N-CSRS
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: 811-05506
College and
University Facility Loan Trust Two
(Exact name of registrant as specified in charter)
c/o U.S. Bank One Federal Street Boston, MA 02110
(Address of principal executive offices) (Zip code)
Patrick S.R.
MacDonald
U.S. Bank Corporate Trust Services
One Federal Street
Boston, MA 02110
(Name
and address of agent for service)
Registrant’s telephone number, including area code: (617) 603-6467
Date of fiscal year end: November 30
Date of reporting period: December 1, 2014–May 31, 2015
| ITEM 1. |
REPORT TO STOCKHOLDERS |
|
| College and University Facility Loan Trust Two |
|
| Financial Statements (Unaudited) |
| As of and for the Six Months Ended May 31, 2015 |
College and University Facility Loan Trust Two
Contents
2
College and University Facility Loan Trust Two
Statement of Assets and Liabilities (Unaudited)
|
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| May 31, 2015 |
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| Assets: |
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|
|
|
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| Investments, at amortized cost, net of allowance for loan losses of $90,000 (Notes 2, 6, 7, and 8) |
|
$ |
11,520,517 |
|
| Cash |
|
|
50,000 |
|
| Interest Receivable |
|
|
95,149 |
|
| Deferred Bond Issuance Costs (Note 2) |
|
|
8,335 |
|
| Prepaid Expenses |
|
|
13,750 |
|
|
|
|
|
|
|
|
| Total Assets |
|
|
11,687,751 |
|
|
|
|
|
|
|
|
| Liabilities: |
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|
|
|
|
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| Bonds Payable, net of unamortized discount (Notes 3 and 8) |
|
|
5,805,926 |
|
| Bonds Interest Payable (Note 3) |
|
|
129,825 |
|
| Accrued Expenses and Other Liabilities |
|
|
218,846 |
|
| Distributions Payable to Class B Certificateholders (Note 5) |
|
|
32,173 |
|
|
|
|
|
|
|
|
| Total Liabilities |
|
|
6,186,770 |
|
|
|
|
|
|
|
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| Net Assets: |
|
|
|
|
|
|
| Class B Certificates, par value $1.00; authorized, issued and outstanding - 1,763,800 certificates |
|
|
1,763,800 |
|
| Additional Paid-In Capital |
|
|
3,595,278 |
|
| Undistributed Net Investment Income |
|
|
141,903 |
|
|
|
|
|
|
|
|
| Net Assets |
|
$ |
5,500,981 |
|
|
|
|
|
|
|
|
| Net Asset Value per Class B Certificate (based on 1,763,800 certificates outstanding) |
|
$ |
3.12 |
|
|
|
|
|
|
The accompanying notes are an integral part of these financial statements.
3
College and University Facility Loan Trust Two
Statement of Operations (Unaudited)
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| Six months ended May 31, 2015 |
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| Investment Income: |
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| Interest income (Note 2) |
|
$ |
584,333 |
|
|
|
|
|
|
|
|
| Expenses: |
|
|
|
|
| Interest expense (Note 3) |
|
|
358,461 |
|
| Professional fees |
|
|
204,425 |
|
| Trustee fees (Note 4) |
|
|
14,912 |
|
| Servicer fees (Note 4) |
|
|
4,832 |
|
| Other trust and bond administration expenses |
|
|
3,988 |
|
|
|
|
|
|
|
|
| Total Expenses |
|
|
586,618 |
|
|
|
|
|
|
|
|
| Net Investment Loss |
|
|
(2,285 |
) |
|
|
| Decrease in Allowance for Loan Losses (Note 6) |
|
|
8,000 |
|
|
|
|
|
|
|
|
| Net Increase in Net Assets Resulting From Operations |
|
$ |
5,715 |
|
|
|
|
|
|
The accompanying notes are an integral part of these financial statements.
4
College and University Facility Loan Trust Two
Statements of Changes in Net Assets
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| |
|
Six Months
Ended
May 31,
2015
(Unaudited) |
|
|
Year Ended
November 30,
2014 |
|
|
|
|
| Increase From Operations: |
|
|
|
|
|
|
|
|
| Net investment loss |
|
$ |
(2,285 |
) |
|
$ |
385,412 |
|
| Decrease in allowance for loan losses |
|
|
8,000 |
|
|
|
38,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net increase in net assets resulting from operations |
|
|
5,715 |
|
|
|
423,412 |
|
|
|
|
| Distributions to Class B Certificateholders From: |
|
|
|
|
|
|
|
|
| Tax return of capital (Note 2) |
|
|
(32,173 |
) |
|
|
(1,086,201 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
| Net Decrease in Net Assets |
|
|
(26,458 |
) |
|
|
(662,789 |
) |
|
|
|
| Net Assets: |
|
|
|
|
|
|
|
|
| Beginning of period/year |
|
|
5,527,439 |
|
|
|
6,190,228 |
|
|
|
|
|
|
|
|
|
|
|
|
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| End of period/year |
|
$ |
5,500,981 |
|
|
$ |
5,527,439 |
|
|
|
|
|
|
|
|
|
|
|
|
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| Undistributed Net Investment Income |
|
$ |
141,903 |
|
|
$ |
155,243 |
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these financial statements.
