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The Strategic Credit Fund (Fund) offered through CUWG and managed by Origin Credit Advisors invests in Freddie Mac securitized multifamily loans. Origin Credit Advisors is a SEC registered investment advisor and Freddie Mac Directing Certificate Holder, specializing in multi family real estate investments. The objective of this Fund is to provide your credit union with a consistent stream of risk-adjusted income, capital protection, and competitive yield above traditional bond products.
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Current Net Yield:
11.4%
Fund Strategy
The Fund’s management team actively invests in Freddie Mac K-Deal B Piece Certificates. The Fund’s investment strategy seeks to invest in securitized products backed by collateral that is composed of 90% or more multifamily housing assets and private positions in senior and mezzanine-level debt of multifamily real estate projects. Key features of the fund include:
Priority Position: The Fund’s investments are senior to the underlying common equity in payback priority, seeking impairment protection by a 30% to 40% cushion to loss in underlying collateral value.
Income Generation: The Fund looks for opportunities to generate attractive risk-adjusted current income. The Fund intends to make regular monthly distributions and provides a distribution reinvestment program for investors to auto-reinvest distributions back into the Fund.
Hedge Against Inflation: The Fund seeks to allocate 30% to 60% of its equity to floating rate debt investments, which means when interest rates rise, so do the borrower’s interest payments.
Priority Position: The Fund’s investments are senior to the underlying common equity in payback priority, seeking impairment protection by a 30% to 40% cushion to loss in underlying collateral value.
Income Generation: The Fund looks for opportunities to generate attractive risk-adjusted current income. The Fund intends to make regular monthly distributions and provides a distribution reinvestment program for investors to auto-reinvest distributions back into the Fund.
Hedge Against Inflation: The Fund seeks to allocate 30% to 60% of its equity to floating rate debt investments, which means when interest rates rise, so do the borrower’s interest payments.
Investment Use CasesDiversify Asset Holdings: Credit unions often face concentration risks, especially if their loan portfolios are heavily weighted toward local mortgage lending. Investing in this Fund allows them to diversify their asset base with exposure to high-performing multifamily real estate.
Risk Reduction: Investments are senior to the underlying common equity in payback priority, providing a 30% to 40% cushion against potential losses in the underlying collateral value. Access to Higher-Yielding Investments: This Fund primarily invests in senior structured credit instruments and floating-rate debt associated with multifamily assets. These investments typically offer higher yields than traditional fixed-income options like government bonds or agency securities. For credit unions, this can improve overall portfolio performance while still aligning with prudent risk management practices. |
