | 32 | 37 | ||||||||||||||||
12,849 | 12,948 | 14,125 | |||||||||||||||||||
Multifamily | 1.73 | % | May-2042 | 2,485 | 2,490 | 2,459 | |||||||||||||||
2.15 | % | May-2056 | 8,906 | 8,889 | 8,722 | ||||||||||||||||
2.18 | % | May-2039 | 3,684 | 3,713 | 3,670 | ||||||||||||||||
2.20 | % | Jun-2056 | 9,400 | 9,379 | 9,199 | ||||||||||||||||
2.25 | % | Dec-2048 | 11,177 | 11,082 | 10,944 | ||||||||||||||||
2.30 | % | Mar-2056 - May-2056 | 50,719 | 50,562 | 49,806 | ||||||||||||||||
2.30 | % | Oct-2056 | 30,714 | 30,365 | 29,914 | ||||||||||||||||
2.31 | % | Nov-2051 | 7,076 | 7,077 | 6,698 | ||||||||||||||||
2.35 | % | Dec-2040 - Nov-2056 | 18,934 | 19,033 | 18,571 | ||||||||||||||||
2.40 | % | Aug-2047 | 11,715 | 11,740 | 11,514 | ||||||||||||||||
2.43 | % | Nov-2038 | 20,000 | 20,087 | 19,908 | ||||||||||||||||
2.50 | % | Jul-2045 - Mar-2057 | 39,320 | 39,353 | 38,400 | ||||||||||||||||
2.50 | % | Sep-2058 | 39,952 | 39,217 | 38,964 | ||||||||||||||||
2.53 | % | Jul-2038 - Feb-2040 | 29,817 | 30,216 | 29,626 | ||||||||||||||||
2.60 | % | Apr-2048 - Apr-2056 | 52,898 | 53,203 | 52,395 |
continued
14 AFL - CIO HOUSING INVESTMENT TRUST
|
Ginnie Mae Securities (24.9% of net assets) continued
Interest Rate | Maturity Date | Face Amount | Amortized Cost | Value | |||||||||||||||
2.65 | % | Jan-2053 | $ | 51,015 | $ | 51,450 | $ | 49,676 | |||||||||||
2.70 | % | May-2048 | 26,230 | 26,666 | 26,031 | ||||||||||||||
2.70 | % | Jul-2056 | 13,881 | 14,045 | 13,706 | ||||||||||||||
2.72 | % | Feb-2044 | 544 | 560 | 543 | ||||||||||||||
2.79 | % | Apr-2049 | 18,958 | 19,169 | 18,710 | ||||||||||||||
2.80 | % | Feb-2053 | 60,000 | 56,839 | 55,868 | ||||||||||||||
2.82 | % | Apr-2050 | 1,500 | 1,534 | 1,481 | ||||||||||||||
2.87 | % | Feb-2036 - Dec-2043 | 25,000 | 25,304 | 24,874 | ||||||||||||||
2.89 | % | Mar-2046 | 32,000 | 32,225 | 31,693 | ||||||||||||||
3.00 | % | Mar-2051 | 20,000 | 20,107 | 19,742 | ||||||||||||||
3.05 | % | May-2044 | 45,500 | 45,806 | 45,568 | ||||||||||||||
3.05 | % | May-2054 | 11,544 | 11,605 | 11,339 | ||||||||||||||
3.10 | % | Jan-2044 | 23,000 | 23,336 | 23,124 | ||||||||||||||
3.11 | % | Jan-2049 | 17,025 | 17,704 | 16,903 | ||||||||||||||
3.13 | % | Nov-2040 | 658 | 675 | 657 | ||||||||||||||
3.20 | % | Jul-2041 - Sep-2051 | 15,000 | 14,890 | 15,109 | ||||||||||||||
3.25 | % | Sep-2054 | 35,000 | 34,681 | 35,037 | ||||||||||||||
3.26 | % | Nov-2043 | 20,000 | 20,035 | 20,079 | ||||||||||||||
3.30 | % | May-2055 | 10,000 | 9,491 | 9,943 | ||||||||||||||
3.30 | % | Jul-2057 | 25,809 | 26,594 | 26,858 | ||||||||||||||
3.33 | % | Jun-2043 | 15,000 | 15,513 | 15,082 | ||||||||||||||
3.35 | % | Nov-2042 - Mar-2044 | 25,000 | 24,474 | 25,186 | ||||||||||||||
3.37 | % | Dec-2046 | 19,200 | 19,468 | 19,296 | ||||||||||||||
3.39 | % | Jul-2046 | 7,760 | 8,018 | 7,800 | ||||||||||||||
3.49 | % | Mar-2042 | 28,000 | 29,099 | 28,367 | ||||||||||||||
3.49 | % | Feb-2044 | 4,000 | 4,210 | 4,045 | ||||||||||||||
3.50 | % | Feb-2051 - Mar-2057 | 54,469 | 55,229 | 56,400 | ||||||||||||||
3.50 | % | Apr-2057 | 25,355 | 26,122 | 26,559 | ||||||||||||||
3.52 | % | Sep-2041 - May-2042 | 16,958 | 17,569 | 17,136 | ||||||||||||||
3.55 | % | Apr-2051 | 4,467 | 4,629 | 4,505 | ||||||||||||||
3.55 | % | Apr-2057 | 42,989 | 44,179 | 45,204 | ||||||||||||||
3.57 | % | Nov-2044 | 20,251 | 20,860 | 20,512 | ||||||||||||||
3.60 | % | Jun-2057 | 14,239 | 14,810 | 15,196 | ||||||||||||||
3.62 | % | Sep-2052 | 6,500 | 6,755 | 6,577 | ||||||||||||||
3.62 | % | Dec-2057 | 29,724 | 30,317 | 31,733 | ||||||||||||||
3.67 | % | Nov-2035 | 16,521 | 17,245 | 16,894 | ||||||||||||||
3.68 | % | Jun-2057 | 27,610 | 28,451 | 29,648 | ||||||||||||||
3.68 | % | Aug-2057 | 14,703 | 15,059 | 15,834 | ||||||||||||||
3.69 | % | Dec-2045 | 8,583 | 8,199 | 8,712 | ||||||||||||||
3.70 | % | Sep-2051 | 7,375 | 7,691 | 7,447 | ||||||||||||||
3.81 | % | Apr-2046 | 10,000 | 10,028 | 10,140 | ||||||||||||||
3.82 | % | Sep-2046 | 4,924 | 5,293 | 4,940 | ||||||||||||||
3.85 | % | Jan-2056 | 32,613 | 32,930 | 35,210 | ||||||||||||||
3.86 | % | Jun-2045 - Oct-2047 | 21,453 | 21,727 | 21,944 | ||||||||||||||
3.91 | % | May-2049 | 6,153 | 6,613 | 6,179 | ||||||||||||||
3.92 | % | Aug-2039 | 47,118 | 50,493 | 48,417 | ||||||||||||||
4.09 | % | Feb-2056 | 57,053 | 57,891 | 61,501 | ||||||||||||||
4.10 | % | May-2051 | 4,053 | 4,438 | 4,399 | ||||||||||||||
4.25 | % | Sep-2038 | 35,943 | 36,147 | 37,021 | ||||||||||||||
4.29 | % | Mar-2053 | 47,973 | 48,275 | 53,545 | ||||||||||||||
4.45 | % | Jun-2055 | 2,591 | 2,486 | 2,831 | ||||||||||||||
4.50 | % | May-2038 | 19,048 | 20,742 | 19,744 | ||||||||||||||
4.63 | % | Sep-2037 | 1 | 1,500 | 1,463 | 1,555 |
continued
ANNUAL REPORT 2017 15
SCHEDULE OF PORTFOLIO INVESTMENTS December 31, 2017 (dollars in thousands)
|
Ginnie Mae Securities (24.9% of net assets) continued
Interest Rate | Maturity Date | Face Amount | Amortized Cost | Value | |||||||||||
4.70% | Oct-2056 | $ | 3,368 | $ | 3,545 | $ | 3,813 | ||||||||
4.90% | Mar-2044 | 1 | 1,000 | 991 | 1,043 | ||||||||||
5.25% | Apr-2037 | 19,230 | 19,224 | 20,386 | |||||||||||
5.34% | Jul-2040 | 6,758 | 6,669 | 6,947 | |||||||||||
5.55% | May-2049 | 1 | 9,910 | 9,910 | 9,921 | ||||||||||
1,508,853 | 1,525,884 | 1,529,400 | |||||||||||||
Total Ginnie Mae Securities | $ | 1,521,702 | $ | 1,538,832 | $ | 1,543,525 |
FHA Construction Securities (0.1% of net assets)
Interest Rates2 | Unfunded | ||||||
Permanent | Construction | Maturity Date | Commitments3 | Face Amount | Amortized Cost | Value | |
Multifamily | 4.10% | 2.50% | Oct-2060 | $16,500 | $5,500 | $5,500 | $5,090 |
Total FHA Construction Securities | $16,500 | $5,500 | $5,500 | $5,090 |
Fannie Mae Securities (42.8% of net assets)
Interest Rate | Maturity Date | Face Amount | Amortized Cost | Value | ||||||||||||||||
Single Family | 1.80% 4 | 1M LIBOR+25 | Mar-2037 | $ | 310 | $ | 306 | $ | 309 | |||||||||||
1.85% 4 | 1M LIBOR+30 | Jul-2043 | 12,758 | 12,673 | 12,751 | |||||||||||||||
1.87% 4 | 1M LIBOR+32 | Jun-2037 | 1,676 | 1,676 | 1,678 | |||||||||||||||
1.90%4 | 1M LIBOR+35 | Mar-2043 - Nov-2044 | 31,286 | 31,262 | 31,350 | |||||||||||||||
1.90% 4 | 1M LIBOR+35 | Nov-2047 | 30,718 | 30,756 | 30,688 | |||||||||||||||
1.93% 4 | 1M LIBOR+38 | Nov-2042 | 6,456 | 6,459 | 6,480 | |||||||||||||||
1.95% 4 | 1M LIBOR+40 | Apr-2037 - Oct-2044 | 17,219 | 17,250 | 17,296 | |||||||||||||||
2.01% 4 | 1M LIBOR+46 | Oct-2042 | 5,803 | 5,829 | 5,846 | |||||||||||||||
2.05% 4 | 1M LIBOR+50 | Dec-2040 - Feb-2043 | 35,184 | 35,083 | 35,466 | |||||||||||||||
2.07% 4 | 1M LIBOR+52 | Jun-2042 | 4,022 | 4,043 | 4,055 | |||||||||||||||
2.10% 4 | 1M LIBOR+55 | Mar-2042 | 9,168 | 9,185 | 9,263 | |||||||||||||||
2.14% 4 | 1M LIBOR+59 | Mar-2041 | 6,227 | 6,276 | 6,288 | |||||||||||||||
2.15% 4 | 1M LIBOR+60 | Mar-2042 - Oct-2043 | 14,555 | 14,608 | 14,751 | |||||||||||||||
2.25% 4 | 1M LIBOR+70 | Dec-2040 | 2,880 | 2,889 | 2,916 | |||||||||||||||
2.44% 4 | 1Y LIBOR+170 | Oct-2042 | 13,850 | 14,185 | 14,083 | |||||||||||||||
2.88% 4 | 1Y UST+211 | May-2033 | 371 | 372 | 387 | |||||||||||||||
2.98% 4 | 6M LIBOR+161 | Aug-2033 | 152 | 152 | 157 | |||||||||||||||
3.00% | Apr-2031 - Jun-2046 | 62,532 | 64,698 | 62,900 | ||||||||||||||||
3.05% 4 | 6M LIBOR+155 | Nov-2033 | 2,131 | 2,132 | 2,192 | |||||||||||||||
3.23% 4 | 1Y UST+219 | Aug-2033 | 1,355 | 1,353 | 1,425 | |||||||||||||||
3.27%4 | 1Y UST+222 | Jul-2033 | 1,511 | 1,515 | 1,591 | |||||||||||||||
3.29% 4 | 1Y LIBOR+155 | Jul-2033 | 257 | 256 | 264 | |||||||||||||||
3.34% 4 | 1Y UST+221 | Aug-2033 | 648 | 648 | 683 | |||||||||||||||
3.35% 4 | 1Y UST+222 | Sep-2035 | 271 | 271 | 281 | |||||||||||||||
3.38% 4 | 1Y LIBOR+163 | Apr-2034 - Nov-2034 | 2,456 | 2,514 | 2,560 | |||||||||||||||
3.50% | Oct-2026 - Jul-2047 | 229,700 | 236,463 | 236,432 | ||||||||||||||||
4.00% | Jun-2018 - Oct-2047 | 142,819 | 148,831 | 149,631 | ||||||||||||||||
4.50% | Mar-2018 - May-2044 | 54,006 | 56,194 | 57,761 | ||||||||||||||||
5.00% | Jan-2018 - Apr-2041 | 15,837 | 16,336 | 17,096 | ||||||||||||||||
5.50% | Jan-2018 - Jun-2038 | 8,195 | 8,232 | 9,040 | ||||||||||||||||
6.00% | Mar-2018 - Nov-2037 | 5,210 | 5,238 | 5,882 | ||||||||||||||||
6.50% | Sep-2028 - Jul-2036 | 871 | 890 | 972 | ||||||||||||||||
7.00% | Sep-2027 - May-2032 | 881 | 884 | 1,004 | ||||||||||||||||
7.50% | Jan-2027 - Sep-2031 | 325 | 326 | 366 | ||||||||||||||||
8.00% | Apr-2030 - May-2031 | 60 | 61 | 64 |
continued
16 AFL - CIO HOUSING INVESTMENT TRUST
|
Fannie Mae Securities (42.8% of net assets) continued
Interest Rate | Maturity Date | Face Amount | Amortized Cost | Value | ||||||||||||||||||
8.50% | Dec-2021 - Apr-2031 | $ | 19 | $ | 19 | $ | 19 | |||||||||||||||
721,719 | 739,865 | 743,927 | ||||||||||||||||||||
Multifamily | 1.58% 4 | 1M LIBOR+34 | Dec-2024 | 60,000 | 60,009 | 60,065 | ||||||||||||||||
1.63% 4 | 1M LIBOR+35 | Dec-2027 | 13,950 | 13,954 | 13,970 | |||||||||||||||||
1.64% 4 | 1M LIBOR+40 | Oct-2024 | 12,994 | 12,980 | 12,989 | |||||||||||||||||
1.64% 4 | 1M LIBOR+35 | Dec-2027 | 18,100 | 18,103 | 18,126 | |||||||||||||||||
1.66% 4 | 1M LIBOR+42 | Aug-2027 | 35,483 | 35,493 | 35,527 | |||||||||||||||||
1.68% 4 | 1M LIBOR+44 | Nov-2022 - May-2027 | 39,655 | 39,664 | 39,688 | |||||||||||||||||
1.84% 4 | 1M LIBOR+60 | Jan-2027 | 25,000 | 25,007 | 25,021 | |||||||||||||||||
2.09% 4 | 1M LIBOR+85 | Jan-2023 | 19,733 | 19,724 | 19,930 | |||||||||||||||||
2.19% 4 | 1M LIBOR+95 | Apr-2022 | 9,976 | 9,979 | 9,974 | |||||||||||||||||
2.21% | Dec-2022 | 30,442 | 30,455 | 30,206 | ||||||||||||||||||
2.21% | Dec-2022 | 23,103 | 23,114 | 22,925 | ||||||||||||||||||
2.24% | Dec-2022 | 30,573 | 30,587 | 30,376 | ||||||||||||||||||