5
College and University Facility Loan Trust Two
Statement of Cash Flows (Unaudited)
|
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|
|
|
| Six months ended May 31, |
|
2015 |
|
|
|
| Cash Flows From Operating Activities: |
|
|
|
|
| Reconciliation of net increase in net assets resulting from operations to net cash provided by operating activities: |
|
|
|
|
| Net increase in net assets resulting from operations |
|
$ |
5,715 |
|
| Decrease in allowance for loan losses |
|
|
(8,000 |
) |
| Accretion of purchase discount on Loans |
|
|
(331,123 |
) |
| Amortization of original issue discount on Bonds |
|
|
225,750 |
|
| Amortization of deferred bond issuance costs |
|
|
2,886 |
|
| Receipts of payments on loan principal balance |
|
|
1,075,988 |
|
| Decrease in investment agreements, net |
|
|
2,069,312 |
|
| Decrease in interest receivable |
|
|
19,942 |
|
| Increase in prepaid expenses |
|
|
(13,750 |
) |
| Decrease in bonds interest payable |
|
|
(40,714 |
) |
| Decrease in accrued expenses and other liabilities |
|
|
(10,577 |
) |
|
|
|
|
|
|
|
| Net cash provided by operating activities |
|
|
2,995,429 |
|
|
|
|
|
|
|
|
| Cash Flows From Financing Activities: |
|
|
|
|
| Principal payments on Bonds |
|
|
(2,035,682 |
) |
| Distribution payments to Class B certificateholders |
|
|
(959,747 |
) |
|
|
|
|
|
|
|
| Net cash used in financing activities |
|
|
(2,995,429 |
) |
|
|
|
|
|
|
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| Net Change in Cash |
|
|
— |
|
|
|
| Cash, beginning of period |
|
|
50,000 |
|
|
|
|
|
|
|
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| Cash, end of period |
|
$ |
50,000 |
|
|
|
|
|
|
|
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| Supplemental Cash Flow Information: |
|
|
|
|
| Cash paid for interest on Bonds |
|
$ |
170,539 |
|
|
|
|
|
|
The accompanying notes are an integral part of these financial statements.
6
College and University Facility Loan Trust Two
Financial Highlights
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| |
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Six Months
Ended
May 31,
2014
(Unaudited) |
|
|
Years Ended November 30, |
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| |
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2014 |
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2013 |
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2012 |
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2011 |
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2010 |
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| Per Certificate Operating Performance Information: |
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| Net asset value, beginning of period/year |
|
$ |
3.13 |
|
|
$ |
3.51 |
|
|
$ |
4.07 |
|
|
$ |
4.33 |
|
|
$ |
5.14 |
|
|
$ |
4.70 |
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| Income (Loss) from investment operations: |
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| Net investment (Loss) income(a) |
|
|
(.00 |
) |
|
|
.22 |
|
|
|
.21 |
|
|
|
.49 |
|
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|
.39 |
|
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|
.53 |
|
| Decrease in allowance for loan losses(a) |
|
|
.00 |
|
|
|
.02 |
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|
.04 |
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|
.09 |
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|
.02 |
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|
.16 |
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| Net increase from operations(a) |
|
|
.00 |
|
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|
.24 |
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|
.25 |
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|
.58 |
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|
.41 |
|
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|
.69 |
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| Distributions to Class B certificateholders from tax return of capital |
|
|
(.01 |
) |
|
|
(.62 |
) |
|
|
(.81 |
) |
|
|
(.84 |
) |
|
|
(1.22 |
) |
|
|
(.25 |
) |
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| Net asset value, end of period/year(b) |
|
$ |
3.12 |
|
|
$ |
3.13 |
|
|
$ |
3.51 |
|
|
$ |
4.07 |
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|
$ |
4.33 |
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$ |
5.14 |
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| Total investment return(c) |
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N/A |
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|
N/A |
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|
N/A |
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|
N/A |
|
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|
N/A |
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|
N/A |
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| Net assets applicable to Class B Certificates, End of period/year |
|
$ |
5,500,981 |
|
|
$ |
5,527,439 |
|
|
$ |
6,190,228 |
|
|
$ |
7,185,363 |
|
|
$ |
7,642,792 |
|
|
$ |
9,070,470 |
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| Ratios and Supplemental Data: |
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| Ratio of operating expenses to average net assets applicable to Class B Certificates |
|
|
10.64 |
%(d)(e) |
|
|
24.02 |
%(d) |
|
|
26.60 |
%(d) |
|
|
29.22 |
%(d) |
|
|
31.42 |
%(d) |
|
|
36.25 |
%(d) |
|
|
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|
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|
| Ratio of net investment income(Loss) to average net assets applicable to Class B Certificates |
|
|
(.04 |
%) |
|
|
6.58 |
% |
|
|
5.55 |
% |
|
|
11.59 |
% |
|
|
8.37 |
% |
|
|
10.96 |
% |
|
|
|
|
|
|
|
| Number of Class B Certificates outstanding, end of period/year |
|
|
1,763,800 |
|
|
|
1,763,800 |
|
|
|
1,763,800 |
|
|
|
1,763,800 |
|
|
|
1,763,800 |
|
|
|
1,763,800 |
|
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| (a) |
Amount for the six months ended May 31, 2015 is less than $0.005. |
| (b) |
The Trust is prohibited, by the terms of its Indenture, from issuing new, or redeeming existing, Certificates. As such, market value is not presented, as discussed in Note 2. |
| (c) |
The Trust’s investments are recorded at amortized cost as discussed in Note 2. Accordingly, the financial statements do not reflect the fair value of such investments. For this reason, management believes that
no meaningful information can be provided regarding “Total investment return” and has not included information under that heading. The Trust is prohibited, by the terms of its Indenture, from selling or purchasing any investments. As the
Trust did not purchase or sell investments during the periods presented, “portfolio turnover” is 0% for all periods presented. |
| (d) |
Excluding interest expense, the ratio of operating expenses to average net assets was 4.14%(e), 7.84%, 8.44%, 6.82%, 5.30% and 5.07% in 2015, 2014, 2013, 2012, 2011
and 2010, respectively. |
The accompanying notes are an integral part of these financial statements.
7
College and University Facility Loan Trust Two
Notes to Financial Statements (Unaudited)
| 1. |
Organization and Business |
College and University Facility Loan Trust Two (the Trust) was formed on
March 11, 1988 as a business trust under the laws of the Commonwealth of Massachusetts by a declaration of trust by Bank of Boston (the Owner Trustee), succeeded by State Street Bank and Trust Company, succeeded by U.S. Bank National
Association (successor Owner Trustee), not in its individual capacity, but solely as Owner Trustee. The Trust is registered under the Investment Company Act of 1940, as amended, (the 1940 Act) as a diversified, closed-end, management investment
company.
