SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
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Filed by a Party other than the Registrant |_|
Check the appropriate box:
| | Preliminary Proxy Statement |_| Soliciting Material Under Rule
|_| Confidential, For Use of the 14a-12
Commission Only (as permitted
by Rule 14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
AFL-CIO Housing Investment Trust
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
________________________________________________________________________________
2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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|_| Fee paid previously with preliminary materials:
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|_| Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
1) Amount previously paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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January 30, 2006
TO PARTICIPANTS, AFL-CIO HOUSING INVESTMENT TRUST
Enclosed is the Notice of a 2006 Special Meeting of Participants and a Proxy
Statement describing proposed amendments to the Declaration of Trust that are
expected to come up at the meeting.
Also enclosed is a proxy card for each Participant noting the number of Units
held by that Participant and the exact name in which those Units are registered.
A Participant that does not wish to send a representative to the meeting should
vote its Units by mail, Internet or facsimile, as described herein, as soon as
possible.
Sincerely,
/s/ Stephen Coyle
Stephen Coyle
Chief Executive Officer
PLEASE VOTE WITHIN FIVE DAYS OF RECEIPT
SC/spt
opeiu #2, afl-cio
Enclosures
AFL-CIO HOUSING INVESTMENT TRUST
NOTICE OF 2006 SPECIAL MEETING OF PARTICIPANTS
To Participants, AFL-CIO Housing Investment Trust:
Notice is hereby given that a Special Meeting of Participants (the
"Meeting") of the American Federation of Labor and Congress of Industrial
Organizations Housing Investment Trust (the "Trust"), a District of Columbia
common law trust, will be held at the offices of the Trust, 1717 K Street, N.W.,
Suite 707, Washington, D.C. 20036 on February 22, 2006 at 2:00 p.m. for the
following purposes:
1. To amend and restate Section 3.3(d)(ii)(A)(2) of the Declaration of Trust
to change the loan to value ratio requirement from 75 percent to 80
percent for construction and permanent mortgage loans and/or securities
where the project receives the benefits of federal low income housing tax
credits;
2. To amend and restate Section 3.3(d)(iv) of the Declaration of Trust to
authorize the Trust to invest in bridge loans for developments that are
eligible to receive and have allocations or other rights to receive
federal rehabilitation tax credits;
3. To amend and restate Section 3.3(h) of the Declaration of Trust to
authorize the Trust to invest in Commercial Mortgage Backed Securities
(CMBS) that at the time of their acquisition by the Trust are rated in the
highest rating category by at least one nationally recognized statistical
rating agency - subject to a limit of no more than 10 percent of the total
value of the Trust's assets; and
4. To transact such other business as may properly come before the Meeting or
any adjournment or adjournments thereof.
The close of business on December 30, 2005 has been fixed as the record
date for the determination of Participants entitled to notice of and to vote at
the Meeting and any adjournment(s) thereof. Accordingly, only Participants of
record as of the close of business on that date are entitled to notice of and to
vote at the Meeting or at any such adjournment.
By Order of the Board of Trustees
/s/ Stephen Coyle
Stephen Coyle
Chief Executive Officer
Dated: January 30, 2006
AFL-CIO HOUSING INVESTMENT TRUST
PROXY STATEMENT
January 30, 2006
GENERAL MATTERS
This Proxy Statement is being sent on January 30, 2006 in connection with
the solicitation of proxies for use at a 2006 Special Meeting of Participants
(the "Meeting") of the American Federation of Labor and Congress of Industrial
Organizations Housing Investment Trust (the "Trust") to be held at the offices
of the Trust, 1717 K Street, N.W., Suite 707, Washington, D.C. 20036, on
February 22, 2006, beginning at 2:00 p.m. and at any adjournment(s) thereof.
A copy of the Trust's Annual Report for the year ended December 31, 2004
together with financial statements for the corresponding fiscal year, were
previously mailed to each Participant entitled to vote at the Meeting. The Trust
will furnish, without charge, a copy of the Annual Report for 2004 and the most
recent Semi-annual Report succeeding the Annual Report, if any, to any
Participant that requests one. Requests for reports should be made by placing a
collect call to the Trust, at (202) 331-8055, and directing the call to
Stephanie Turman. Written requests may be directed to Marketing, Investor and
Labor Relations, AFL-CIO Housing Investment Trust, 1717 K Street, N.W., Suite
707, Washington, D.C. 20036. Reports may also be accessed on the Trust's website
at www.aflcio-hit.com.
ABOUT THE MEETING
WHAT IS THE PURPOSE OF THE SPECIAL MEETING?