2.26% | Nov-2022 | 6,360 | 6,379 | 6,325 | ||||||||||||||||||
2.34% | Sep-2026 | 28,500 | 28,685 | 27,698 | ||||||||||||||||||
2.38% | Jul-2026 | 21,840 | 21,886 | 21,263 | ||||||||||||||||||
2.44% | Aug-2026 | 22,400 | 22,400 | 21,926 | ||||||||||||||||||
2.46% | Aug-2026 | 25,830 | 25,842 | 24,692 | ||||||||||||||||||
2.48% | Oct-2028 | 24,990 | 25,106 | 24,056 | ||||||||||||||||||
2.49% | Dec-2026 | 16,799 | 16,851 | 16,536 | ||||||||||||||||||
2.50% | Jun-2026 | 60,000 | 60,000 | 58,884 | ||||||||||||||||||
2.50% | Jul-2026 | 37,680 | 37,784 | 36,288 | ||||||||||||||||||
2.57% | Sep-2028 | 40,100 | 40,756 | 38,844 | ||||||||||||||||||
2.70% | Nov-2025 | 15,999 | 16,021 | 16,099 | ||||||||||||||||||
2.72% | Jul-2028 | 36,400 | 36,893 | 35,674 | ||||||||||||||||||
2.75% | Jul-2028 | 15,750 | 15,983 | 15,593 | ||||||||||||||||||
2.80% | Mar-2018 - Apr-2025 | 19,978 | 20,220 | 19,890 | ||||||||||||||||||
2.81% | Sep-2027 | 12,400 | 12,518 | 12,342 | ||||||||||||||||||
2.84% | Mar-2022 | 3,526 | 3,537 | 3,587 | ||||||||||||||||||
2.85% | Mar-2022 | 33,000 | 33,046 | 33,599 | ||||||||||||||||||
2.85% | Dec-2027 | 23,590 | 23,671 | 23,741 | ||||||||||||||||||
2.87% | Oct-2027 | 9,425 | 9,560 | 9,418 | ||||||||||||||||||
2.91% | Jun-2031 | 25,000 | 25,240 | 24,923 | ||||||||||||||||||
2.92% | Jan-2026 - Apr-2028 | 34,255 | 34,390 | 34,506 | ||||||||||||||||||
2.92% | Jun-2027 | 71,659 | 71,813 | 72,757 | ||||||||||||||||||
2.94% | Jul-2039 | 14,999 | 15,207 | 14,727 | ||||||||||||||||||
2.94% | Jun-2027 | 29,000 | 29,066 | 29,226 | ||||||||||||||||||
2.94% | Sep-2027 | 30,000 | 30,256 | 30,073 | ||||||||||||||||||
2.97% | May-2026 - Nov-2032 | 37,987 | 38,743 | 38,098 | ||||||||||||||||||
2.99% | Jun-2025 | 2,750 | 2,760 | 2,814 | ||||||||||||||||||
3.00% | May-2027 - Mar-2028 | 16,010 | 16,051 | 16,080 | ||||||||||||||||||
3.02% | Jun-2027 - Nov-2029 | 40,119 | 40,352 | 40,495 | ||||||||||||||||||
3.04% | Apr-2030 | 25,100 | 25,221 | 25,392 | ||||||||||||||||||
3.05% | Apr-2030 | 28,467 | 28,511 | 28,518 | ||||||||||||||||||
3.08% | Jul-2029 | 12,813 | 12,870 | 12,846 | ||||||||||||||||||
3.10% | Sep-2029 | 8,515 | 8,569 | 8,536 | ||||||||||||||||||
3.12% | Jul-2029 | 25,350 | 25,573 | 25,581 | ||||||||||||||||||
3.12% | Apr-2030 | 13,854 | 13,860 | 13,786 | ||||||||||||||||||
3.14% | Apr-2029 | 7,889 | 7,918 | 8,027 | ||||||||||||||||||
3.15% | Jan-2027 | 20,700 | 20,744 | 21,346 | ||||||||||||||||||
3.17% | Sep-2029 | 13,862 | 13,937 | 13,940 | ||||||||||||||||||
3.18% | Sep-2029 - May-2035 | 22,840 | 23,259 | 22,912 |
continued
ANNUAL REPORT 2017 17
SCHEDULE OF PORTFOLIO INVESTMENTS December 31, 2017 (dollars in thousands)
|
Fannie Mae Securities (42.8% of net assets) continued
Interest Rate | Maturity Date | Face Amount | Amortized Cost | Value | |||||||||||||||
3.20 | % | Oct-2027 | $ | 10,641 | $ | 10,722 | $ | 10,966 | |||||||||||
3.21 | % | May-2030 | 7,170 | 7,320 | 7,315 | ||||||||||||||
3.22 | % | Sep-2026 | 28,335 | 28,382 | 29,278 | ||||||||||||||
3.24 | % | Aug-2027 | 9,500 | 9,684 | 9,711 | ||||||||||||||
3.25 | % | Nov-2027 | 10,638 | 10,720 | 10,983 | ||||||||||||||
3.26 | % | Jan-2027 | 7,668 | 7,702 | 7,910 | ||||||||||||||
3.31 | % | Oct-2027 | 16,282 | 16,501 | 16,873 | ||||||||||||||
3.32 | % | Apr-2029 | 20,080 | 20,216 | 20,405 | ||||||||||||||
3.34 | % | Dec-2029 | 12,150 | 12,400 | 12,274 | ||||||||||||||
3.35 | % | Feb-2029 | 20,000 | 20,360 | 20,657 | ||||||||||||||
3.36 | % | Dec-2023 - Oct-2029 | 19,814 | 19,856 | 20,554 | ||||||||||||||
3.40 | % | Oct-2026 | 3,037 | 3,058 | 3,172 | ||||||||||||||
3.41 | % | Sep-2023 - Apr-2029 | 56,607 | 57,251 | 58,547 | ||||||||||||||
3.42 | % | Apr-2035 | 5,498 | 5,602 | 5,680 | ||||||||||||||
3.43 | % | Oct-2026 | 7,473 | 7,524 | 7,816 | ||||||||||||||
3.46 | % | Dec-2023 | 3,500 | 3,512 | 3,648 | ||||||||||||||
3.54 | % | Oct-2021 | 7,091 | 7,106 | 7,362 | ||||||||||||||
3.61 | % | Sep-2023 | 6,496 | 6,545 | 6,793 | ||||||||||||||
3.63 | % | Jul-2035 | 21,987 | 22,025 | 23,470 | ||||||||||||||
3.66 | % | Oct-2023 | 4,769 | 4,812 | 4,998 | ||||||||||||||
3.77 | % | Dec-2033 | 10,500 | 10,748 | 11,434 | ||||||||||||||
3.84 | % | May-2018 | 7,140 | 7,140 | 7,183 | ||||||||||||||
3.87 | % | Sep-2023 | 2,506 | 2,553 | 2,638 | ||||||||||||||
4.06 | % | Oct-2025 | 23,925 | 24,001 | 25,616 | ||||||||||||||
4.15 | % | Jun-2021 | 8,958 | 8,963 | 9,381 | ||||||||||||||
4.22 | % | Jul-2018 | 319 | 319 | 321 | ||||||||||||||
4.25 | % | May-2021 | 4,067 | 4,067 | 4,263 | ||||||||||||||
4.27 | % | Nov-2019 | 5,690 | 5,689 | 5,851 | ||||||||||||||
4.32 | % | Nov-2019 | 2,810 | 2,810 | 2,891 | ||||||||||||||
4.33 | % | Nov-2019 - Mar-2021 | 21,479 | 21,479 | 22,215 | ||||||||||||||
4.38 | % | Apr-2020 | 9,651 | 9,654 | 10,002 | ||||||||||||||
4.44 | % | May-2020 | 5,726 | 5,727 | 5,950 | ||||||||||||||
4.50 | % | Feb-2020 | 4,025 | 4,025 | 3,979 | ||||||||||||||
4.52 | % | Nov-2019 - May-2021 | 6,849 | 6,862 | 7,165 | ||||||||||||||
4.56 | % | Jul-2019 | 6,967 | 6,968 | 7,160 | ||||||||||||||
4.66 | % | Jul-2021 | 1,219 | 1,222 | 1,222 | ||||||||||||||
4.68 | % | Jul-2019 | 12,435 | 12,432 | 12,798 | ||||||||||||||
4.69 | % | Jan-2020 - Jun-2035 | 13,317 | 13,341 | 13,840 | ||||||||||||||
4.71 | % | Mar-2021 | 5,604 | 5,621 | 5,929 | ||||||||||||||
4.73 | % | Feb-2021 | 1,474 | 1,478 | 1,558 | ||||||||||||||
4.80 | % | Jun-2019 | 2,029 | 2,028 | 2,088 | ||||||||||||||
4.86 | % | May-2019 | 1,355 | 1,354 | 1,393 | ||||||||||||||
4.89 | % | Nov-2019 | 848 | 849 | 881 | ||||||||||||||
4.94 | % | Apr-2019 | 3,335 | 3,334 | 3,427 | ||||||||||||||
5.00 | % | Jun-2019 | 1,774 | 1,774 | 1,830 | ||||||||||||||
5.04 | % | Jun-2019 | 1,756 | 1,757 | 1,813 | ||||||||||||||
5.05 | % | Jun-2019 | 1,237 | 1,237 | 1,277 | ||||||||||||||
5.08 | %4 | 10Y UST+17 | Apr-2021 | 40,000 | 40,001 | 42,964 | |||||||||||||
5.12 | % | Jul-2019 | 8,222 | 8,220 | 8,506 | ||||||||||||||
5.13 | % | Jul-2019 | 833 | 833 | 862 | ||||||||||||||
5.15 | % | Oct-2022 | 1,623 | 1,627 | 1,732 | ||||||||||||||
5.25 | % | Jan-2020 | 6,451 | 6,452 | 6,747 | ||||||||||||||
5.29 | % | May-2022 | 4,977 | 4,977 | 5,432 |
continued
18 AFL - CIO HOUSING INVESTMENT TRUST
Fannie Mae Securities (42.8% of net assets) continued
Interest Rate | Maturity Date | Face Amount | Amortized Cost | Value | |||||||||||||||||||
5.30 | % | Aug-2029 | $ | 5,598 | $ | 5,518 | $ | 6,319 | |||||||||||||||
5.45 | % | May-2033 | 2,506 | 2,514 | 2,603 | ||||||||||||||||||
5.47 | % | Aug-2024 | 7,833 | 7,854 | 8,136 | ||||||||||||||||||
5.60 | % | Feb-2018 - Jan-2024 | 9,739 | 9,739 | 10,512 | ||||||||||||||||||
5.69 | % | Jun-2041 | 4,632 | 4,755 | 5,298 | ||||||||||||||||||
5.75 | % | Jun-2041 | 2,247 | 2,315 | 2,490 | ||||||||||||||||||
5.91 | % | Mar-2037 | 1,814 | 1,846 | 1,989 | ||||||||||||||||||
5.96 | % | Jan-2029 | 335 | 336 | 338 | ||||||||||||||||||
6.06 | % | Jul-2034 | 8,509 | 8,669 | 8,959 | ||||||||||||||||||
6.15 | % | Jan-2023 | 3,511 | 3,511 | 3,410 | ||||||||||||||||||
6.23 | % | Sep-2034 | 1,243 | 1,277 | 1,277 | ||||||||||||||||||
6.28 | % | Nov-2028 | 2,353 | 2,423 | 2,483 | ||||||||||||||||||
6.35 | % | Aug-2032 | 9,197 | 9,216 | 9,257 | ||||||||||||||||||
6.38 | % | Jul-2021 | 4,964 | 4,969 | 5,368 | ||||||||||||||||||
6.39 | % | Apr-2019 | 797 | 797 | 780 | ||||||||||||||||||
6.52 | % | May-2029 | 4,449 | 4,646 | 4,580 | ||||||||||||||||||
7.20 | % | Aug-2029 | 732 | 724 | 737 | ||||||||||||||||||
7.75 | % | Dec-2024 | 1,158 | 1,158 | 1,155 | ||||||||||||||||||
8.40 | % | Jul-2023 | 271 | 270 | 274 | ||||||||||||||||||
8.50 | % | Nov-2019 | 1,015 | 1,021 | 1,070 | ||||||||||||||||||
1,835,485 | 1,844,945 | 1,855,630 | |||||||||||||||||||||
When Issued5 | 1.88 | %4 | 1M LIBOR+34 | Jan-2028 | 22,425 | 22,432 | 22,387 | ||||||||||||||||
3.12 | % | Mar-2025 | 12,675 | 12,875 | 12,898 | ||||||||||||||||||
3.34 | % | Jan-2030 | 17,200 | 17,555 | 17,648 | ||||||||||||||||||
52,300 | 52,862 | 52,933 | |||||||||||||||||||||
Total Fannie Mae Securities | $ | 2,609,504 | $ | 2,637,672 | $ | 2,652,490 |
Ginnie Mae Construction Securities (2.0% of net assets)
Interest Rates2 | Unfunded | |||||||||||||||||||||||||
Permanent | Construction | Maturity Date | Commitments3 | Face Amount | Amortized Cost | Value | ||||||||||||||||||||
Multifamily | 3.25 | % | 3.25 | % | Jun-2059 | $ | 31,475 | $ | 25 | $ | 655 | $ | 328 | |||||||||||||
3.30 | % | 3.30 | % | Mar-2057 | 1,549 | 3,639 | 3,682 | 3,851 | ||||||||||||||||||
3.30 | % | 4.30 | % | Nov-2058 | 3,698 | 16,827 | 17,442 | 18,005 | ||||||||||||||||||
3.34 | % | 3.34 | % | Aug-2059 | 42,655 | — | 853 | 735 | ||||||||||||||||||
3.35 | % | 3.35 | % | Aug-2059 | 6,662 | 25 | 226 | 181 | ||||||||||||||||||
3.38 | % | 3.38 | % | Aug-2059 | 35,509 | 25 | 913 | 777 | ||||||||||||||||||
3.38 | % | 3.38 | % | Jan-2060 | 20,429 | 39,975 | 39,975 | 41,796 | ||||||||||||||||||
3.38 | % | 3.38 | % | Jun-2059 | 44,685 | — | 894 | 923 | ||||||||||||||||||
3.39 | % | 3.39 | % | Feb-2059 | 14,650 | 25 | 319 | 413 | ||||||||||||||||||
3.48 | % | 3.48 | % | May-2059 | 14,578 | — | 305 | 550 | ||||||||||||||||||
3.49 | % | 3.49 | % | Aug-2058 | 8,290 | 3,110 | 3,392 | 3,659 | ||||||||||||||||||
3.53 | % | 3.53 | % | Apr-2042 | 827 | 17,472 | 18,157 | 18,571 | ||||||||||||||||||
3.65 | % | 3.65 | % | Nov-2058 | 1,818 | 8,778 | 8,929 | 9,406 | ||||||||||||||||||
3.66 | % | 3.66 | % | Jul-2058 | 1,200 | 22,800 | 23,111 | 24,582 | ||||||||||||||||||
4.15 | % | 4.15 | % | Sep-2051 | 14,906 | 2,961 | 3,022 | 3,054 | ||||||||||||||||||
Total Ginnie Mae Construction Securities | $ | 242,931 | $ | 115,662 | $ | 121,875 | $ | 126,831 |
ANNUAL REPORT 2017 19
SCHEDULE OF PORTFOLIO INVESTMENTS December 31, 2017 (dollars in thousands) |