The Trust was formed for the sole purpose of raising funds through the issuance and sale of bonds (the Bonds). The Trust commenced operations on
May 12, 1988 (the Closing Date) and issued Bonds in four tranches in the aggregate principal amount (at maturity) of $450,922,000. The Bonds constitute full recourse obligations of the Trust. The collateral securing the Bonds consists primarily
of a pool of loans made to college and university facilities (the Loans) and certain other funds held under the Indenture and the investment agreements. The Loans were originated by, or previously assigned to, the United States Department of
Education under the College Housing Loan Program or the Academic Facilities Loan Program. The Loans, which have been assigned to The Bank of New York Mellon Trust Company, National Association, as successor in interest to J.P. Morgan Trust Company,
National Association, as successor in interest to Bank One Trust Company, NA, formerly The First National Bank of Chicago (the Bond Trustee), are secured by various types of collateral, including mortgages on real estate, general recourse
obligations of the borrowers, pledges of securities and pledges of revenues. As of the Closing Date, the Loans had a weighted average stated interest rate of approximately 3.18% and a weighted average remaining term to maturity of approximately 18.8
years. Payments on the Loans are managed by the Bond Trustee in various fund accounts and are invested under investment agreements (see Note 2) as specified in the Indenture. The Trust is prohibited, by the terms of its Indenture, from selling
or purchasing any Loans and investments.
All payments on the Loans and earnings under the investment agreements and any required transfers from the
Expense Fund and Liquidity Fund are deposited to the credit of the Revenue Fund held by the Bond Trustee, as defined within and in accordance with the Indenture. In accordance with the Indenture, on each bond payment date, the amounts on deposit in
the Revenue Fund, are applied in the following order of priority: to pay amounts due on the Bonds, to pay administrative expenses not previously paid from the Expense Fund, to fund the Expense Fund to the Expense Fund Requirement and to fund the
Liquidity Fund to the Liquidity Fund Requirement. Any funds remaining in the Revenue Fund on such payment date will be used to further pay down the Bonds to the extent of the Maximum Principal Distribution Amount, as defined in the Indenture, after
which any residual amounts are paid to the certificateholders, as discussed in Note 5. See Note 8 for balances in the Revenue and Liquidity Funds.
Berkadia Commercial Mortgage LLC (“Servicer” or “Berkadia”), formerly Capmark Finance, Inc., is the administrator for the Loan portfolio.
Berkadia serves as the Master Servicer and Special Servicer under the Master Servicing and Special Service Agreements. Berkadia handles the custodial bank accounts and performs the loan recordkeeping and monitoring.
8
College and University Facility Loan Trust Two
Notes to Financial Statements (Unaudited)
| 2. |
Summary of Significant Accounting Policies |
| (a) |
College and University Facility Loans |
The Loans were purchased by the Trust at amounts below the
par value of the Loans, resulting in a “purchase discount”.
As a 1940 Act investment company, the Trust is required to report the
investment portfolio of Loans at fair value under Accounting Standard Codification (“ASC”) Topic 946, Financial Services—Investment Companies, (“ASC 946”). However, management believes that the amortized cost method
of accounting, net of any allowance for loan losses, best serves the informational needs of the users of the Trust’s financial statements.
Pursuant to a “no-action letter” that the Trust received from the Securities and Exchange Commission, the Loans were recorded at the discounted
value (the amortized cost) and are being accounted for under the amortized cost method of accounting, net of any allowance for loan losses. Under the amortized cost method, the difference between the purchase discount and par value of each Loan is
accreted to par value, assuming no prepayments of principal, and included in the Trust’s interest income by applying the Loan’s effective interest rate to the amortized cost of that Loan over the duration of the Loan. Upon a Loan
prepayment, any remaining unamortized purchase discount is recognized as interest income. The remaining balance of the unamortized purchase discount on the Loans as of May 31, 2015 was approximately $1,884,000. For the six months ended
May 31, 2015, the Trust recognized approximately $331,000 of interest income from the accretion of purchase discount. As a result of prepayments of Loans during the six months ended May 31, 2015, approximately $24,000 of unamortized
purchase discount related to such Loans at the time of prepayment was recognized and is included in the $331,000 of accretion for the six months ended May 31, 2015.
The Trust records an allowance for loan losses based on the Trust’s evaluation of collectability of the Loans within the portfolio. The Loans are
classified into three separate pools based on risk and collection performance. The pools are then assigned a reserve percentage based on risk and other factors and a reserve is systematically calculated for the pools:
| |
(1) |
General - Loans are performing on a timely basis and where there is no information that leads the Trust to reclassify to a different risk pool. |
| |
(2) |
Substandard - Loans are generally classified into this category resulting from either historical collection issues or administrative issues with receiving collection that have been on-going. Loans in this pool are not
considered uncollectible but due to collection issues, a higher reserve percentage is applied due to the risk profile of this pool. |
| |
(3) |
Doubtful - A Loan is considered doubtful when, based on current information and events, it is probable that the Trust will be unable to collect all amounts due in accordance with the contractual terms of the Loan
agreement. Loans in this category are generally assigned a 100% reserve unless facts and circumstances provide evidence that some level of collectability exists. At May 31, 2015, no loans were considered doubtful by the Trust.
|
As the credit quality for an individual Loan borrower changes, the Loan is evaluated for reclassification to a different risk pool as
described above. Risk ratings to the existing pools may be adjusted based on qualitative factors including, among others, general economic and business conditions, credit quality trends, and specific industry conditions. The Trust monitors credit
quality primarily through two trigger points: receipt of financial information that upon review raises credit quality concerns and delinquent payments which then require investigation as to causes of the delinquency. Historically, write-offs have
not been material.
9
College and University Facility Loan Trust Two
Notes to Financial Statements (Unaudited)
There are inherent uncertainties with respect to the final outcome of Loans and as such, actual losses may
differ from the amounts reflected in the financial statements and such differences could be material.
The Trust accrues interest, including accretion of purchase discount, on the
Loans as earned. The Loans generally require interest payments on a semi-annual basis with rates of interest ranging from 3% to 4%. The Trust recognizes the accretion of Loan purchase discount as interest income using the effective interest method.
