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U.S. Agency Mortgage-Backed REIT Advantaged Fund completes C$32.7 million initial public offering

Date Closed

October 23, 2012

Lead Office

Toronto

Value

32.70 Million CAD

On October 23, 2012, Connor, Clark & Lunn Capital Markets Inc. (the “Manager”) announced the closing of the initial public offering of U.S. Agency Mortgage-Backed REIT Advantaged Fund (the “Fund”). The Fund raised gross proceeds of C$31 million from the sale of 3.1 million Class A Units and C$1.7 million from the sale of 167,910 Class F Units. The Fund has granted to the agents an over-allotment option, exercisable for a period of 30 days from the closing date, to offer an additional 465,000 Class A Units. The Class A Units are listed on the Toronto Stock Exchange (“TSX”) under the symbol USM.UN.

The Fund’s investment objectives are to (i) provide tax-advantaged quarterly cash distributions consisting primarily of returns of capital; and (ii) provide low-cost exposure to a notional portfolio (the “Portfolio”) comprised of the 10 largest (by market capitalization) publically traded U.S. Agency Mortgage REITS through a forward purchase agreement (the “Forward Agreement”). The Fund will not have a fixed distribution policy, but intends to make quarterly distributions on the last day of the months of January, April, July and October based on the Manager’s expected returns on the Portfolio for the period. Based on current estimates and assumptions, the Fund’s initial distribution target is expected to be C$0.20 per Unit per quarter, representing an initial yield on the Unit issue price of 8.0% per annum.

The Units were offered for sale by a syndicate of agents co-led by BMO Capital Markets and CIBC World Markets Inc., and includes Scotia Capital Inc., Raymond James Ltd., Canaccord Genuity Corp., GMP Securities L.P., Macquarie Private Wealth Inc. and Mackie Research Capital Corporation.

Connor, Clark & Lunn Capital Markets, headquartered in Toronto, Ontario, is part of the Connor, Clark & Lunn Financial Group, a multi-boutique asset management firm.

McCarthy Tétrault LLP represented the U.S. Agency Mortgage-Backed REIT Advantaged Fund and Connor, Clark & Lunn Capital Markets, with a team led by Andrew Armstrong.

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