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May 18, 2007
Proven Community Investment Fund Now Open to All
    by Anne Moore Odell

Access Capital Strategies changes the structure of its Community Investing Fund to allow individuals and small institutions to invest in the Fund.

Access Capital Strategies is offering a market-rate method for investing in communities, with part of the funds helping finance lower and moderate-income people’s homes. Access Capital, based in Boston, MA, has regulatory approval to open its Community Investment Fund (XACSX) to all investors with a minimum investment of $25,000. Access Capital also announced that it has chosen Voyageur Asset Management as the new sub-advisor for the Fund.

"What community investing has done over the past ten years is focused on a bottom-up approach to security creation. What we have done is look at individual loans, where they are located and what sort of borrowers they support and then build securities,” said David Sand, President and Chief Investment Officer for Access Capital. “The result is investment instruments that have the same risk and return characteristics as conventional issues but have all sorts of double bottom line benefits embedded in them."

Access Capital’s $500 million Fund has been in operation since June 1998 for banks and other institutional investors. Beginning this week, the Fund has changed to a continuously offered, closed-end interval Fund and is now open to individual investors.

The Fund’s mission is to invest in debt securities that support community development serving low- and moderate-income individuals and communities across the U.S. The Fund’s activities include investments in home ownership, affordable housing, education, community health centers and small businesses.

The Fund operates exclusively in prime- or FHA-insured mortgages that help extend lower cost mortgages to low and moderate-income homebuyers. Fannie Mae, Freddie Mac or Ginnie Mae guarantees all of the Fund’s mortgage-backed securities.

Sand told “We try to be the takeout for mortgages that are originated by community based lenders or are issued in support of high impact community lending programs. We hope to create demand for originators who can reach out to borrowers who might otherwise be victimized by predatory lending.”

Although sub-prime mortgage lenders have received negative attention of late, Access Capital thinks that low and moderate-income mortgages are actually a solid investment. Access Capital works with the mortgage originators to help sell the mortgages as prime.

“Besides the social need to help these homeowners, we believe that low and moderate-income homebuyers can be more reliable, a better investment across the broad spectrum,” said Access Capital’s CEO, Ron Homer.

Access Capital’s investments are typically AAA rated with prepayment protection and private placements with illiquidity premiums. “When we buy multifamily issues in support of affordable rental housing we are usually buying securities that cannot be refinanced by the developers; we also are able to buy nonpublic community investments that may have attractive returns due to their illiquidity. We see ourselves as long term, patient investors,” Sand explained.

Investors with $1 million in the Fund can target the specific area of the country they would like to invest in, by county, census tract, state or region. Although their investment dollars are focused on a specific area, the investors’ returns are co-mingled with the entire Fund. Currently, 45 states are reflected in the Fund’s portfolio with the Fund purchasing securities from loans that have provided financing for more than 8,000 homes.

Washington Mutual (WaMu), a bank headquartered in Seattle, WA, chose to invest with Access Capital because of their Fund’s community impact, targeted Community Reinvestment Act (CRA) Investment, and financially sound investment with a market rate return.

“One of the most difficult components for a community development organization is access to capital. Access Capital helps fill this critical component by providing a secondary market for community development organizations to improve their liquidity and lending capacity,” said Margaret Yung, National Community Investment Manager for WaMu. “Additionally, Access Capital targets investments impacting affordable housing, education and job creation, which are also the focus of WaMu’s community investing strategy.”

Access Capital has deployed WaMu’s capital in the states of Washington, Oregon, California, Nevada, Arizona, Texas, Florida, Georgia, New York and New Jersey, working to positively impact traditionally underserved communities, which include the nation’s inner cities, rural America, Southwest Native American communities, and low- to moderate-income communities.

As of December 2006, the Fund’s investors included 132 public pension funds, corporations, banks, insurers and foundations. As of March 31, 2007, the average annual returns for the Fund were 7.36% for one-year, 5.19% for five-years and 5.85% since inception. Sales fees waived on investments of $1million or more. The Funds’ net assets are currently $477.3 million.

Along with opening up the Fund to all investors, Access Capital has selected Minneapolis-based Voyageur as the Fund’s new sub-advisor. Voyageur’s duties include value cash flow, value options, and value credit risk. Voyageur works with Access Capital as a portfolio manager to decide when to buy, sell, and hold securities. Voyageur is a subsidiary of RBC Dain Rauscher, which is owned by Royal Bank of Canada.

“We chose Voyageur because they are part of a large finance network, but they are small enough to give the Fund close attention,” said Homer.


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