The Trust views all amounts over 30 days past due as delinquent. It is the Trust’s policy to generally discontinue the accrual of interest on Loans
for which payment of principal or interest is 180 days or more past due or for other such Loans if management believes the collection of interest and principal is doubtful. Due to the nature of the Loan investments in the Trust, there are instances
where payment of the Loans and related interest may not be received by the Trust due to documentation issues that require time for the Trust to resolve. In those circumstances, where the past due loan is greater than 180 days but the Trust has
concluded it is not a credit issue, the Trust will continue to accrue interest or accrete purchase discount if the Trust believes interest and principal amounts to be collectible. When a Loan is placed on nonaccrual status, all previously accrued,
but uncollected interest is reversed against the current period’s interest income. Subsequently, any interest income received from a Loan that is on nonaccrual status is recognized when received and such payments are generally applied to
interest first, with the balance, if any, applied to principal. At May 31, 2015, no Loans have been placed on nonaccrual status. At May 31, 2015, there are no past due amounts.
Other investments, which are included in investments in the accompanying
Statement of Assets and Liabilities, consist of two investment agreements issued by JP Morgan Chase Bank bearing fixed rates of interest of 7.05% and 7.75%. These investments are carried at cost, whereas they should be reported at fair value under
ASC 946. However, management believes that the cost method of accounting best serves the informational needs of the users of the Trust’s financial statements because the Trust cannot sell or dispose of these investment agreements prior to the
date they terminate, which is the earlier of June 1, 2018, or the date on which the Bonds are paid-in-full. See Note 8 for discussion of fair value measurement of these investments.
| (d) |
Deferred Bond Issuance Costs |
Deferred bond issuance costs are amortized using the effective
interest rate method over the estimated life of the Bonds, which are based on the scheduled payments of the Loans, and are included as a component of interest expense. Loan prepayments have the effect of accelerating Bond payments. As these
accelerated Bond payments occur, an additional portion of the deferred issuance costs is expensed in the year the prepayment occurs.
10
College and University Facility Loan Trust Two
Notes to Financial Statements (Unaudited)
It is the Trust’s policy to comply with the requirements applicable to
a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended, and to distribute substantially all of its investment company taxable income to its certificateholders each year. Accordingly, no provision for
federal income, state income, or excise tax is necessary.
For tax purposes, the Loans were transferred to the Trust at their face values. Accordingly,
the accretion of the purchase discount creates a permanent book-tax difference.
As of May 31, 2015, the Trust had no uncertain tax positions that
would require financial statement recognition, de-recognition, or disclosure. The Trust is additionally not aware of any tax positions for which it is reasonably possible that the total amount of unrecognized tax benefits will change in the next 12
months.
The Trust files a U.S. federal and Massachusetts state income tax return annually after its fiscal year-end, which is subject to examination for
a period of three years from the date of filing.
Capital distributions are presented and disclosed in accordance with ASC 946, which requires the Trust
to report distributions that are in excess of tax-basis earnings and profits as a tax return of capital and to present the Trust’s distributable earnings (components of net assets) on a basis that approximates the amounts that are available for
future distributions on a tax basis. For the six months ended May 31, 2015, distributions of $0.02 were declared on May 27, 2015, and paid to certificateholders of record on June 2, 2015. For the year ended November 30,
2014, distributions of $0.07 and $0.55 per certificate were declared on May 30, 2014 and November 26, 2014 and paid to certificateholders of record on June 2, 2014 and December 2, 2014, respectively. The distributions of $32,173
and $1,086,201 for the six months ended May 31, 2015 and the year ended November 30, 2014, respectively, represent returns of capital for tax purposes.
The Trust’s primary permanent differences between accounting principles generally accepted in the United States of America (“GAAP”) and tax
basis relate to:
| |
(a) |
The accretion of the Loan purchase discounts under GAAP. For the six months ended May 31, 2015 and the year November 30, 2014, the Trust recorded $331,123 and $1,151,459, respectively of interest income
related to the accretion of purchase discounts. At May 31, 2015 and November 30, 2014, the Trust had recognized accumulated accretion of the purchase discounts of $216,815,759 and $216,484,636, respectively. |
| |
(b) |
Net operating losses for tax purposes of $312,068 and $696,261 for the six months ended May 31, 2015 and the year ended November 30, 2014, respectively. |
As required under ASC 946, the Trust reclassifies the accumulated value of the permanent differences discussed above from distributions in excess of net
investment income to paid-in capital. The total reclassification increased additional paid-in capital and reduced undistributed net investment income by $19,055 and $455,198 as of May 31, 2015 and November 30, 2014, respectively. These
reclassifications have no impact on the net assets or net assets per certificate value of the Trust.
The primary reasons for the book-to-tax temporary
differences relate to allowance for loan losses and the difference in original issuance discount on the Bonds.
The Trust’s tax year end is
November 30th, and therefore the character and amounts of the permanent and temporary differences for the six months ended May 31, 2015 are subject to change until the Trust prepares its provision for the year ending November 30, 2015
11
College and University Facility Loan Trust Two
Notes to Financial Statements (Unaudited)
The preparation of the 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 income and expense during the reporting period. Actual results could differ
from these estimates.
| (g) |
Statement of Cash Flows |
The cash amount shown in the Statement of Cash Flows of the Trust is the
amount included in the Trust’s Statement of Assets and Liabilities and represents the cash at the bank and does not include any short-term investments.
The Trust’s investments are subject to the following:
Credit Risk
The Trust is subject to credit risk from its
counterparties to any of its investments if the counterparties fail to perform pursuant to the terms of their agreements with the Trust.
The Trust’s
investment agreements are held in escrow by the Bond Trustee. The Bond Trustee has custody of the Trust’s investment agreements. The Trust is subject to counterparty risk to the extent that the Bond Trustee may be unable to fulfill its
obligations to the Trust.
Loan payments made to the Trust are received and processed by the Servicer. The Trust is subject to counterparty risk to the
extent that the borrowers and the Servicer may be unable to fulfill their obligations to the Trust.
Prepayment Risk
Most of the Loans held by the Trust allow for prepayment of principal without penalty. As such, the Trust is subject to prepayment risk, which could negatively
impact future earnings.