Freddie Mac Securities (14.5% of net assets)
Interest Rate | Maturity Date | Face Amount | Amortized Cost | Value | |||||||||||||||||
Single Family | 1.78 | %4 | 1M LIBOR+30 | Feb-2036 | $ | 1,386 | $ | 1,386 | $ | 1,388 | |||||||||||
1.81 | %4 | 1M LIBOR+33 | May-2037 | 110 | 110 | 110 | |||||||||||||||
1.83 | %4 | 1M LIBOR+35 | Apr-2036 - Mar-2045 | 28,901 | 28,920 | 28,963 | |||||||||||||||
1.88 | %4 | 1M LIBOR+40 | Aug-2043 | 5,419 | 5,416 | 5,444 | |||||||||||||||
1.96 | %4 | 1M LIBOR+48 | Oct-2040 | 4,360 | 4,356 | 4,393 | |||||||||||||||
1.98 | %4 | 1M LIBOR+50 | Oct-2040 - Jun-2044 | 39,451 | 39,469 | 39,787 | |||||||||||||||
2.03 | %4 | 1M LIBOR+55 | Nov-2040 | 5,060 | 5,109 | 5,114 | |||||||||||||||
2.15 | %4 | 1M LIBOR+67 | Aug-2037 | 4,442 | 4,497 | 4,504 | |||||||||||||||
2.50 | % | Jan-2043 - Aug-2046 | 18,334 | 18,617 | 17,743 | ||||||||||||||||
3.00 | % | Aug-2042 - Sep-2046 | 77,431 | 79,306 | 77,829 | ||||||||||||||||
3.20 | %4 | 1Y UST+222 | Jun-2033 | 283 | 282 | 293 | |||||||||||||||
3.47 | %4 | 1Y UST+223 | Oct-2033 | 788 | 782 | 823 | |||||||||||||||
3.50 | % | Jan-2026 - Oct-2046 | 173,465 | 178,234 | 178,740 | ||||||||||||||||
3.50 | % | Jun-2046 | 25,398 | 26,090 | 26,097 | ||||||||||||||||
3.52 | %4 | 1Y LIBOR+177 | Jul-2035 | 124 | 124 | 130 | |||||||||||||||
4.00 | % | Aug-2020 - Aug-2047 | 184,592 | 192,925 | 193,304 | ||||||||||||||||
4.00 | % | Sep-2045 | 38,339 | 40,173 | 40,141 | ||||||||||||||||
4.50 | % | Aug-2018 - Dec-2044 | 58,027 | 60,858 | 62,206 | ||||||||||||||||
5.00 | % | Jan-2019 - Mar-2041 | 8,864 | 8,932 | 9,473 | ||||||||||||||||
5.50 | % | May-2020 - Jul-2038 | 4,003 | 3,988 | 4,425 | ||||||||||||||||
6.00 | % | Jul-2021 - Feb-2038 | 5,224 | 5,283 | 5,908 | ||||||||||||||||
6.50 | % | Apr-2028 - Nov-2037 | 705 | 712 | 808 | ||||||||||||||||
7.00 | % | Apr-2028 - Mar-2030 | 59 | 55 | 68 | ||||||||||||||||
7.50 | % | Aug-2029 - Apr-2031 | 56 | 53 | 64 | ||||||||||||||||
8.00 | % | Dec-2029 | 1 | 1 | 1 | ||||||||||||||||
8.50 | % | Jul-2024 - Jan-2025 | 72 | 72 | 81 | ||||||||||||||||
9.00 | % | Mar-2025 | 34 | 34 | 39 | ||||||||||||||||
684,928 | 705,784 | 707,876 | |||||||||||||||||||
Multifamily | 1.57 | %4 | 1M LIBOR+33 | Sep-2024 | 24,999 | 24,999 | 24,990 | ||||||||||||||
1.79 | %4 | 1M LIBOR+42 | May-2027 | 19,364 | 19,364 | 19,368 | |||||||||||||||
1.89 | %4 | 1M LIBOR+65 | Jan-2023 | 11,808 | 11,808 | 11,842 | |||||||||||||||
1.94 | %4 | 1M LIBOR+70 | Sep-2022 | 23,685 | 23,661 | 23,528 | |||||||||||||||
2.95 | % | Jan-2018 | 300 | 300 | 300 | ||||||||||||||||
3.28 | % | Dec-2029 | 17,007 | 17,412 | 17,260 | ||||||||||||||||
3.34 | % | Dec-2029 | 9,959 | 10,251 | 10,176 | ||||||||||||||||
3.35 | % | Oct-2033 | 18,500 | 18,863 | 18,790 | ||||||||||||||||
3.38 | % | Apr-2030 | 14,698 | 15,182 | 15,032 | ||||||||||||||||
3.48 | % | Jun-2030 | 19,176 | 19,988 | 19,740 | ||||||||||||||||
3.60 | % | Apr-2030 | 26,291 | 27,698 | 27,335 | ||||||||||||||||
185,787 | 189,526 | 188,361 | |||||||||||||||||||
Total Freddie Mac Securities | $ | 870,715 | $ | 895,310 | $ | 896,237 |
20 AFL - CIO HOUSING INVESTMENT TRUST
State Housing Finance Agency Securities (4.2% of net assets)
Interest Rates2 | Unfunded | ||||||||||||||||||||||||||||
Issuer | Permanent | Construction | Maturity Date | Commitments3 | Face Amount | Amortized Cost | Value | ||||||||||||||||||||||
Multifamily | City of Rocherster, MN | — | 0.84% | Jun-2019 | $ | — | $ | 15,750 | $ | 15,750 | $ | 15,715 | |||||||||||||||||
City of Chicago | — | 2.00% | May-2019 | — | 5,700 | 5,701 | 5,701 | ||||||||||||||||||||||
Connecticut Housing Finance Auth | — | 3.25% | Nov-2019 | 6 | 15,895 | 6,605 | 6,562 | 6,522 | |||||||||||||||||||||
NYC Housing Development Corp | 2.95% | — | Nov-2045 | — | 5,000 | 5,000 | 5,126 | ||||||||||||||||||||||
NYC Housing Development Corp | 3.10% | — | Oct-2046 | — | 24,973 | 24,974 | 24,737 | ||||||||||||||||||||||
Connecticut Housing Finance Auth | 3.25% | — | May-2050 | — | 12,500 | 12,383 | 11,975 | ||||||||||||||||||||||
NYC Housing Development Corp | 3.75% | — | May-2035 | 6 | — | 4,405 | 4,405 | 4,532 | |||||||||||||||||||||
MassHousing | 3.85% | — | Dec-2058 | — | 9,980 | 9,977 | 9,476 | ||||||||||||||||||||||
NYC Housing Development Corp | 4.00% | — | Dec-2028 | — | 5,000 | 5,103 | 5,346 | ||||||||||||||||||||||
MassHousing | 4.04% | — | Nov-2032 | — | 1,305 | 1,305 | 1,318 | ||||||||||||||||||||||
MassHousing | 4.13% | — | Dec-2036 | — | 5,000 | 5,000 | 5,233 | ||||||||||||||||||||||
NYC Housing Development Corp | 4.20% | — | Dec-2039 | — | 8,305 | 8,305 | 8,677 | ||||||||||||||||||||||
NYC Housing Development Corp | 4.25% | — | Nov-2025 | — | 1,150 | 1,150 | 1,194 | ||||||||||||||||||||||
NYC Housing Development Corp | 4.29% | — | Nov-2037 | — | 1,190 | 1,190 | 1,205 | ||||||||||||||||||||||
NYC Housing Development Corp | 4.40% | — | Nov-2024 | — | 4,120 | 4,120 | 4,244 | ||||||||||||||||||||||
NYC Housing Development Corp | 4.44% | — | Nov-2041 | — | 1,120 | 1,120 | 1,138 | ||||||||||||||||||||||
NYC Housing Development Corp | 4.49% | — | Nov-2044 | — | 455 | 455 | 463 | ||||||||||||||||||||||
NYC Housing Development Corp | 4.50% | — | Nov-2030 | — | 1,680 | 1,682 | 1,764 | ||||||||||||||||||||||
MassHousing | 4.50% | — | Jun-2056 | — | 45,000 | 45,000 | 47,017 | ||||||||||||||||||||||
NYC Housing Development Corp | 4.60% | — | Nov-2030 | — | 4,665 | 4,665 | 4,856 | ||||||||||||||||||||||
NYC Housing Development Corp | 4.70% | — | Nov-2035 | — | 1,685 | 1,685 | 1,776 | ||||||||||||||||||||||
NYC Housing Development Corp | 4.78% | — | Aug-2026 | — | 12,500 | 12,502 | 13,107 | ||||||||||||||||||||||
NYC Housing Development Corp | 4.80% | — | Nov-2040 | — | 2,860 | 2,862 | 3,019 | ||||||||||||||||||||||
NYC Housing Development Corp | 4.90% | — | Nov-2034 - Nov-2041 | — | 8,800 | 8,800 | 9,139 | ||||||||||||||||||||||
NYC Housing Development Corp | 4.95% | — | Nov-2039 - May-2047 | — | 13,680 | 13,682 | 14,172 | ||||||||||||||||||||||
MassHousing | 5.55% | — | Nov-2039 | — | 5,000 | 4,981 | 5,165 | ||||||||||||||||||||||
MassHousing | 5.69% | — | Nov-2018 | — | 845 | 845 | 861 | ||||||||||||||||||||||
MassHousing | 5.70% | — | Jun-2040 | — | 11,510 | 11,510 | 11,747 | ||||||||||||||||||||||
MassHousing | 6.42% | — | Nov-2039 | — | 22,000 | 22,000 | 23,121 | ||||||||||||||||||||||
MassHousing | 6.70% | — | Jun-2040 | — | 9,290 | 9,290 | 9,639 | ||||||||||||||||||||||
15,895 | 252,073 | 252,004 | 257,985 | ||||||||||||||||||||||||||
Forward Commitments | MassHousing | — | 3.00 | % | Oct-2018 | 6 | 9,464 | — | (97 | ) | (33 | ) | |||||||||||||||||
Total State Housing Finance Agency Securities | $ | 25,359 | $ | 252,073 | $ | 251,907 | $ | 257,952 |
ANNUAL REPORT 2017 21
SCHEDULE OF PORTFOLIO INVESTMENTS December 31, 2017 (dollars in thousands) |
Commercial Mortgage-Backed Securities (2.0% of net assets)
Issuer | Interest Rate | Maturity Date | Face Amount | Amortized Cost | Value | |||
Nomura | 2.77% | Dec-2045 | $ | 10,000 | $ | 10,160 | $ | 9,991 |
Nomura | 3.19% | Mar-2046 | 20,000 | 20,384 | 20,270 | |||
JP Morgan | 3.48% | Jun-2045 | 10,000 | 10,454 | 10,289 | |||
Citigroup | 3.62% | Jul-2047 | 8,000 | 8,207 | 8,322 | |||
Barclays/ JP Morgan | 3.81% | Jul-2047 | 2,250 | 2,308 | 2,356 | |||
RBS/ Wells Fargo | 3.82% | Aug-2050 | 5,000 | 5,132 | 5,242 | |||
Deutsche Bank/UBS | 3.96% | Mar-2047 | 5,000 | 5,129 | 5,254 | |||
Barclays/ JP Morgan | 4.00% | Apr-2047 | 5,000 | 5,130 | 5,289 | |||
Cantor/Deutsche Bank | 4.01% | Apr-2047 | 20,000 | 20,516 | 21,130 | |||
Barclays/ JP Morgan | 4.08% | Feb-2047 | 6,825 | 7,166 | 7,255 | |||
Cantor/Deutsche Bank | 4.24% | Feb-2047 | 7,000 | 7,179 | 7,487 | |||
Deutsche Bank | 5.00% | Nov-2046 | 18,990 | 19,434 | 20,026 | |||
Total Commercial Mortgage Backed Securities | $ | 118,065 | $ | 121,199 | $ | 122,911 |
Other Multifamily Investments (0.3% of net assets)
Interest Rates2 | Unfunded | |||||||||||
Issuer | Permanent | Construction | Maturity Date | Commitments3 | Face Amount | Amortized Cost | Value | |||||
Direct Loans | ||||||||||||
Harry Silver Housing Company, Inc. | — | 4.20% | Jun-2018 | $ | — | $ | 5,197 | $ | 5,201 | $ | 5,208 | |
Harry Silver Housing Company, Inc. | — | 4.20% | Jun-2018 | — | 207 | 208 | 207 | |||||
Detroit Home Repair Program | — | 5.75% | Jun-2018 | 129 | 58 | 58 | 58 | |||||
Detroit Home Repair Program | — | 5.75% | Apr-2018 | 250 | 147 | 147 | 147 | |||||
379 | 5,609 | 5,614 | 5,620 | |||||||||
Privately Insured Construction/Permanent Mortgages7 | ||||||||||||
IL Housing Development Authority | 5.40% | — | Mar-2047 | — | 8,073 | 8,076 | 8,051 | |||||
IL Housing Development Authority | 6.20% | — | Dec-2047 | — | 3,063 | 3,073 | 3,063 | |||||
IL Housing Development Authority | 6.40% | — | Nov-2048 | — | 927 | 938 | 916 | |||||
— | 12,063 | 12,087 | 12,030 | |||||||||
Total Other Multifamily Investments | $ 379 | $ | 17,672 | $ | 17,701 | $ | 17,650 |
United States Treasury Securities (3.8% of net assets)
Interest Rate | Maturity Date | Face Amount | Amortized Cost | Value | ||||
1.63% | May-2026 | $ | 10,000 | $ | 10,081 | $ | 9,420 | |
2.13% | May-2025 | 15,000 | 14,874 | 14,770 | ||||
2.25% | Nov-2024 | 65,000 | 66,698 | 64,670 | ||||
2.25% | Nov-2025 | 5,000 | 5,096 | 4,956 | ||||
2.38% | Aug-2024 | 70,000 | 70,458 | 70,227 | ||||
2.88% | Aug-2045 | 10,000 | 10,255 | 10,256 | ||||
3.13% | Aug-2044 | 55,000 | 56,721 | 59,108 | ||||
Total United States Treasury Securities | $230,000 | $234,183 | $233,407 | |||||
Total Fixed-Income Investments | $ | 5,898,311 | $ | 5,983,673 | $ | 6,018,452 |
22 AFL - CIO HOUSING INVESTMENT TRUST
Equity Investments (less than 0.01% of net assets)