At the Trust's 2006 Special Meeting, Participants will act upon the
matters outlined in the accompanying notice of Meeting, including amending and
restating the following sections of the Declaration of Trust:
>> (i) Section 3.3(d)(ii)(A)(2) to change the loan to value ratio requirement
from 75 percent to 80 percent for construction and permanent mortgage
loans and/or securities where the project receives the benefits of federal
low income housing tax credits,
>> (ii) Section 3.3(d)(iv) to authorize the Trust to invest in bridge loans
for developments that are eligible to receive and have allocations or
other rights to receive federal rehabilitation tax credits, and
>> (iii) Section 3.3(h) to authorize the Trust to invest in Commercial
Mortgage Backed Securities (CMBS) that at the time of their acquisition by
the Trust are rated in the highest rating category by at least one
nationally recognized statistical rating agency - subject to a limit of no
more than 10 percent of the total value of the Trust's assets.
>> In addition, the Trust's management will respond to questions from
Participants.
WHO IS ENTITLED TO VOTE?
The close of business on December 30, 2005 is the record date for the
determination of Participants entitled to notice of and to vote at the Meeting
and any adjournment(s) thereof (the "Record Date"). As of the Record Date, there
were 3,290,697.559 Units of Participation of the Trust outstanding, each Unit
being entitled to one vote. No shares of any other class of securities were
outstanding as of that date.
Only Participants of record as of the close of business on the Record Date
will be entitled to vote at the Meeting.
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WHO CAN ATTEND THE MEETING?
All Participants as of the Record Date, or their duly appointed proxies,
may attend the Meeting.
WHAT CONSTITUTES A QUORUM?
A quorum for the Meeting is the presence in person or by proxy of
Participants holding a majority of Units outstanding at the close of business on
the Record Date. As of the Record Date, 3,290,697.559 Units of Participation of
the Trust were outstanding. Proxies received but marked as abstentions will be
included in the calculation of the number of Units considered to be present at
the Meeting.
HOW DO I VOTE?
By Mail: If the proxy card that is enclosed with this Proxy Statement is
properly executed and returned, the Units of Participation it represents will be
voted at the Meeting in accordance with the instructions noted thereon. If no
direction is indicated, the proxy card will be voted in accordance with the
Trustees' recommendations set forth thereon.
By Facsimile: If the proxy card that is enclosed with this Proxy Statement
is properly executed and returned via facsimile to (202) 331-8190, the Units of
Participation it represents will be voted at the Meeting in accordance with the
instructions noted thereon. If no direction is indicated, the proxy card will be
voted in accordance with the Trustees' recommendations set forth thereon.
By Internet: If the proxy card is properly voted through the Internet, the
Units of Participation it represents will be voted at the Meeting in accordance
with the instructions noted thereon. If no direction is indicated, the proxy
card will be voted in accordance with the Trustees' recommendations set forth
thereon.
To vote by proxy through the Internet:
1) Use a web browser to go to http://www.aflcio-hit.com/proxy
2) Enter the User Name* and Password* that are included with this
mailing.
*Please note that the User Name and Password are CASE-SENSITIVE.
Please type the User Name and Password into the appropriate screen
exactly as it is shown on the enclosure.
In Person: By attending the Meeting and voting your Units.
CAN I CHANGE MY VOTE AFTER GIVING A PROXY?
Yes. Any Participant giving a Proxy may revoke it at any time before it is
exercised by giving written notice to the Trust bearing a date later than the
date of the Proxy, by submission of a later dated Proxy, or by voting in person
at the Meeting, which any Participant may do whether or not such Participant has
previously given a Proxy.
WHAT ARE THE BOARD OF TRUSTEES' RECOMMENDATIONS?
Unless you give other instructions when you vote, the persons named as
proxy holders on the proxy card will vote in accordance with the recommendations
of the Board of Trustees. The Board's recommendation is set forth together with
the description of each item in this proxy statement. In summary, the Board
recommends a vote:
o FOR amending and restating Section 3.3(d)(ii)(A)(2) (see page
3);
o FOR amending and restating Section 3.3(d)(iv) (see pages 3-4);
and
o FOR amending and restating Section 3.3(h) (see page 4).
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With respect to any other matter that properly comes before the Special
Meeting or any adjournment or adjournments thereof, the proxy holders will vote
as recommended by the Board of Trustees or, if no recommendation is given, in
their own discretion.
WHAT VOTE IS REQUIRED TO APPROVE EACH ITEM?
As to Proposals I, II and III, the vote required for approval will be an
affirmative vote of a majority of the Units represented in person or by proxy at
the Meeting. Each Unit is entitled to one vote. Abstentions will not be included
in the calculation of the number of Units voted affirmatively for a proposal.
WHO IS MAKING THE SOLICITATION ON BEHALF OF THE TRUST?
The Proxy is being solicited by the Board of Trustees of the Trust through
the mail. The cost of solicitation will be paid by the Trust. Further
solicitation of proxies may be made by telephone or oral communication with some
Participants following the original solicitation. Any such further solicitation
will be made by Trustees or officers of the Trust who will not be compensated
therefor. The date on which proxy materials were first mailed to Participants
was January 30, 2006.