Under the Trust’s organizational documents, its Owner Trustee and Bond
Trustee may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the Trust, and certificateholders are indemnified against personal liability for the obligations of the Trust. Additionally, in the
normal course of business, the Trust may enter into agreements with service providers that may contain indemnification clauses. The Trust’s maximum exposure under these arrangements is unknown as this would involve future claims that may be
made against the Trust that have not yet occurred.
12
College and University Facility Loan Trust Two
Notes to Financial Statements (Unaudited)
The Bonds outstanding at May 31, 2015 consist of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
Rate |
|
|
Stated
Maturity |
|
|
Outstanding
Principal
(000’s) |
|
|
Unamortized
Discount
(000’s) |
|
|
Carrying
Amount
(000’s) |
|
|
|
|
|
|
| |
4.0 |
% |
|
|
June 1, 2018 |
|
|
$ |
6,491 |
|
|
$ |
(685 |
) |
|
$ |
5,806 |
|
Interest on the Bonds is payable semi-annually. On June 1, 2015, the Trust made a principal payment of $1,260,279 on the
Bonds. The average amount of bond principal outstanding for the six months ended May 31, 2015 was approximately $6,491,000.
Pursuant to the terms of
the Indenture, principal payments on the Bonds are made prior to the stated maturity on each bond payment date in an amount equal to the lesser of either (1) amounts available in the Revenue Fund after certain required payments of interest and
principal (at the stated maturity of the Bonds) and administrative expenses, after required transfers to the Expense Fund and the Liquidity Fund (such that the amounts on deposit are equal to the Expense Fund Requirement and the Liquidity Fund
Requirement, respectively), or (2) the Maximum Principal Distribution Amount.
The estimated remaining aggregate principal payments on the Bonds at
May 31, 2015, after taking into consideration actual Loan prepayments and the Maximum Principal Distribution Amount, are as follows:
|
|
|
|
|
| Fiscal Year |
|
Amount
(000’s) |
|
|
|
| 2015* |
|
$ |
1,260 |
|
| 2016 |
|
|
1,862 |
|
| 2017 |
|
|
1,773 |
|
| 2018 |
|
|
1,596 |
|
|
|
|
|
|
|
|
| Total |
|
$ |
6,491 |
|
|
|
|
|
|
| * |
For the six months ended November 30, 2015. |
Actual Bond principal payments may differ from estimated
payments because borrowers may prepay or default on their obligations. The Bonds are not subject to optional redemption by either the Trust or the bondholders.
In the event the Trust realizes negative cash flows, the Liquidity Fund is being maintained such that, on or before such bond payment date, the Liquidity Fund
may be used by the Bond Trustee to make any required payments on the Bonds and to pay operating expenses of the Trust. See Note 8 for balance in the Liquidity Fund.
The original issue discount is being amortized using the effective interest rate method over the estimated life of the Bonds, which are based on the scheduled
payments of the Loans. Accordingly, Loan prepayments have the effect of accelerating Bond payments. When Bond payments occur sooner than estimated, a portion of the original issue discount is expensed in the year of prepayment. Amortization of
original issue discount is included as a component of interest expense. Remaining unamortized discount as of May 31, 2015 was $685,000.
13
College and University Facility Loan Trust Two
Notes to Financial Statements (Unaudited)
| 4. |
Administrative Agreements |
As compensation for the services provided under the servicing agreement, Berkadia,
receives a servicing fee. The fee is earned on each date of payment for each Loan and is equal to 0.075 of 1% of the outstanding principal balance of such Loans divided by the number of payments of principal and interest in a calendar year. For the
six months ended May 31, 2015, this fee totaled $4,562. Additionally, per the servicing agreement, the Servicer is reimbursed for certain expenditures incurred related to inspection of mortgaged property. For the six months ended May 31,
2015, the Servicer was reimbursed $270. As of May 31, 2015, $2,072 in fees are due to the Servicer.
As compensation for services provided, the Owner and Bond Trustees are entitled, under
the Declaration of Trust and the Indenture, to receive the following fees:
Under the Declaration of Trust agreement, the Owner Trustee, in its capacities
as manager of the Trust and as Owner Trustee, is entitled to annual fees of $15,000 and $12,500, respectively. In addition, the Owner Trustee is paid an annual registration fee of $1,000. The expected future minimum payments to the Owner Trustee
under such agreement will be $28,500 in fiscal years 2015, 2016, 2017, 2018 and 2019, and will total $114,000 thereafter. For the six months ended May 31, 2015, the Owner Trustee incurred no out-of-pocket expenses.
The Bond Trustee is entitled to an annual fee equal to 0.015 of 1% of the aggregate outstanding principal of the Bonds on the bond payment date immediately
preceding the date of payment of such fee. The Bond Trustee is also reimbursed for out-of-pocket expenses. In addition, the Bond Trustee is reimbursed for other agreed-upon related expenses such as transaction costs. For the six months ended
May 31, 2015, total Bond Trustee fees and related expenses amounted to $1,162.
The holders of the Class B certificates may receive semi-annual distributions declared in
May and November of each year, calculated in accordance with the Indenture, from amounts collected by the Trust, on a pro rata basis. While the Bonds remain outstanding, the distributions are paid on the second business day in each June and
December and, after the Bonds are paid in full, on the first business day of each month. The certificateholders of the Class B Certificates are entitled to one vote per certificate. Distributions payable of $32,173 at May 31, 2015,
were paid on June 2, 2015.