Issuer | Face Amount (Cost) | Amount of Dividends or Interest | Value |
HIT Advisers8 | $ 1 | $— | $ (843) |
Total Equity Investment | $ 1 | $— | $ (843) |
Short-Term Investments (4.2% of net assets)
Issuer | Interest Rate | Maturity Date | Face Amount | Amortized Cost | Value | |||
NYS Housing Finance Agency | 1.70% | 9 | May-2049 | $20,000 | $ | 20,000 | $ | 20,000 |
NYS Housing Finance Agency | 1.95% | 9 | Nov-2049 | 20,000 | 20,000 | 20,000 | ||
NYS Housing Finance Agency | 1.75% | 9 | May-2050 | 30,000 | 30,000 | 30,000 | ||
Blackrock Federal Funds | 1.18% | 10 | Jan-2018 | 187,799 | 187,799 | 187,799 | ||
Total Short-Term Investments | $257,799 | $ | 257,799 | $ | 257,799 | |||
Total Investments | $ 6,156,111 | $ | 6,241,473 | $ | 6,275,408 |
Footnotes
1 | Tax-exempt bonds collateralized by Ginnie Mae securities. |
2 | Construction interest rates are the rates charged to the borrower during the construction phase of the project. The permanent interest rates are charged to the borrower during the amortization period of the loan, unless the U.S. Department of Housing and Urban Development requires that such rates be charged earlier. |
3 | The HIT may make commitments in securities or loans that fund over time on a draw basis or forward commitments that fund at a single point in time. The unfunded amount of these commitments totaled $285.2 million at period end. Generally, GNMA construction securities fund over a 12- to 24-month period. Funding periods for State Housing Finance Agency construction securities and Direct Loans vary by project, but generally fund over a one- to 48-month period. Forward commitments generally settle within 12 months of the original commitment date. |
4 | The interest rate shown on these floating or adjustable rate securities represents the rate at period end. Referenced rate and spread in basis points are also presented. |
5 | The HIT records when issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when issued basis are marked to market monthly and begin earning interest on the settlement date. Losses may occur on these transactions due to changes in market conditions or the failure of counterparties to perform under the contract. |
6 | Securities exempt from registration under the Securities Act of 1933 and were privately placed directly by a state housing agency (a not-for-profit public agency) with the HIT. The securities are backed by mortgages and are general obligations of the state housing agency, and therefore secured by the full faith and credit of said agency. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. These securities are considered liquid, under procedures established by and under the general supervision of the HIT’s Board of Trustees. |
7 | Loans insured by Ambac Assurance Corporation, are additionally backed by a repurchase option from the mortgagee for the benefit of the HIT. The repurchase price is defined as the unpaid principal balance of the loan plus all accrued unpaid interest due through the remittance date. The repurchase option can be exercised by the HIT in the event of a payment failure by Ambac Assurance Corporation. |
8 | The HIT has a participation interest in HIT Advisers, a Delaware limited liability company. HIT Advisers is a New York based adviser currently exempt from investment adviser registration in New York. The investment in HIT Advisers is valued by the HIT’s valuation committee in accordance with the fair value procedures adopted by the HIT’s Board of Trustees, and approximates carrying value. The participation interest is not registered under the federal securities laws. Refer to Note 3 of the Finacial Statements - Transactions with Related Entities. |
9 | Variable rate bond with a weekly interest rate reset by a remarketing agent in accordance with the bond’s offering statement and can be redeemed at par, with accrued and unpaid interest, with a seven-day notice. The interest rate shown represents the rate at period end. |
10 | Rate indicated is the annualized 1-day yield as of December 31, 2017. |
Key to Abbreviations
M | Month |
Y | Year |
LIBOR | London Interbank Offered Rate |
UST | U.S. Treasury |
See accompanying Notes to Financial Statements.
ANNUAL REPORT 2017 23
Statement of Operations
For the Year Ended December 31, 2017 (dollars in thousands)
Investment income | $ 170,370 | |
Expenses | ||
Non-officer salaries and fringe benefits | 10,219 | |
Officer salaries and fringe benefits | 5,671 | |
Investment management | 1,332 | |
Consulting fees | 1,281 | |
Marketing and sales promotion (12b-1) | 1,156 | |
Legal fees | 734 | |
Auditing, tax and accounting fees | 506 | |
Insurance | 385 | |
Trustee expenses | 41 | |
Rental expenses | 1,229 | |
General expenses | 1,530 | |
Total expenses | 24,084 | |
Net investment income | 146,286 | |
Net realized and unrealized gains (losses) on investments | ||
Net realized gains (losses) on investments | 21,359 | |
Net change in unrealized appreciation (depreciation) on investments | 17,333 | |
Net realized and unrealized gains (losses) on investments | 38,692 | |
Net increase (decrease) in net assets resulting from operations | $ 184,978 |
See accompanying Notes to Financial Statements.
24 AFL - CIO HOUSING INVESTMENT TRUST
Statements of Changes in Net Assets
For the Years Ended December 31, 2017 and 2016 (dollars in thousands)
Increase (decrease) in net assets from operations | 2017 | 2016 | ||||||
Net investment income | $ | 146,286 | $ | 139,758 | ||||
Net realized gains (losses) on investments | 21,359 | 19,547 | ||||||
Net change in unrealized appreciation (depreciation) on investments | 17,333 | (55,674 | ) | |||||
Net increase (decrease) in net assets resulting from operations | 184,978 | 103,631 | ||||||
Decrease in net assets from distributions | ||||||||
Distributions to participants or reinvested from: | ||||||||
Net investment income | (161,677 | ) | (152,539 | ) | ||||
Net realized gains on investments | (3,720 | ) | — | |||||
Net decrease in net assets from distributions | (165,397 | ) | (152,539 | ) | ||||
Increase (decrease) in net assets from unit transactions | ||||||||
Proceeds from the sale of units of participation | 330,734 | 373,174 | ||||||
Dividend reinvestment of units of participation | 145,704 | 135,239 | ||||||
Payments for redemption of units of participation | (87,547 | ) | (124,034 | ) | ||||
Net increase from unit transactions | 388,891 | 384,379 | ||||||
Total increase (decrease) in net assets | 408,472 | 335,471 | ||||||
Net assets | ||||||||
Beginning of period | $ | 5,790,753 | $ | 5,455,282 | ||||
End of period | $ | 6,199,225 | $ | 5,790,753 | ||||
Distribution in excess of net investment income | $ | (2,062 | ) | $ | (2,059 | ) | ||
Unit information | ||||||||
Units sold | 294,942 | 327,020 | ||||||
Distributions reinvested | 130,001 | 118,390 | ||||||
Units redeemed | (78,150 | ) | (109,790 | ) | ||||
Increase in units outstanding | 346,793 | 335,620 |
See accompanying Notes to Financial Statements.
ANNUAL REPORT 2017 25
NOTES TO FINANCIAL STATEMENTS |
NOTE 1. Summary of Significant Accounting Policies
The American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) Housing Investment Trust (HIT) is a common law trust created under the laws of the District of Columbia and is registered under the Investment Company Act of 1940, as amended (the Investment Company Act), as a no-load, open-end investment company. The HIT has obtained certain exemptions from the requirements of the Investment Company Act that are described in the HIT’s Prospectus and Statement of Additional Information.
Participation in the HIT is limited to eligible pension plans and labor organizations, including health and welfare, general, voluntary employees’ benefit associations and other funds that have beneficiaries who are represented by labor organizations.
The following is a summary of significant accounting policies followed by the HIT in the preparation of its financial statements. The policies are in conformity with generally accepted accounting principles (GAAP) in the United States. The HIT follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946 Financial Services – Investment Companies.
INVESTMENT VALUATION
Net asset value per share (NAV) is calculated as of the close of business of the major bond markets in New York City on the last business day of each month. The HIT’s Board of Trustees is responsible for the valuation process and has delegated the supervision of the valuation process to a Valuation Committee. The Valuation Committee, in accordance with the policies and procedures adopted by the HIT’s Board of Trustees, is responsible for evaluating the effectiveness of the HIT’s pricing policies, determining the reliability of third-party pricing information, and reporting to the Board of Trustees on valuation matters, including fair value determinations. Following is a description of the valuation methods and inputs applied to the HIT’s major categories of assets.
Portfolio securities for which market quotations are readily available are valued by using independent pricing services. For U.S. Treasury securities, independent pricing services generally base prices on actual transactions as well as dealer supplied market information. For state housing finance agency securities, independent pricing services generally base prices using models that utilize trading spreads, new issue scales, verified bid information, and credit ratings. For commercial mortgage-backed securities, independent pricing services generally base prices on cash flow models that take into consideration benchmark yields and utilize available trade information, dealer quotes, and market color.
