09/11/2024 | Press release | Distributed by Public on 09/11/2024 13:07
• |
Multifamily Construction Investments: The Trust invests in fixed-income securities that finance the construction of multifamily properties. These securities generally have credit enhancements from FHA, Ginnie Mae (GNMA), or a letter of credit or repurchase guarantee from an entity rated "A" or better. These securities generally fund over 12-24 months and upon completion of construction, a permanent security is issued. These securities typically generate yields above U.S. Treasury investments with comparable average lives and generally have significant prepayment protections.
|
• |
Multifamily Permanent Mortgage-Backed Securities: The Trust invests in securities that are either backed by permanent loans for multifamily properties or by loans for existing single family homes. These FHA, GNMA, Fannie Mae, or Freddie Mac credit enhanced investments typically generate yield spreads above U.S. Treasury investments with comparable average lives. Additionally, multifamily mortgage-backed securities generally have significant prepayment protections.
|
• |
State Housing Finance Agency Securities: The Trust may invest in securities that are backed by construction and/or permanent loans for multifamily properties having evidence of support by a state or local government and that, among other things, are guaranteed or insured by a state or local housing finance agency ("A" rated or better or top tier by Standard and Poor's); are secured by recourse to such assets of the Housing Finance Agency as to provide protection comparable to a pledge of the agency's general credit; or satisfy other indicia of credit quality set out in the Declaration of Trust.
|
• |
Single Family Mortgage-Backed Securities: The Trust invests in securities that pool individual mortgages from single family homes. The interest and principal cash flows are passed through to the investor of the MBS net of any servicing fees. These Fannie Mae, GNMA, or Freddie Mac credit enhanced investments typically generate yield spreads above U.S. Treasury bonds. There is no prepayment protection on these securities meaning payments could be more than the scheduled amount.
|
• |
Construction and Permanent Loans: The Trust invests in direct, bridge and other loans used to finance the purchase, refinance development and/or construction of a property.
|
HIT
|
Bloomberg Aggregate
|
|
U.S. Government or Agency
|
87.36%
|
71.28%
|
AAA
|
0.83%
|
2.66%
|
AA
|
4.26%
|
2.37%
|
A
|
0.00%
|
11.35%
|
BBB
|
0.00%
|
12.34%
|
Not Rated
|
4.96%
|
0.00%
|
Cash
|
2.59%
|
0.00%
|
HIT
|
Bloomberg Aggregate
|
HIT
|
Bloomberg Aggregate
|
||
Credit Profile
|
|||||
U.S. Government/Agency/AAA/Cash
|
90.78%
|
73.94%
|
A & Below/Not Rated
|
4.96%
|
23.69%
|
Yield
|
|||||
Current Yield
|
4.03%
|
3.61%
|
Yield to Worst
|
4.98%
|
4.42%
|
Interest Rate Risk
|
|||||
Effective Duration
|
5.99
|
6.06
|
Convexity
|
0.20
|
0.26
|
Call Risk
|
|||||
Call Protected
|
74%
|
74%
|
Not Call Protected
|
26%
|
26%
|
• |
The HIT does not invest in corporate bonds or low credit quality securities.
|
• |
HIT uses government/agency-insured multifamily MBS as a substitute for corporate debt and some Treasury and agency securities in the benchmark.
|
• |
These multifamily MBS have superior credit quality relative to corporate debt, but typically have similar call protection.
|
• |
The HIT's yield measures have been consistently higher than the benchmark's.
|
• |
Although historical month-over-month returns comparing the HIT to the Bloomberg Aggregate show significant correlation, with approximately 99% correlation for the five-year period ending August 31, 2024, the HIT's very different composition can provide diversification benefits from other fixed-income investments and riskier assets such as equities.
|