14
College and University Facility Loan Trust Two
Notes to Financial Statements (Unaudited)
| 6. |
Allowance for Loan Losses |
An analysis of the allowance for loan losses for the six months ended
May 31, 2015 is summarized as follows:
|
|
|
|
|
| Balance, beginning of period |
|
$ |
98,000 |
|
| Decrease in allowance for loan losses |
|
|
(8,000 |
) |
| Charge-offs |
|
|
— |
|
| Recoveries |
|
|
— |
|
|
|
|
|
|
|
|
| Balance, end of period |
|
$ |
90,000 |
|
|
|
|
|
|
Loan classification by credit risk profile as of May 31, 2015 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Amortized
Cost
(000’s) |
|
|
Reserve
Amount
(000’s) |
|
|
Total
(000’s) |
|
|
|
|
|
| General |
|
$ |
9,025 |
|
|
$ |
90 |
|
|
$ |
8,935 |
|
| Substandard |
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Doubtful |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
|
$ |
9,025 |
|
|
$ |
90 |
|
|
$ |
8,935 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scheduled principal and interest payments on the Loans as of May 31, 2015 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
| Fiscal Year |
|
Principal
Payments
(000’s) |
|
|
Interest
Payments
(000’s) |
|
|
Total
(000’s) |
|
|
|
|
|
| 2015* |
|
$ |
1,430 |
|
|
$ |
175 |
|
|
$ |
1,605 |
|
| 2016 |
|
|
2,173 |
|
|
|
297 |
|
|
|
2,470 |
|
| 2017 |
|
|
1,865 |
|
|
|
229 |
|
|
|
2,094 |
|
| 2018 |
|
|
1,680 |
|
|
|
169 |
|
|
|
1,849 |
|
| 2019 |
|
|
1,672 |
|
|
|
114 |
|
|
|
1,786 |
|
| Thereafter |
|
|
2,089 |
|
|
|
110 |
|
|
|
2,199 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
|
$ |
10,909 |
|
|
$ |
1,094 |
|
|
$ |
12,003 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| * |
For the six months ended November 30, 2015. |
Expected payments may differ from contractual payments
because borrowers may prepay or default on their obligations. Accordingly, actual principal and interest payments on the Loans may vary significantly from the scheduled payments. Principal prepayments made during the six months ended May 31,
2015 totaled approximately $213,000.
The ability of a borrower to meet future service payments on a Loan will depend on a number of factors
relevant to the financial condition of such borrower, including, among others, the size and diversity of the borrower’s sources of revenues; enrollment trends; reputation; management
15
College and University Facility Loan Trust Two
Notes to Financial Statements (Unaudited)
expertise; the availability and restrictions on the use of endowments and other funds; the quality and maintenance costs of the borrower’s facilities and, in the case of some Loans to public
institutions, which are obligations of a State, the financial condition of the relevant State or other governmental entity and its policies with respect to education. The ability of a borrower to maintain enrollment levels will depend on such
factors as tuition costs, geographical location, geographic diversity, quality of the student body, quality of the faculty and diversity of program offerings.
There are no outstanding principal balances that are due as of May 31, 2015.
The collateral for Loans that are secured by a mortgage on real estate generally consists of special purpose facilities, such as dormitories, dining halls and
gymnasiums, which are integral components of the overall educational setting. As a result, in the event of borrower default on a Loan, the Trust’s ability to realize the outstanding balance of the Loan through the sale of the underlying
collateral may be negatively impacted by the purpose, nature and location of such collateral.
| 8. |
Fair Value of Financial Instruments |
ASC Topic 825, Financial Instruments, requires
entities to disclose the estimated fair value of financial instruments.
ASC Topic 820, Fair Value Measurement, establishes
fair valuation principles, a three-tier hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available.
Observable inputs are inputs that market participants would use in valuing the asset or liability based on market data obtained from sources independent of the Trust. Unobservable inputs are inputs that reflect the Trust’s assumptions about the
factors market participants would use in valuing the asset or liability based on the best information available in the circumstances. The hierarchy is broken down into three levels based on the reliability of inputs as follows:
|
|
|
| Level 1 - |
|
Valuations based on quoted prices in active markets for identical assets or liabilities. |
|
|
| Level 2 - |
|
Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly. |
|
|
| Level 3 - |
|
Valuations based on inputs that are unobservable and significant to the overall fair value measurement (including the Trust’s own assumptions in determining fair value). |
Current market prices are not available for most of the Trust’s financial instruments since an active market generally
does not exist for such instruments. In accordance with the terms of the Indenture, the Trust is required to hold all of the Loans to maturity and to use the cash flows therefrom to retire the Bonds. Accordingly, the Trust has estimated the fair
values of its Loans and Bonds using a discounted cash flow methodology. This methodology is similar to the approach used at the formation of the Trust to determine the initial carrying amounts of these instruments for financial reporting purposes.
In applying the methodology, the calculations have been adjusted for the change in the relevant market rates of interest, the estimated duration of the instruments and an internally developed credit risk rating of the instruments. All calculations
are based on the scheduled principal and interest payments on the Loans and Bonds, excluding any potential prepayments as it is not possible to estimate such prepayments.
16
College and University Facility Loan Trust Two
Notes to Financial Statements (Unaudited)
The fair values of the fixed-maturity investment agreements are determined by adding a market rate adjustment
to the carrying value of the investments. This market rate adjustment is calculated using the net present value of the difference between future interest income to the Trust at the issue rate and the future interest income at the current market rate
through the maturity of the investment. The current market rate at May 31, 2015, is based upon bonds with similar characteristics and maturity dates of the investment agreements.
The following table summarizes the estimated fair value and carrying value of the Trust’s assets and liabilities that represent financial instruments,
which all are deemed to be Level 2 fair value measurements as of May 31, 2015:
|
|
|
|
|
|
|
|
|
| |
|
Carrying
Value
(000’s) |
|
|
Fair Value
(000’s) |
|
|
|
|
| Loans |
|
$ |
8,935 |
* |
|
$ |
11,144 |
|
|
|
|
| Investment Agreements: |
|
|
|
|
|
|
|
|
| Revenue Fund |
|
|
2,070 |
|
|
|
2,161 |
|
| Liquidity Fund |
|
|
516 |
|
|
|
591 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total Investment Agreements |
|
|
2,586 |
|
|
|
2,752 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total Investments |
|
$ |
11,521 |
|
|
$ |
13,896 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Bonds Payable |
|
$ |
5,805 |
|
|
$ |
6,848 |
|
|
|
|
|
|
|
|
|
|
| * |
Net of allowance for loan losses of $90,000. |
There were no transfers between levels during the six months
ended May 31, 2015. The Trust’s policy is to recognize transfers in and transfers out as of the beginning of the year.