For U.S. agency and government-sponsored enterprise securities, including single family and multifamily mortgage-backed securities, construction mortgage securities and loans, and collateralized mortgage obligations, independent pricing services generally base prices on an active TBA (“to-be-announced”) market for mortgage pools, discounted cash flow models or option-adjusted spread models. Independent pricing services examine reference data and use observable inputs such as issue name, issue size, ratings, maturity, call type, and spread/benchmark yields, as well as dealer-supplied market information. The discounted cash flow or option-adjusted spread models utilize inputs from matrix pricing, which consider observable market-based discount and prepayment rates, attributes of the collateral, and yield or price of bonds of comparable quality, coupon, maturity, and type.
Investments in registered open-end investment management companies are valued based upon the NAV of such investments.
When the HIT finances the construction and permanent securities or participation interests, value is determined based upon the total amount, funded and/or unfunded, of the commitment.
Portfolio investments for which market quotations are not readily available or deemed unreliable are valued at their fair value determined in good faith by the HIT’s Valuation Committee using consistently applied procedures adopted by the HIT’s Board of Trustees. In determining fair market value, the Valuation Committee will employ a valuation method that it believes reflects fair value for that asset, which may include the referral of the asset to an independent valuation consultant or the utilization of a discounted cash flow model based on broker and/or other market inputs. The frequency with which these fair value procedures may be used cannot be predicted. However, on December 31, 2017, the Valuation Committee fair valued less than 0.01% of the HIT’s net assets utilizing internally derived unobservable inputs.
Short-term investments acquired with a stated maturity of 60 days or less are generally valued at amortized cost, which approximates fair market value.
The HIT holds a 100% ownership interest, either directly or indirectly in HIT Advisers LLC (HIT Advisers). HIT Advisers is valued at its fair value determined in good faith under consistently applied procedures adopted by the HIT’s Board of Trustees, which approximates its respective carrying value.
GAAP establishes a disclosure hierarchy that categorizes the inputs to valuation techniques used to value assets and liabilities at measurement date. The HIT classifies its assets and liabilities into three levels based on the method used to value the assets or liabilities. Level 1 values are based on quoted prices in active markets for identical securities. Level 2 values are based on significant observable market inputs, such as quoted prices for similar securities, interest rates, prepayment speeds, credit risk, and quoted prices in inactive markets. Level 3 values are based on significant unobservable inputs that reflect the HIT’s determination of assumptions that market participants might reasonably use in valuing the securities.
The following table presents the HIT’s valuation levels as of December 31, 2017:
Investment securities: ($ in thousands)
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
FHA Permanent Securities | $ | — | $ | 162,359 | $ | — | $ | 162,359 | ||||||||
FHA Construction Securities | — | 5,090 | — | 5,090 | ||||||||||||
Ginnie Mae Securities | — | 1,543,525 | — | 1,543,525 | ||||||||||||
Ginnie Mae Construction Securities | — | 126,831 | — | 126,831 | ||||||||||||
Fannie Mae Securities | — | 2,599,557 | — | 2,599,557 | ||||||||||||
Freddie Mac Securities | — | 896,237 | — | 896,237 | ||||||||||||
Commercial Mortgage-Backed Securities | — | 122,911 | — | 122,911 | ||||||||||||
State Housing Finance Agency Securities | — | 257,985 | — | 257,985 | ||||||||||||
Other Multifamily Investments | ||||||||||||||||
Direct Loans | — | — | 5,620 | 5,620 | ||||||||||||
Privately Insured Construction/Permanent Mortgages | — | 12,030 | — | 12,030 | ||||||||||||
Total Other Multifamily Investments | — | 12,030 | 5,620 | 17,650 | ||||||||||||
United States Treasury Securities | — | 233,407 | — | 233,407 | ||||||||||||
Equity Investments | — | — | (843 | ) | (843 | ) | ||||||||||
Short-Term Investments | 257,799 | — | — | 257,799 | ||||||||||||
Other Financial Instruments* | — | 52,900 | — | 52,900 | ||||||||||||
Total | $ | 257,799 | $ | 6,012,832 | $ | 4,777 | $ | 6,275,408 |
*If held in the portfolio at report date, other financial instruments include forward commitments, TBA and when issued securities.
26 AFL - CIO HOUSING INVESTMENT TRUST
|
The following table reconciles the valuation of the HIT’s Level 3 investment securities and related transactions for the year ended December 31, 2017:
Investments in Securities ($ in thousands)
Other Multifamly Investments |
Equity Investment |
Total | |
Beginning Balance, 12/31/2016 | $ 5,425 | $ (478) | $ 4,947 |
Paydown | (58) | — | (58) |
Total Unrealized Gain (Loss)* | (9) | (364) | (373) |
Cost of Purchases | 262 | — | 263 |
Proceeds of Sales | — | (1) | (1) |
Ending Balance, 12/31/2017 | $ 5,620 | $ (843) | $ 4,777 |
* Net change in unrealized gain (loss) attributable to Level 3 securities held at December 31, 2017 totaled $(276,000) and is included on the accompanying Statement of Operations.
Level 3 securities primarily consist of Direct Loans (Other Multifamily Investments) which were valued by an independent pricing service at December 31, 2017 utilizing a discounted cash flow model. Weighted average lives for the loans ranged from 0.16 to 1.09 years. Unobservable inputs include spreads to relevant U.S. Treasuries ranging from 99 to 379 basis points. A change in unobservable inputs may impact the value of the loans.
The HIT’s policy is to recognize transfers between levels at the beginning of the reporting period. For the year ended December 31, 2017, there were no transfers in levels.
USE OF ESTIMATES
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates.
FEDERAL INCOME TAXES
The HIT’s policy is to comply with the requirements of the Internal Revenue Code of 1986, as amended (the Internal Revenue Code), that are applicable to regulated investment companies, and to distribute all of its taxable income to its participants. Therefore, no federal income tax provision is required.
Tax positions taken or expected to be taken in the course of preparing the HIT’s tax returns are evaluated to determine whether the tax positions are “more-likely-than- not” of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax benefit or expense in the current year. Management has analyzed for all open years the HIT’s tax positions taken on federal income tax returns and has concluded that no provision for income tax is required in the HIT’s financial statements.
The HIT files U.S. federal, state, and local tax returns as required. The HIT’s tax returns are subject to examination by the relevant tax authorities until the expiration of the applicable statutes of limitations, which is generally three years after the filing of the tax return but could be longer in certain circumstances.
DISTRIBUTIONS TO PARTICIPANTS
At the end of each calendar month, a pro-rata distribution is made to participants of the net investment income earned during the month. This pro-rata distribution is based on the participant’s number of units held as of the immediately preceding month-end and excludes realized gains (losses) which are distributed at year-end.
Participants redeeming their investments are paid their pro-rata share of undistributed net income accrued through the month-end of the month in which they redeem.
The HIT offers a reinvestment plan that permits current participants to automatically reinvest their distributions of income and capital gains, if any, into the HIT’s units of participation. Total reinvestment was approximately 88% of distributed income and capital gains, if any, for the year ended December 31, 2017.
INVESTMENT TRANSACTIONS AND INCOME
For financial reporting purposes, security transactions are accounted for as of the trade date. Gains and losses on securities sold are determined on the basis of amortized cost. Realized gains (losses) on paydowns of mortgage- and asset-backed securities are classified as interest income. Interest income, which includes amortization of premium and accretion of discount on debt securities, is accrued as earned.
12b-1 PLAN OF DISTRIBUTION
The HIT’s Board of Trustees annually considers a Plan of Distribution under Rule 12b-1 under the Investment Company Act to pay for marketing and sales promotion expenses incurred in connection with the offer and sale of units and related distribution activities (12b-1 expenses). For the year ended December 31, 2017, the HIT was authorized to pay 12b-1 expenses in an annual amount up to $600,000 or 0.05% of its average monthly net assets, whichever was greater. During the year ended December 31, 2017, the HIT incurred approximately $1,155,500, or less than 0.02% of its average monthly net assets, in 12b-1 expenses.
NOTE 2. Investment Risks
INTEREST RATE RISK
As with any fixed-income investment, the market value of the HIT’s investments will generally fall at times when market interest rates rise. Rising interest rates may also reduce prepayment rates, causing the average life of the HIT’s investments to increase. This could in turn further reduce the value of the HIT’s portfolio.
PREPAYMENT AND EXTENSION RISK
The HIT invests in certain fixed-income securities whose value is derived from an underlying pool of mortgage loans that are subject to prepayment and extension risk.
Prepayment risk is the risk that a security will pay more quickly than its assumed payment rate, shortening its expected average life. In such an event, the HIT may be required to reinvest the proceeds of such prepayments in other investments bearing lower interest rates. The majority of the HIT’s securities backed by loans for multifamily projects include restrictions on prepayments for specified periods to mitigate this risk or include prepayment penalties to compensate the HIT. Prepayment penalties, when received, are included in realized gains.
Extension risk is the risk that a security will pay more slowly than its assumed payment rate, extending its expected average life. When this occurs, the HIT’s ability to reinvest principal repayments in higher returning investments may be limited.
These two risks may increase the sensitivity of the HIT’s portfolio to fluctuations in interest rates and negatively affect the value of the HIT’s portfolio.
ANNUAL REPORT 2017 27
NOTES TO FINANCIAL STATEMENTS |
NOTE 3. Transactions with Related Entities
HIT ADVISERS
HIT Advisers, a Delaware limited liability company, was formed by the HIT to operate as an investment adviser and be registered, as appropriate under applicable federal or state law. It currently has no clients. HIT Advisers is owned by HIT directly (99.9%), and indirectly through HIT Advisers Managing Member (0.1%) which is also a wholly owned by HIT. This ownership structure is intended to insulate the HIT from any potential liabilities associated with the conduct of HIT Advisers business. The HIT receives no services from HIT Advisers and carries it as a portfolio investment that meets the definition of a controlled affiliate.
In accordance with a contract, in addition to its membership interest, the HIT provides HIT Advisers advances to assist with its operations and cash flow management as needed. Advances are expected to be repaid as cash becomes available. However, as with many start-up operations, there is no certainty that HIT Advisers will generate sufficient revenue to cover its operations and liabilities. Also in accordance with the contract, the HIT provides the time of certain personnel and allocates operational expenses to HIT Advisers on a cost-reimbursement basis. As of December 31, 2017, HIT Advisers had no clients or assets under management and did not earn income. A rollforward of advances to HIT Advisers by the HIT is included in the table below:
Advances to HIT Advisers by HIT | $ in Thousands |
Beginning Balance, 12/31/2016 | $ 607 |
Advances in 2017 | 265 |
Repayment by HIT Advisers LLC in 2017 | — |
Ending Balance, 12/31/2017 | $ 872 |
BUILDING AMERICA
Building America is a Community Development Entity, certified by the Community Development Financial Institutions Fund (CDFI Fund) of the U.S. Department of the Treasury. On April 7, 2017, the HIT transferred ownership of Building America to HIT Advisers for consideration.
In accordance with a contract, the HIT provides the time of certain personnel to Building America and allocates operational expenses on a cost-reimbursement basis. Also, in accordance with the contract, the HIT provides Building America advances to assist with its operations and cash flow management as needed. Advances are repaid as cash becomes available. A rollforward of advances to Building America by the HIT is included in the table below:
Advances to BACDE by HIT | $ in Thousands |
Beginning Balance, 12/31/2016 | $ 75 |
Advances in 2017 | 1,056 |
Repayment by BACDE in 2017 | (1,086) |
Ending Balance, 12/31/2017 | $ 45 |
Summarized financial information on a historical cost basis for HIT Advisers and Building America are included in the table below:
$ in Thousands | HIT Advisers | Building America |
As of December 31, 2017 | ||
Assets | $ 35 | $ 582 |
Liabilities | $ 878 | $ 292 |
Equity | $ (843) | $ 290 |
For the year ended December 31, 2017 | ||
Income | $ — | $1,446 |
Expenses | (266) | (1,125) |
Tax expenses | — | (153) |
Net Income (Loss) | $ (266) | $ 168 |
NOTE 4. Commitments
The HIT may make commitments in securities or loans that fund over time on a draw basis or forward commitments that fund at a single point in time. The HIT agrees to an interest rate and purchase price for these securities or loans when the commitment to purchase is originated.
Certain assets of the HIT are invested in liquid investments until they are required to fund these purchase commitments. As of December 31, 2017, the HIT had outstanding unfunded purchase commitments of approximately $285.2 million. The HIT maintains a sufficient level of liquid securities of no less than the total of the outstanding unfunded purchase commitments. As of December 31, 2017, the value of liquid securities, less short-term investments, maintained in a custodial trading account was approximately $5.9 billion.
NOTE 5. Investment Transactions
Purchases and sales of investments, excluding short-term securities and U.S. Treasury securities, for the year ended December 31, 2017, were $1.7 billion and $347.7 million, respectively.
NOTE 6. Income Taxes
No provision for federal income taxes is required since the HIT intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code and distribute to shareholders all of its taxable income and gains. Federal income tax regulations differ from GAAP; therefore, distributions determined in accordance with tax regulations may differ in amount or character from net investment income and realized gains for financial reporting purposes. Financial reporting records were adjusted for permanent book/tax differences to reflect tax character.
The tax character of distributions paid during 2017 and 2016 were as follows ($ in thousands):
2017 | 2016 | |
Ordinary investment income | $ 161,677 | $ 152,539 |
Long-term capital gain on investments | 3,720 | — |
Total distributions paid to participants or reinvested | $ 165,397 | $ 152,539 |
28 AFL - CIO HOUSING INVESTMENT TRUST
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As of December 31, 2017, the components of accumulated earnings on a tax basis were as follows ($ in thousands):
2017 | ||||
Unrealized appreciation | $ | 33,935 | ||
Undistributed ordinary income | 3,140 | |||
Other temporary differences | (5,200 | ) | ||
Total accumulated earnings | $ | 31,875 |
The differences between book basis and tax basis components of net assets are primarily attributable to tax treatment of deferred compensation plans, accrued expenses, and depreciation.