The Trust has evaluated the need for disclosures and/or adjustments to the financial
statements resulting from subsequent events through the date of issuance of these financial statements.
The remainder of this page
intentionally left blank.
17
COLLEGE AND UNIVERSITY FACILITY LOAN TRUST TWO
SCHEDULE OF INVESTMENTS
(Unaudited)
May 31, 2015
(Dollar Amounts in Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding
Principal
Balance |
|
|
Description |
|
Stated
Interest
Rate % |
|
|
Maturity
Date |
|
Effective
Yield to
Maturity % (A) |
|
|
Amortized
Cost (Notes
1 and 2) |
|
|
|
|
|
COLLEGE AND UNIVERSITY LOANS (164%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
---------- ALABAMA (8%)-------- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ |
540 |
|
|
Auburn University |
|
|
3.000 |
|
|
12/01/2018 |
|
|
9.16 |
% |
|
$ |
461 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
461 |
|
|
|
|
|
---------- CALIFORNIA (20%)-------- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
793 |
|
|
California State University |
|
|
3.000 |
|
|
11/01/2019 |
|
|
8.99 |
|
|
|
688 |
|
| |
129 |
|
|
Lassen Junior College District |
|
|
3.000 |
|
|
04/01/2020 |
|
|
10.27 |
|
|
|
105 |
|
| |
390 |
|
|
University Student Co-Operative Association |
|
|
3.000 |
|
|
04/01/2019 |
|
|
10.70 |
|
|
|
325 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,118 |
|
|
|
|
|
---------- DISTRICT OF COLUMBIA (55%)-------- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
985 |
|
|
Georgetown University |
|
|
3.000 |
|
|
11/01/2020 |
|
|
10.36 |
|
|
|
804 |
|
| |
2,640 |
|
|
Georgetown University |
|
|
4.000 |
|
|
11/01/2020 |
|
|
10.52 |
|
|
|
2,211 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,015 |
|
|
|
|
|
---------- GEORGIA (2%) -------- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
134 |
|
|
Paine College |
|
|
3.000 |
|
|
10/01/2016 |
|
|
10.45 |
|
|
|
124 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
124 |
|
|
|
|
|
---------- INDIANA (24%) -------- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
1,730 |
|
|
Vincennes University |
|
|
3.000 |
|
|
06/01/2023 |
|
|
9.02 |
|
|
|
1,342 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,342 |
|
|
|
|
|
---------- IOWA (1%) -------- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
46 |
|
|
Simpson College |
|
|
3.000 |
|
|
07/01/2016 |
|
|
10.58 |
|
|
|
42 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42 |
|
|
|
|
|
---------- MISSISSIPPI (11%)-------- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
224 |
|
|
Millsaps College |
|
|
3.000 |
|
|
11/01/2021 |
|
|
10.34 |
|
|
|
177 |
|
| |
530 |
|
|
Mississippi State University |
|
|
3.000 |
|
|
12/01/2020 |
|
|
9.64 |
|
|
|
422 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
599 |
|
|
|
|
|
---------- NEW JERSEY (6%)-------- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
340 |
|
|
Fairleigh Dickinson University |
|
|
3.000 |
|
|
11/01/2017 |
|
|
10.39 |
|
|
|
305 |
|
| |
57 |
|
|
Rider College |
|
|
3.000 |
|
|
05/01/2017 |
|
|
10.70 |
|
|
|
51 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
356 |
|
|
|
|
|
---------- NEW Mexico (2%)-------- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
139 |
|
|
College of Santa Fe |
|
|
3.000 |
|
|
10/01/2018 |
|
|
10.43 |
|
|
|
122 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
122 |
|
|
|
|
|
---------- NEW YORK (1%)-------- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
45 |
|
|
Daemen College |
|
|
3.000 |
|
|
04/01/2016 |
|
|
10.77 |
|
|
|
42 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42 |
|
|
|
|
|
---------- NORTH CAROLINA (3%) -------- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
75 |
|
|
Elizabeth City State University |
|
|
3.000 |
|
|
10/01/2017 |
|
|
10.02 |
|
|
|
69 |
|
| |
120 |
|
|
Saint Mary’s College |
|
|
3.000 |
|
|
06/01/2020 |
|
|
10.14 |
|
|
|
96 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
165 |
|
The accompanying notes
are an integral part of this schedule.