During 2017, the HIT utilized its entire accumulated capital loss carryforward from prior years of $2,598,000 to offset current capital gains.
For financial reporting purposes, capital accounts are adjusted to reflect the tax character of permanent book/tax differences. These reclassifications are primarily due to the different book and tax treatment of paydowns, distributions, meals and entertainment expense, and insurance premiums paid. Results of operations and net assets were not affected by these reclassifications.
For the year ended December 31, 2017, the HIT recorded the following permanent reclassifications ($ in thousands):
2017 | ||||
Accumulated net investment income | $ | 15,388 | ||
Accumulated net realized losses | $ | (15,041 | ) | |
Amount invested and reinvested by current participants | $ | (347 | ) |
At December 31, 2017, the cost of investments for federal income tax purposes was $6,241,473,000 which approximated book cost at amortized cost. Net unrealized gain aggregated $33,935,000 at period-end, of which $84,215,000 related to appreciated investments and $50,280,000 related to depreciated investments.
NOTE 7. Retirement & Deferred Compensation Plans
The HIT participates in the AFL-CIO Staff Retirement Plan (Plan), which is a multiemployer defined benefit pension plan, under the terms of a collective-bargaining agreement. The Plan covers substantially all employees, including non-bargaining unit employees. The risks of participating in a multiemployer plan are different from a single-employer plan in the following aspects:
a. Assets contributed to a multiemployer plan by one employer may be used to provide benefits to employees of other participating employers.
b. If a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers based on their level of contributions to the plan.
c. If the HIT chooses to stop participating in its multiemployer plan, the HIT may be required to pay the plan an amount based on the HIT’s share of the underfunded status of the plan, referred to as a withdrawal liability.
The HIT’s participation in the Plan for the period ended December 31, 2017, is outlined in the table below. The “EIN/Pension Plan Number” line provides the Employee Identification Number (EIN) and the three-digit plan number. The most recent Pension Protection Act (PPA) zone status available in 2017 is for the 2015 Plan year-ended at June 30, 2016. The zone status is based on information that the
HIT received from the Plan and is certified by the Plan’s actuary. Among other factors, plans in the red zone are generally less than 65% funded, plans in the yellow zone are less than 80% funded, and plans in the green zone are at least 80% funded. The “FIP/ RP Status Pending/Implemented” line indicates whether a financial improvement plan (FIP) or a rehabilitation plan (RP) is either pending or has been implemented.
Pension Fund: AFL-CIO Staff Retirement Plan | |
EIN/Pension Plan Number | 53-0228172 / 001 |
2015 Plan Year PPA Zone Status | Green |
FIP/RP Status Pending/ Implemented | No |
2017 HIT’s Contributions | $2,257,466 |
2017 Contribution Rate | 24% |
Surcharge Imposed | no |
Expiration Date of Collective Bargaining Agreement | 03/31/2022 |
The HIT was listed in the Plan’s Form 5500 as providing more than 5% of the total contributions for the following plan year:
Pension Fund | Years
Contributions to Plan Exceeded More Than 5 Percent of Total Contributions |
AFL-CIO Staff Retirement Plan | 20151 |
1 The 2015 plan year ended at June 30, 2016.
At the date the HIT financial statements were issued, the Plan’s Form 5500 was not available for the plan year ended June 30, 2017.
The HIT also sponsors a deferred compensation plan, referred to as a 401(k) plan, covering substantially all employees. This plan permits employees to defer the lesser of 100% of their total compensation or the applicable Internal Revenue Service limit. During 2017, the HIT matched dollar for dollar the first $6,000 of each employee’s contributions. The HIT’s 401(k) contribution for the year ended December 31, 2017, was approximately $310,200.
NOTE 8. Loan Facility
The HIT has a $15 million uncommitted loan facility which expires on June 11, 2018. Under this facility, borrowings bear interest per annum equal to 1.25% plus the highest of (a) the Federal Funds Effective Rate, (b) the Overnight Eurodollar Rate, or (c) the one-month LIBOR. The HIT did not borrow against the facility during, and had no outstanding balance under the facility for, the year ended December 31, 2017. No compensating balances are required.
NOTE 9. Contract Obligations
In the ordinary course of business, the HIT enters into contracts that contain a variety of indemnifications. The HIT’s maximum exposure under these arrangements is unknown. However, the HIT has not had any prior claims or losses pursuant to these contracts and expects the risk of loss to be low.
NOTE 10. New Accounting Pronouncement
In February 2016, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standards Update (“ASU”) No. 2016-02, Leases, which intends to improve financial reporting about leasing transactions. The ASU affects all companies and other organizations that lease assets such as real estate and equipment. The new disclosure is effective for annual or interim periods beginning on or after December 15, 2019. Management is evaluating the impact of this update on its financial statements and disclosures.
ANNUAL REPORT 2017 29
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Financial Highlights
Selected Per Share Data and Ratios for the Years Ended December 31
Per share data | 2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||
Net asset value, beginning of period | $ | 1,113.29 | $ | 1,121.13 | $ | 1,140.10 | $ | 1,107.45 | $ | 1,171.21 | ||||||||||
Income from investment operations: | ||||||||||||||||||||
Net investment income * | 27.36 | 27.46 | 29.41 | 32.48 | 34.11 | |||||||||||||||
Net realized and unrealized gains (losses) on investments | 7.58 | (5.33 | ) | (16.43 | ) | 34.38 | (61.53 | ) | ||||||||||||
Total income (loss) from investment operations | 34.94 | 22.13 | 12.98 | 66.86 | (27.42 | ) | ||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (30.23 | ) | (29.97 | ) | (31.95 | ) | (34.21 | ) | (36.33 | ) | ||||||||||
Net realized gains on investments | (0.68 | ) | — | — | — | (0.01 | ) | |||||||||||||
Total distributions | (30.91 | ) | (29.97 | ) | (31.95 | ) | (34.21 | ) | (36.34 | ) | ||||||||||
Net asset value, end of period | $ | 1,117.32 | $ | 1,113.29 | $ | 1,121.13 | $ | 1,140.10 | $ | 1,107.45 | ||||||||||
Ratios/supplemental data | ||||||||||||||||||||
Ratio of expenses to average net assets | 0.40 | % | 0.41 | % | 0.43 | % | 0.43 | % | 0.43 | % | ||||||||||
Ratio of net investment income to average net assets | 2.4 | % | 2.4 | % | 2.6 | % | 2.9 | % | 3.0 | % | ||||||||||
Portfolio turnover rate | 24.6 | % | 20.3 | % | 18.9 | % | 18.3 | % | 29.5 | % | ||||||||||
Number of outstanding units at end of period | 5,548,292 | 5,201,499 | 4,865,879 | 4,262,218 | 4,077,108 | |||||||||||||||
Net assets, end of period (in thousands) | $ | 6,199,225 | $ | 5,790,753 | $ | 5,455,282 | $ | 4,859,337 | $ | 4,515,201 | ||||||||||
Total return | 3.17 | % | 1.94 | % | 1.13 | % | 6.10 | % | (2.37 | )% |
*The average shares outstanding method has been applied for this per share information.
See accompanying Notes to Financial Statements.
30 AFL - CIO HOUSING INVESTMENT TRUST
BOARD OF TRUSTEES+ |
Overall responsibility for the management of the HIT, the establishment of policies, and the oversight of activities is vested in its Board of Trustees. The list below provides the following information for each of the Trustees: name, age, address, term of office, length of time served, principal occupations during at least the past five years and other directorships held.* The HIT’s Statement of Additional Information includes additional information about the Trustees and is available without charge, upon request, by placing a collect call to the HIT’s Investor Relations Office at (202) 331-8055, or by viewing the HIT’s website at www.aflcio-hit.com.
Correspondence intended for a trustee may be sent to the AFL-CIO Housing Investment Trust, 2401 Pennsylvania Avenue, NW, Suite 200, Washington, DC 20037.
Richard Ravitch,** age 84; Chairman; service commenced 1991, expires 2017; Manager, Waterside Plaza LLC; formerly Lieutenant Governor, State of New York; Co-Chair, Millennial Housing Commission; President and Chief Executive Officer, Player Relations Committee of Major League Baseball.
Richard L. Trumka,** age 68; Union Trustee; service commenced 1995, expires 2017; President, AFL- CIO; Chairman, AFL-CIO Staff Retirement Plan; formerly Secretary- Treasurer, AFL-CIO.
Liz Shuler, age 47; Union Trustee; service commenced 2009, expires 2018; Secretary- Treasurer, AFL-CIO; Trustee, AFL-CIO Staff Retirement Plan; formerly Executive Assistant to the President, IBEW.
Vincent Alvarez, age 49; Union Trustee; service commenced 2012; expires 2019; President, New York City Central Labor Council (NYCCLC); formerly Assistant Legislative Director, New York State AFL-CIO; formerly Chief of Staff, NYCCLC.
James Boland, age 67; Union Trustee; service commenced 2010, expires 2019; President, International Union of Bricklayers and Allied Craftworkers (BAC); Co-Chair, International Masonry Institute; Co-Chair, International Trowel Trades Pension Fund and BAC International Health Fund; Executive Member, BAC Staff Health Plan; Trustee, BAC Local Union Officers and Employees Pension Fund and BAC Salaried Employees Pension Fund; formerly Executive Vice President and Secretary Treasurer, BAC.
Sean McGarvey, age 55; Union Trustee; service commenced 2012, expires 2018; President, North America’s Building Trades Unions; formerly Secretary-Treasurer, Building and Construction Trades Department.
Jack Quinn, Jr., age 66; Management Trustee; service commenced 2005, expires 2017; President, Erie Community College; Director, Kaiser Aluminum Corporation; formerly President, Cassidy & Associates; Member of Congress, 27th District, New York.
Kenneth E. Rigmaiden, age 64; Union Trustee; service commenced 2011, expires 2017; General President, International Union of Painters and Allied Trades of the United States and Canada (IUPAT); Director, Coalition of Black Trade Unionists; Trustee, IUPAT International PensionFund; formerly Executive General Vice President, IUPAT; Assistant to the General President, IUPAT; National Project Coordinator, IUPAT Job Corps Program; Director, United Way.
Marlyn J. Spear,** CFA, age 63; Management Trustee; service commenced 1995, expires 2018; Director, Baird Funds, Inc.; formerly Chief Investment Officer, Building Trades United Pension Trust Fund (Milwaukee and Vicinity); Member, Greater Milwaukee Foundation Investment Committee.
Tony Stanley,** age 84; Management Trustee; service commenced 1983, expires 2019; Director, TransCon Builders, Inc.; formerly Executive Vice President, TransCon Builders, Inc.
+As of December 31, 2017. Effective January 24, 2018, Kenneth W. Cooper, David B. Durkee, Bridget Gainer, Deidre L. Schmidt and William C. Thompson, Jr. were elected to the Board of Trustees. Richard Ravitch did not stand for re-election as Chairman of the Board of Trustees at the 2017 Annual Meeting of Participants. Effective January 24, 2018 Helen R. Kanovsky was elected as Chair of the Board of Trustees. Additional information relating to the election of these new Trustees is set forth on page 10.
* Includes any directorships in a corporation or trust having securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended, or subject to the requirements of Section 15(d) of such Act, or a company registered as an investment company under the Investment Company Act of 1940, as amended.
** Executive Committee member.
ANNUAL REPORT 2017 31
LEADERSHIP |
All officers of the HIT are located at 2401 Pennsylvania Avenue, NW, Suite 200, Washington, DC 20037 except Mr. Chandler who is located at 155 N. Lake Avenue, Suite 800, Pasadena, CA 91191 and Ms. Johnstone who is located at One Sansome Street, Suite 3500, San Francisco, California 94104.*
Stephen Coyle, age 72; Chief Executive Officer, AFL-CIO Housing Investment Trust since 1992. He has presided over the HIT’s growth from a $530 million fund in 1992 to $6.2 billion in total net assets at year-end 2017. During his time as CEO, he has overseen $6.7 billion in HIT investment in $12.9 billion in development ($8.5 billion and $15.7 billion in constant dollars, respectively), creating some 94,000 housing units and over 65,000 union construction jobs.**
Theodore S. Chandler, age 58; Chief Operating Officer, AFL-CIO Housing Investment Trust since 2009; formerly Vice President, Fannie Mae; Deputy Director, Chief Financial Officer and General Counsel, Massachusetts Industrial Finance Agency.
Erica Khatchadourian, age 50; Chief Financial Officer, AFL-CIO Housing Investment Trust since 2001; formerly Controller, Chief of Staff and Director of Operations, AFL-CIO Housing Investment Trust; Senior Consultant, Price Waterhouse.
Chang Suh, CFA, age 46; Senior Executive Vice President and Chief Portfolio Manager, AFL-CIO Housing Investment Trust since 2005; formerly Assistant Portfolio Manager, and Senior Portfolio Analyst, AFL-CIO Housing Investment Trust; Senior Auditor, Arthur Andersen.
Nicholas C. Milano, age 50, General Counsel, AFL-CIO Housing Investment Trust since 2013; formerly Of Counsel, Perkins Coie LLP; Deputy General Counsel and Chief Compliance Officer, Legg Mason Capital
Management; Deputy General Counsel and Chief Compliance Officer, AFL-CIO Housing Investment Trust; Senior Counsel, Division of Investment Management, Securities and Exchange Commission.
Debbie Cohen, age 67; Chief Development Officer, AFL-CIO Housing Investment Trust since 2009; formerly Chief Director of Marketing and Investor Relations, AFL-CIO Housing Investment Trust; Realtor, Coldwell Banker Realty and Weichert Realty; Senior Director of Planning and Research, Federal Home Loan Banks.
Emily Johnstone, age 44; Executive Vice President and Managing Director of Defined Contribution Marketing, AFL-CIO Housing Investment Trust since 2016; formerly Managing Director of Business Development and Regional Marketing Director, AFL-CIO Housing Investment Trust; Director of Investor Relations and Director of the West Regional Office, RBC Capital Markets.
Christopher Kaiser, age 53; Deputy General Counsel (since 2008) and Chief Compliance Officer (since 2007), AFL-CIO Housing Investment Trust; formerly Associate General Counsel, AFL-CIO Housing Investment Trust; Branch Chief, Division of Investment Management, U.S. Securities and Exchange Commission.
Thalia B. Lankin, age 39; Chief Business Development Officer, AFL-CIO Housing Investment Trust since 2016; Chief Operating Officer, Building America CDE, Inc.; formerly Director of Operations, Chief of
Staff and Special Counsel, AFL-CIO Housing Investment Trust.
Harpreet Singh Peleg, CFA, age 44; Controller, AFL-CIO Housing Investment Trust since 2005; Chief Financial Officer, Building America CDE, Inc.; formerly Chief Financial Officer, AFL-CIO Investment Trust Corporation; Financial Analyst, Goldman Sachs & Co.; Senior Associate, Pricewaterhouse Coopers.
Eric W. Price, age 56; Executive Vice President, AFL-CIO Housing Investment Trust since 2010; Chief Executive Officer, Building America CDE, Inc.; formerly Senior Vice President, Abdo Development; Senior Vice President, Local Initiative Support Corporation; Deputy Mayor for Planning and Economic Development, D.C.
Lesyllee White, age 55; Executive Vice President and Managing Director of Defined Benefit Marketing, AFL-CIO Housing Investment Trust since 2004; formerly Director of Marketing, Regional Marketing Director and Senior Marketing Associate, AFL- CIO Housing Investment Trust; Vice President, Northern Trust Company.
Stephanie H. Wiggins, age 52; Executive Vice President and Chief Investment Officer, AFL-CIO Housing Investment Trust since 2001; Director, Resource Capital Corp.; formerly Director of Fannie Mae Finance, AFL-CIO Housing Investment Trust; Director, Prudential Mortgage Capital Company; Vice President/Multifamily Transaction Manager, WMF Capital Corporation.
* Except for Ms. Wiggins, no officer of the HIT serves as a trustee or director in any corporation or trust having securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended, or subject to the requirements of Section 15(d) of such Act, or any company registered as an investment company under the Investment Company Act of 1940, as amended. These officers are appointed annually, serving for a period of approximately one year or until their respective successors are duly appointed and qualified.
**Economic impacts such as jobs, personal income, and tax revenue estimates are derived from an IMPLAN model. See inside back cover for additional detail.
32 AFL - CIO HOUSING INVESTMENT TRUST
AFL-CIO Housing Investment Trust
National Office | Independent Registered Public Accounting Firm |
2401 Pennsylvania Avenue, N.W. | Ernst & Young LLP |
Suite 200 | Tysons, Virginia |
Washington, D.C. 20037 | |
(202) 331-8055 | Corporate Counsel |
www.aflcio-hit.com | Katten Muchin Rosenman LLP |
Washington, D.C. | |
New York City Office | |
1270 Avenue of the Americas | Transfer Agent |
Suite 210 | BNY Mellon Investment Servicing (US) Inc. |
New York, New York 10020 | Wilmington, Delaware |
(212) 554-2750 | |
Custodian | |
New England Regional Office | Bank of New York Mellon |
Ten Post Office Square, Suite 800 | New York, New York |
Boston, Massachusetts 02109 | |
(617) 850-9071 | |
Western Regional Office | |
One Sansome Street, Suite 3500 | |
San Francisco, California 94104 | |
(415) 433-3044 | |
Southern California Office | |
155 North Lake Avenue, Suite 800 | |
Pasadena, California 91101 | |
(626) 993-6676 |
Investors should consider the HIT’s investment objectives, risks, and expenses carefully before investing. A prospectus containing more complete information may be obtained from the HIT by calling the Marketing and Investor Relations Department collect at (202) 331-8055 or by viewing the HIT’s website at www.aflcio-hit.com. The prospectus should be read carefully before investing. The calculations of the HIT yield herein represent widely accepted portfolio characteristics information based on coupon rate, current price and, for yield to worst, certain prepayment assumptions, and are not current yield or other performance data as defined by the SEC in Rule 482.
Job and economic benefit figures in this report are provided by Pinnacle Economics, Inc. and HIT. Estimates are calculated using an IMPLAN input-output model based on HIT project data and secondary source materials and are shown in 2016 dollars.
This document contains forecasts, estimates, opinions, and/or other information that is subjective. Statements concerning economic, financial, or market trends are based on current conditions, which will fluctuate. There is no guarantee that such statements will be applicable under all market conditions, especially during periods of downturn. Actual outcomes and results may differ significantly from the views expressed. It should not be considered as investment advice or a recommendation of any kind.
Item 2. Code of Ethics.
(a) | The Trust has adopted a Code of Ethics to comply with Section 406 of the Sarbanes-Oxley Act of 2002, as of December 31, 2017. This Code of Ethics applies to the Trust’s principal executive officer, principal financial officer, and principal accounting officer or controller or persons performing similar functions. |
(b) | For purposes of this Item, the term “Code of Ethics” means written standards that are reasonably designed to deter wrongdoing and to promote: |
(1) | Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; |
(2) | Full, fair, accurate, timely, and understandable disclosure in reports and documents that a registrant files with, or submits to, the Commission and in other public communications made by the registrant; |
(3) | Compliance with applicable governmental laws, rules, and regulations; |
(4) | The prompt internal reporting of violations of the code to an appropriate person or persons identified in the code; and |
(5) | Accountability for adherence to the code. |
(c) | The Trust’s Code of Ethics was not amended during the period covered by the Report. |
(d) | There have been no waivers granted from any provision of the Trust’s Code of Ethics during the period covered by the Report. |
(e) | Not applicable. |
(f) | (1) | A copy of the Trust’s Code of Ethics is filed herewith as an Exhibit pursuant to Item 12(a)(1). |
Item 3. Audit Committee Financial Expert.
(a) | (1) | The Trust’s Board of Trustees has determined that Marlyn Spear possesses the attributes to qualify as an Audit Committee financial expert and has designated Ms. Spear the Audit Committee’s financial expert. |
(2) | Ms. Spear is independent for purposes of this Item 3. |
Item 4. Principal Accountant Fees and Services.
(a) Audit fees.
The aggregate fees billed for professional services provided to the Registrant by its independent auditors for the audit of the Registrant’s annual financial statements and for services normally provided by the independent auditors in connection with statutory and regulatory filings or engagements were $454,000 for the fiscal year ended December 31, 2017.
The aggregate fees billed for professional services provided to the Registrant by its independent auditors for the audit of the Registrant’s annual financial statements and for services normally provided by the independent auditors in connection with statutory and regulatory filings or engagements were $454,000 for the fiscal year ended December 31, 2016.
(b) Audit-related fees.
The aggregate fees billed by the Registrant’s independent auditors for assurance and related services relating to the performance of the audit of the Registrant’s financial statements and not reported under paragraph (a) of this Item were $0 for the fiscal year ended December 31, 2017. The percentage of these fees relating to services approved by the Registrant’s Audit Committee pursuant to the de minimis exception from the pre-approval requirement in Rule 2-01(c)(7)(i)(C) of Regulation S-X was 0%.
The aggregate fees billed by the Registrant’s independent auditors for services relating to the performance of the audit of the financial statements of the Registrant’s investment adviser(s) and other service providers under common control with the adviser(s) and that relate directly to the operations or financial reporting of the Registrant were $0 for the Registrant’s fiscal year ended December 31, 2017. The percentage of these fees relating to services approved by the Registrant’s Audit Committee pursuant to the de minimis exception from the pre-approval requirement in Rule 2-01(c)(7)(i)(C) of Regulation S-X was 0%.
The aggregate fees billed by the Registrant’s independent auditors for assurance and related services relating to the performance of the audit of the Registrant’s financial statements and not reported under paragraph (a) of this Item were $0 for the fiscal year ended December 31, 2016. The percentage of these fees relating to services approved by the Registrant’s Audit Committee pursuant to the de minimis exception from the pre-approval requirement in Rule 2-01(c)(7)(i)(C) of Regulation S-X was 0%.
The aggregate fees billed by the Registrant’s independent auditors for services relating to the performance of the audit of the financial statements of the Registrant’s investment adviser(s) and other service providers under common control with the adviser(s) and that relate directly to the operations or financial reporting of the Registrant were $0 for the Registrant’s fiscal year ended December 31, 2016. The percentage of these fees relating to services approved by the Registrant’s Audit Committee pursuant to the de minimis exception from the pre-approval requirement in Rule 2-01(c)(7)(i)(C) of Regulation S-X was 0%.
(c) Tax fees.
The aggregate fees billed by the Registrant’s independent auditors for professional services provided to the Registrant for tax compliance, including preparation of tax returns and distribution assistance, were $33,440 for the fiscal year ended December 31, 2017. The percentage of these fees relating to services approved by the Registrant’s Audit Committee pursuant to the de minimis exception from the pre-approval requirement in Rule 2-01(c)(7)(i)(C) of Regulation S-X was 0%.
The aggregate fees billed by the Registrant’s independent auditors for tax-related services provided to the Registrant’s adviser(s) and other service providers under common control with the adviser(s) and that relate directly to the operations or financial reporting of the Registrant were $0 for the Registrant’s fiscal year ended December 31, 2017. The percentage of these fees relating to services approved by the Registrant’s Audit Committee pursuant to the de minimis exception from the pre-approval requirement in Rule 2-01(c)(7)(i)(C) of Regulation S-X was 0%.
The aggregate fees billed by the Registrant’s independent auditors for professional services provided to the Registrant for tax compliance, including preparation of tax returns and distribution assistance, were $32,150 for the fiscal year ended December 31, 2016. The percentage of these fees relating to services approved by the Registrant’s Audit Committee pursuant to the de minimis exception from the pre-approval requirement in Rule 2-01(c)(7)(i)(C) of Regulation S-X was 0%.
The aggregate fees billed by the Registrant’s independent auditors for tax-related services provided to the Registrant’s investment adviser(s) and other service providers under common control with the adviser(s) and that relate directly to the operations or financial reporting of the Registrant were $0 for the Registrant’s fiscal year ended December 31, 2016. The percentage of these fees relating to services approved by the Registrant’s Audit Committee pursuant to the de minimis exception from the pre-approval requirement in Rule 2-01(c)(7)(i)(C) of Regulation S-X was 0%.
(d) | All other fees. |
The aggregate fees billed for all services provided by the independent auditors to the Registrant other than those set forth in paragraphs (a), (b) and (c) of this Item, which consisted of the preparation of a report on the Schedule of Rates of Return including an opinion on the Global Investment Performance Standards, were $16,000 for the fiscal year ended December 31, 2017. The percentage of these fees relating to services approved by the Registrant’s Audit Committee pursuant to the de minimis exception from the pre-approval requirement in Rule 2-01(c)(7)(i)(C) of Regulation S-X was 0%.
The aggregate fees billed for all services other than those set forth in paragraphs (a), (b) and (c) of this Item provided by the Registrant’s independent auditors to the Registrant’s adviser(s) and other service providers under common control with the adviser(s) and that relate directly to the operations or financial reporting of the Registrant were $0 for the Registrant’s fiscal year ended December 31, 2017. The percentage of these fees relating to services approved by the Registrant’s Audit Committee pursuant to the de minimis exception from the pre-approval requirement in Rule 2-01(c)(7)(i)(C) of Regulation S-X was 0%.
The aggregate fees billed for all services provided by the independent auditors to the Registrant other than those set forth in paragraphs (a), (b) and (c) of this Item, which consisted of the preparation of a report on the Schedule of Rates of Return including an opinion on the Global Investment Performance Standards, were $16,000 for the fiscal year ended December 31, 2016. The percentage of these fees relating to services approved by the Registrant’s Audit Committee pursuant to the de minimis exception from the pre-approval requirement in Rule 2-01(c)(7)(i)(C) of Regulation S-X was 0%.
The aggregate fees billed for all services other than those set forth in paragraphs (a), (b) and (c) of this Item provided by the Registrant’s independent auditors to the Registrant’s adviser(s) and other service providers under common control with the adviser(s) and that relate directly to the operations or financial reporting of the Registrant were $0 for the Registrant’s fiscal year ended December 31, 2016. The percentage of these fees relating to services approved by the Registrant’s Audit Committee pursuant to the de minimis exception from the pre-approval requirement in Rule 2-01(c)(7)(i)(C) of Regulation S-X was 0%.