18
COLLEGE AND UNIVERSITY FACILITY LOAN TRUST TWO
SCHEDULE OF INVESTMENTS
(Unaudited)
May 31, 2015
(Dollar Amounts in Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding
Principal
Balance |
|
|
Description |
|
Stated
Interest
Rate % |
|
|
Maturity
Date |
|
Effective
Yield to
Maturity % (A) |
|
|
Amortized
Cost (Notes
1 and 2) |
|
|
|
|
|
---------- OHIO (1%)-------- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ |
48 |
|
|
Wittenberg University |
|
|
3.000 |
|
|
11/01/2017 |
|
|
10.39 |
% |
|
$ |
43 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
43 |
|
|
|
|
|
---------- PENNSYLVANIA (17%)-------- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
927 |
|
|
Philadelphia College of Art |
|
|
3.000 |
|
|
01/01/2022 |
|
|
10.62 |
|
|
|
709 |
|
| |
290 |
|
|
Villanova University |
|
|
3.000 |
|
|
04/01/2019 |
|
|
10.70 |
|
|
|
242 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
951 |
|
|
|
|
|
---------- PUERTO RICO (5%)-------- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
272 |
|
|
Inter American University of Puerto Rico |
|
|
3.000 |
|
|
01/01/2017 |
|
|
10.94 |
|
|
|
249 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
249 |
|
|
|
|
|
---------- TEXAS (3%)-------- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
200 |
|
|
University of Saint Thomas |
|
|
3.000 |
|
|
10/01/2019 |
|
|
10.41 |
|
|
|
168 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
168 |
|
|
|
|
|
---------- VIRGINIA (2%)-------- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
115 |
|
|
Lynchburg College |
|
|
3.000 |
|
|
05/01/2018 |
|
|
10.68 |
|
|
|
100 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100 |
|
|
|
|
|
---------- WEST VIRGINIA (1%)-------- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
60 |
|
|
Bethany College |
|
|
3.000 |
|
|
11/01/2017 |
|
|
10.40 |
|
|
|
54 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
54 |
|
|
|
|
|
---------- WISCONSIN (1%)-------- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
80 |
|
|
Marian College |
|
|
3.000 |
|
|
10/01/2016 |
|
|
10.45 |
|
|
|
74 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
74 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL COLLEGE & UNIVERSITY LOANS (164%) |
|
|
|
|
|
|
|
|
|
|
|
|
9,025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for Loan Losses (-2%) |
|
|
|
|
|
|
|
|
|
|
|
|
(90 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans, net of aloowance for Loan Losses (162%) |
|
|
|
|
|
|
|
|
|
|
|
|
8,935 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INVESTMENT AGREEMENTS (47%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
516 |
|
|
JPMorgan Chase Bank - Liquidity Fund |
|
|
7.750 |
|
|
06/01/2018(C) |
|
|
7.750 |
|
|
|
516 |
|
| |
2,070 |
|
|
JPMorgan Chase Bank - Revenue Fund |
|
|
7.050 |
|
|
06/01/2018(C) |
|
|
7.050 |
|
|
|
2,070 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL INVESTMENT AGREEMENTS |
|
|
|
|
|
|
|
|
|
(B) |
|
|
2,586 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL INVESTMENTS (209%) |
|
|
|
|
|
|
|
|
|
|
|
$ |
11,521 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER ASSETS, LESS LIABILITIES (-109%) |
|
|
|
|
|
|
|
|
|
|
|
|
(6,020 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET ASSETS (100.0%) |
|
|
|
|
|
|
|
|
|
|
|
$ |
5,501 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (A) |
Represents the rate of return earned by the Trust based on the purchase discount and the accretion to maturity. |
| (B) |
The tax basis of the Loans is approximately $13,495. |
| (C) |
Terminates at the earlier of June 1, 2018 or the date on which the Bonds are paid-in-full (Note 2). |
The accompanying notes are an integral part of this schedule.
19
Not applicable to the registrant.
| ITEM 3. |
AUDIT COMMITTEE FINANCIAL EXPERT |
Not applicable to the registrant.
| ITEM 4. |
PRINCIPAL ACCOUNTANT FEES AND SERVICES |
(a) Audit Fees billed to the registrant for the two most recent fiscal
years:
Fiscal year ended 2014 - $190,015
Fiscal year ended 2013 - $223,050
(b)
Audit-Related Fees billed to the registrant for the two most recent fiscal years:
Fiscal year ended 2014 - $0
Fiscal year ended 2013 - $0
(c) Tax Fees billed
to the registrant for the two most recent fiscal years:
Fiscal year ended 2014 - $0
Fiscal year ended 2013 - $0
(d) All Other Fees
billed to the registrant for the two most recent fiscal years:
Fiscal year ended 2014 - $62,985
-$44,755 in connection with Accountants’ Report on Applying Agreed-Upon Procedures to comply with the requirements of section 4.7
(c) of the Trust’s Indenture.
-$13,230 in connection with Accountants’ Report on Applying Agreed-Upon Procedures to
relating to the Trust’s Servicing Agreement.
-$4,000 out of pocket expenses.
Fiscal year ended 2013 - $60,176
-$43,576 in connection with Accountants’ Report on Applying Agreed-Upon Procedures to comply with the requirements of section 4.7
(c) of the Trust’s Indenture.
-$12,600 in connection with Accountants’ Report on Applying Agreed-Upon Procedures to
relating to the Trust’s Servicing Agreement.
-$4,000 out of pocket expenses.
(e)
(1) Audit Committee Policies regarding Pre-approval of Services.
Not applicable to the registrant.
(2) Percentage of services identified in items 4(b) through 4(d) that were approved by the registrants audit committee pursuant to paragraph
(c)(7)(i)(C) of Rule 2-01 of Regulation S-X:
Not applicable to the registrant.
(f) Not applicable to the registrant.
(g) Not applicable to
the registrant.
(h) Not applicable to the registrant.
| ITEM 5. |
AUDIT COMMITTEE OF LISTED REGISTRANTS |
Not applicable to the registrant.
| ITEM 6. |
SCHEDULE OF INVESTMENTS |
Schedule is included as part of the report to shareholders filed under Item 1.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES
Not applicable to the registrant.
ITEM 8. PORTFOLIO
MANAGER OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES
Not applicable to the registrant.
ITEM 9. PURCHASE OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS
Not applicable to the registrant.
ITEM 10. SUBMISSION OF
MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable to the registrant.
ITEM 11. CONTROLS AND PROCEDURES
(a) Not applicable to the
registrant.
(b) Not applicable to the registrant.
The following exhibits are attached to this Form N-CSR:
(a)
| |
(1) |
Code of ethics or amendments: not applicable to the registrant. |
| |
(2) |
Certification by the registrant’s Owner Trustee, as required by Rule 30a-2(a) under the Investment Company Act of 1940, is attached. |
| |
(3) |
Annual Compliance Statement of the Servicer, Berkadia Commercial Mortgage LLC, is attached. |
| |
(4) |
Report on Compliance with minimum Master Servicing Standards is attached. |
| |
(5) |
Berkadia Commercial Mortgage LLC reports pursuant to section 1301, 1302, 1303, 1304, 1306 and 1307 of the servicer agreement. |
(b) Certification by the registrant’s Owner Trustee, as required by Rule 30a-2(b) under the Investment Company Act of 1940, is attached.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
|
|
|
|
|
| (Registrant) |
|
College and University Facility Loan Trust Two |
|
|
|
|
|
|
|
|
|
|
| By (Signature and Title) |
|
/s/ Patrick S.R. MacDonald, Vice President |
|
|
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 registrant and in the capacities and on the dates indicated.
|
|
|
|
|
| By (Signature and Title) |
|
/s/ Bryan Calder, Executive Vice President |
|
|