(e) | (1) | The Charter of the Trust’s Audit Committee provides that the Audit Committee shall review and, if appropriate, approve in advance all audit and non-audit services (as such term may be from time to time defined in the Securities Exchange Act of 1934, as amended) to be provided to the Trust by the Trust’s independent auditor. In making a determination, the Audit Committee considers whether the services are consistent with maintaining the principal accountant’s independence. If such a service is required between regularly scheduled audit committee meetings, pre-approval may be authorized by a majority of the audit committee members at a special meeting called for such purposes or by unanimous written consent. The Audit Committee’s Charter does not permit waiver of pre-approval for audit or non-audit services requiring fees of a de minimis amount. |
(2) | No percentage of the services included in (b)-(d) above were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X. |
(f) | For the most recent fiscal year, less than 50% of the hours expended by the Trust’s principal accountant were performed by persons other than the accountant’s full-time permanent employees. |
(g) | The aggregate non-audit fees billed by the Trust’s accountant for services rendered to the Registrant for fiscal years ending December 31, 2017 and December 31, 2016 were $49,440 and $48,150, respectively. The Trust has no investment adviser. |
(h) | Not applicable. The Trust’s accountant performed no non-audit services for the Trust’s investment adviser during each of the last two fiscal years. |
Item 5. Audit Committee of Listed Registrants.
Not Applicable.
Item 6. Schedule of Investments.
(a) | Included herein under Item 1. |
(b) | Not applicable. |
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not Applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not Applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
Not Applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
No material changes have been made to the procedures by which participants may recommend nominees to the Board of Trustees of the Trust, where those changes were implemented after the Trust last provided disclosure in response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR 229.407) (as required by Item 22(b)(15) of Schedule 14A (17 CFR 240.14a-101)) or this Item 10.
Item 11. Controls and Procedures.
(a) | The Trust’s Chief Executive Officer (the principal executive officer) and Chief Financial Officer (the principal financial officer) have concluded that the Trust’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Act (17 CFR 270.30a-3(c))) are effective to ensure that material information relating to the Trust is made known to them by appropriate persons, based on their evaluation of such controls and procedures as of December 31, 2017. |
(b) | There was no change in the Trust’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Act (17 CFR 270.30a-3(d)) that occurred during the Trust’s last fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Trust’s internal control over financial reporting. |
Item 12. Exhibits.
(2) | A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the Act (17 CFR 270.30a-2(a)). |
(3) | Not Applicable. |
(b) | A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(b) under the Act. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the AFL-CIO Housing Investment Trust has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
AFL-CIO HOUSING INVESTMENT TRUST
By:
/s/ Stephen Coyle |
Stephen Coyle
Chief Executive Officer
Date: March 9, 2018
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the AFL-CIO Housing Investment Trust and in the capacities and on the dates indicated.
/s/ Stephen Coyle |
Stephen Coyle
Chief Executive Officer
(Principal Executive Officer)
Date: March 9, 2018
/s/ Erica Khatchadourian |
Erica Khatchadourian,
Chief Financial Officer
AFL-CIO Housing Investment Trust
Date: March 6, 2018
AFL-CIO Housing Investment Trust N-CSR
Exhibit (a)(1)
AFL-CIO HOUSING INVESTMENT TRUST
Code of Ethics for Purposes of
Section 406 of the Sarbanes-Oxley Act of 2002
Dated as of July 14, 2009
I. | Covered Officers |
This code of ethics (the “Code”) has been adopted by the AFL-CIO HOUSING INVESTMENT TRUST (the “Trust”) to comply with Section 406 of the Sarbanes-Oxley Act of 2002. This Code applies to the Trust’s principal executive officer, principal financial officer, and principal accounting officer or persons performing similar functions (collectively, the “Covered Officers” and each, a “Covered Officer”), each of whom is set forth on Exhibit A.
II. | Purpose of This Code |
A. | This Code has been adopted for the purpose of promoting: |
● | honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; |
● | full, fair, accurate, timely, and understandable disclosure in reports and documents that the Trust files with, or submits to, the Securities and Exchange Commission (the “SEC”), and in other public communications made by the Trust; |
● | compliance with applicable laws and governmental rules and regulations; |
● | the prompt internal reporting of violations of this Code to an appropriate person or persons identified in this Code; and |
● | accountability for adherence to this Code. |
B.
Each Covered Officer should adhere to a high standard of business ethics and should be sensitive to situations that may give rise to actual as well as apparent conflicts of interest.
III. | Standards of Conduct Required |
The material failure of a Covered Officer to adhere to any of the standards of conduct set forth in subparts A, B and C of this Section III shall constitute a violation of this Code.
A. | Covered Officers Should Handle Ethically Actual and Apparent Conflicts of Interest |
1. | Conflict of Interest Defined. |
a. A “conflict of interest” occurs when a Covered Officer’s private interest interferes with the interests of, or his or her service to, the Trust. For example, a conflict of interest would arise if a Covered Officer, or a member of his or her family, were to receive improper personal benefits as a result of his or her position with the Trust.
b. In addition to the foregoing, certain conflicts of interest may arise out of the relationships between Covered Officers and the Trust which are already subject to conflict of interest provisions in the Investment Company Act of 1940 (including the regulations thereunder, the “Investment Company Act”). For example, Covered Officers may not individually engage in certain transactions (such as the purchase or sale of securities or other property) with the Trust because of their status as “affiliated persons” of the Trust. The Trust’s compliance programs and procedures are designed to prevent, identify and correct, violations of these provisions. This Code does not, and is not intended to, repeat or replace these programs and procedures, and such conflicts fall outside the parameters of this Code.
2. | Examples of Prohibited Conflicts of Interest |
a. Other conflicts of interest are covered by the Code, even if such conflicts of interest are not subject to provisions in the Investment Company Act and the Investment Advisers Act. The following list provides examples of conflicts of interest under the Code, but Covered Officers should keep in mind that these examples are not exhaustive. The overarching principle is that the personal interest of a Covered Officer should not be placed improperly before the interest of the Trust.
Each Covered Officer must:
● | Not use his or her personal influence or personal relationships improperly to influence investment decisions or financial reporting by the Trust whereby such Covered Officer would benefit personally to the detriment of the Trust. |
● | Not cause the Trust to take action, or fail to take action, for the individual personal benefit of such Covered Officer rather than the benefit of the Trust. |
● | Not use material non-public knowledge of portfolio transactions or proposed investments of the Trust made or contemplated by the Trust to trade personally or cause others to trade personally or act in respect of such investments in contemplation of the market effect of such transactions or in a manner contrary to the interests of the Trust. |
b. With respect to other potential conflict of interest situations, if a Covered Officer is in doubt as to whether such situations would constitute Prohibited Conduct under this Code, the Covered Officer should immediately describe the matter to the Chair of the Executive Committee of the Board of Trustees (the “Chair”) for resolution. The Chair may refer the matter to appropriate counsel of the Trust for advice.
B. | Covered Officers Should Promote Full, Fair, Accurate and Timely Disclosure |
● | Each Covered Officer should familiarize himself or herself with the disclosure requirements generally applicable to the Trust. |
● | Each Covered Officer should not knowingly misrepresent, or cause others to misrepresent, material facts about the Trust to the Trust’s Board of Trustees, its auditors, governmental regulators or others, whether within or outside the Trust. |
● | Each Covered Officer should, to the extent appropriate within his or her area of responsibility, consult with other officers and employees of the Trust and, if applicable, the Trust’s other service providers, with the goal of promoting full, fair, accurate, timely, and understandable disclosure in the reports and documents the Trust files with, or submits to, the SEC, and in other public communications made by the Trust. |
C. | Covered Officers Should Promote Compliance |
● | It is the responsibility of each Covered Officer to promote compliance with the standards and restrictions imposed by applicable laws, governmental rules, and regulations. |
IV. | Accountability and Administration; Violations of Code |
A. | Each Covered Officer must: |
● | Upon becoming subject to this Code, and upon being provided a copy of this Code, affirm in writing that he or she has received, read, and understands and will adhere to this Code. |
● | Annually thereafter affirm in writing that he or she has complied with the requirements of this Code. |
● | Not retaliate against any other Covered Officer or any employee of the Trust for reports of potential violations that are made in good faith. |
● | Notify the Chair promptly if he or she knows of any material violation of this Code, as defined in Section III above. Failure to do so is itself a violation of this Code. |
B. The Chair is responsible for applying this Code to specific situations in which questions are presented under it and has the authority to interpret this Code in any particular situation.
V. | Investigation and Enforcement of Code |
The Trust will follow the following procedures in investigating and enforcing this Code:
● | The Chair will take all appropriate action to investigate any potential violations reported to him/her. The Chair is authorized to consult, as appropriate, in-house or outside counsel to the Trust or counsel, if any, to the independent Trustees, and all necessary resources shall be made available to him/her for this purpose. |
● | If, after such investigation, the Chair concludes that no violation has occurred, the Chair may, as appropriate, so inform the Covered Officer or Officers concerned, and the Chair shall not be required to take any further action. |
● | If, after such investigation, the Chair concludes a violation of the Code has occurred, the Chair shall consult with senior management (other than the Covered Officer or Officers concerned) and/or other appropriate persons and make a recommendation as to whether any sanction should be imposed or preventive action taken. Opportunity shall be given to the Covered Officer or Officers concerned to respond to the allegations prior to any conclusion that a violation of the Code has occurred. |
● | The Chair shall promptly inform the entire Executive Committee of the Board of Trustees of any violations of this Code and of the recommendation for sanctions or preventive action. |
● | If the Executive Committee concurs by majority vote that a violation has occurred, it will consider appropriate sanctions or preventive action and, by majority vote, take such action or impose such sanctions as it deems appropriate. |
● | Appropriate sanctions or preventive action may, without limitation, include a written warning, a letter of censure, suspension, dismissal or, in the event of criminal or other serious violations of law, notification of the SEC or other appropriate law enforcement authorities or the pursuit of any available legal remedies. |
● | The Chair will be responsible for granting waivers, as he/she deems appropriate. Any changes to or waivers of this Code will, to the extent required, be disclosed as provided by SEC rules. |
VI. | Other Policies and Procedures |
This Code is the sole code of ethics adopted by the Trust for purposes of Section 406 of the Sarbanes-Oxley Act and the rules and forms applicable to registered investment companies thereunder. The obligations imposed by this Code are separate from, and in addition to, the obligations imposed on such persons as Covered Persons under the Code of Ethics adopted by the Trust pursuant to Rule 17j-1 of the Investment Company Act of 1940, as amended. Other Trust policies and procedures that cover activities or behavior of Covered Officers (and/or other persons) are separate requirements applying to the Covered Officers and others, and are not part of this Code.
Except as expressly provided herein, no failure to follow a procedure under this Code shall be considered a violation under this Code.
VII. | Amendments |
Any material amendments or changes to this Code, other than amendments to Exhibit A, must be approved or ratified by a majority vote of the Trustees who are not interested persons of the Trust.
VIII. | Confidentiality |
All reports and records prepared pursuant to this Code shall be maintained by the Chair and will be considered confidential and shall be maintained and protected accordingly. Except as otherwise required by law or this Code, such matters shall not be disclosed to anyone other than the appropriate members of the Board of Trustees, legal counsel and appropriate personnel at the Trust.
IX. | Internal Use/Limitations |
This Code shall not in any way act as a limitation on the authority of the Trust, its Trustees or any of its officers, to discipline or discharge any employee of the Trust, and shall not be deemed to grant to any employee of the Trust any contract or other employment related rights, whether substantive or procedural. The policies and procedures described in this Code do not create any obligations to any person or entity other than the Trust. This Code is intended solely for the internal use by the Trust and does not constitute a promise or contract, by or on behalf of the Trust, nor any admission as to any fact, circumstance, or legal conclusion. The Trust and the Chair retain the sole discretion to decide whether the Code applies to a specific situation, and how it should be interpreted or enforced.
Exhibit A
Persons Covered by This Code of Ethics
Stephen Coyle - Chief Executive Officer
Theodore S. Chandler - Chief Operating Officer
Erica Khatchadourian - Chief Financial Officer
Harpreet S. Peleg - Controller
AFL-CIO Housing Investment Trust N-CSR
Exhibit (a)(2)
Form N-CSR Certification Pursuant to
Section 302 of the Sarbanes-Oxley Act
I, Stephen Coyle, certify that:
1. | I have reviewed this report on Form N-CSR of the AFL-CIO Housing Investment Trust; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of trustees (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Stephen Coyle | |
Stephen Coyle | |
Chief Executive Officer | |
AFL-CIO Housing Investment Trust | |
Date: March 9, 2018 |
Exhibit (a)(2)
Form N-CSR Certification Pursuant to
Section 302 of the Sarbanes-Oxley Act
I, Erica Khatchadourian, certify that:
1. | I have reviewed this report on Form N-CSR of the AFL-CIO Housing Investment Trust; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of trustees (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Erica Khatchadourian | |
Erica Khatchadourian, | |
Chief Financial Officer | |
AFL-CIO Housing Investment Trust | |
Date: March 6, 2018 |
AFL-CIO Housing Investment Trust N-CSR
Exhibit (b)
Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
AFL-CIO Housing Investment Trust
In connection with the Report on Form N-CSR of the AFL-CIO Housing Investment Trust that is accompanied by this certification, the undersigned hereby certifies that:
1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Trust.
Dated: March 9, 2018
/s/ Stephen Coyle |
Stephen Coyle
Chief Executive Officer
AFL-CIO Housing Investment Trust
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the AFL-CIO Housing Investment Trust and will be retained by the AFL-CIO Housing Investment Trust and furnished to the Securities and Exchange Commission or its staff upon request.
Exhibit (b)
Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
AFL-CIO Housing Investment Trust
In connection with the Report on Form N-CSR of the AFL-CIO Housing Investment Trust that is accompanied by this certification, the undersigned hereby certifies that:
1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Trust.
Dated: March 6, 2018
/s/ Erica Khatchadourian |
Erica Khatchadourian,
Chief Financial Officer
AFL-CIO Housing Investment Trust
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the AFL-CIO Housing Investment Trust and will be retained by the AFL-CIO Housing Investment Trust and furnished to the Securities and Exchange Commission or its staff upon request.
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