AMENDMENTS TO DECLARATION OF TRUST
PROPOSAL I: TO AMEND AND RESTATE SECTION 3.3(d)(ii)(A)(2) OF THE
DECLARATION OF TRUST TO CHANGE THE LOAN TO VALUE RATIO
REQUIREMENT FROM 75 PERCENT TO 80 PERCENT FOR CONSTRUCTION AND
PERMANENT MORTGAGE LOANS AND/OR SECURITIES WHERE THE PROJECT
RECEIVES THE BENEFITS OF FEDERAL LOW INCOME HOUSING TAX
CREDITS
The proposed amendment to Section 3.3(d)(ii)(A)(2) of the Declaration of
Trust would change the loan to value ratio requirement from 75 percent to 80
percent for construction and permanent mortgage loans and/or securities where
the project receives Federal Low Income Housing Tax Credits ("LIHTCs"). The
Declaration of Trust currently authorizes investment in construction and
permanent mortgage loans and/or securities with a loan to value ratio of 75
percent if the underlying project receives the benefit of LIHTCs. The proposed
amendment would increase the loan to value ratio to 80 percent for projects
receiving LIHTCs.
Subject to certain restrictions, the LIHTC is generally a credit against
regular federal income tax liability for investments in the acquisition and
rehabilitation or construction of qualified low-income rental housing. To
qualify, properties must set aside a certain percentage of their units for
low-income occupancy. The LIHTC program has a compliance period of 30 years
(subject to certain exceptions) during which strict occupancy restrictions must
be followed. The penalty for noncompliance is recapture of a certain portion of
the LIHTCs, plus interest, for all prior years. The LIHTC generally may be
claimed over a 10-year credit period starting the year the building meets the
minimum set-aside requirement for low income occupancy. Money raised through the
sale of LIHTCs is used to pay the costs of development of the LIHTC project.
The proposed increase will facilitate additional investment opportunities
for the Trust. The Trust's past experience with projects that have LIHTCs is
that these projects have a lower risk of default than similar projects which do
not have these credits. The Trust is aware that other lenders are currently
offering up to 85 percent loan to value loans for projects with LIHTCs, which in
some cases is due to affordable housing requirements or goals of these lenders.
All other requirements for this type of investment under the Declaration of
Trust will remain unchanged, including the current limitation that the Trust's
total investment in construction and/or permanent mortgage loans for projects
receiving LIHTCs may not exceed 4 percent of the total value of the Trust's
assets. In light of the foregoing, the Trust believes that the proposed increase
in the loan to value ratio requirement will not materially increase risk to the
Trust.
THE BOARD OF TRUSTEES RECOMMENDS THAT PARTICIPANTS VOTE "FOR"
THE PROPOSED AMENDMENT TO THE DECLARATION OF TRUST
SET FORTH IN PROPOSAL I
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PROPOSAL II: TO AMEND AND RESTATE SECTION 3.3(d)(iv) OF THE DECLARATION OF
TRUST TO AUTHORIZE THE TRUST TO INVEST IN BRIDGE LOANS FOR
DEVELOPMENTS THAT ARE ELIGIBLE TO RECEIVE AND HAVE ALLOCATIONS
OR OTHER RIGHTS TO RECEIVE FEDERAL REHABILITATION TAX CREDITS
The Declaration of Trust authorizes the Trust to invest in credit-enhanced
bridge loans for projects that have allocations of LIHTCs. The proposed
amendment to Section 3.3(d)(iv) would expand the Trust's authority to invest in
credit-enhanced bridge loans to include bridge loans where the projects have
allocations of Federal Rehabilitation Tax Credits ("RTCs").
RTCs are generally credits against federal income tax liability for costs
incurred for the rehabilitation of certain buildings. Rehabilitation includes
renovation, restoration and reconstruction. In general, the RTC is equal to 10
percent of the amount of qualified rehabilitation expenditures for certain
buildings placed in service before 1936 and 20 percent of the amount of
qualified rehabilitation expenditures for certified historic structures. The
full amount of the RTC may be claimed in the year in which the property is
placed in service. Generally, RTCs are subject to recapture if the building is
disposed of or otherwise converted to an improper use during the five-year
period commencing on the date it is placed in service.
RTCs are often used by developers in urban areas to complete the adaptive
reuse of schools, office buildings and factory buildings for multifamily rental
housing. This proposed amendment will potentially increase the Trust's
investment opportunities in urban markets in which the Trust can most readily
meet its union labor requirements, without materially increasing the risk to the
Trust. All other requirements for investment in bridge loans will remain
unchanged, including the credit enhancement requirements set forth in the
Declaration of Trust and the current limit on the Trust's investments in bridge
loans to no more than 5 percent of the total value of the Trust's assets.
THE BOARD OF TRUSTEES RECOMMENDS THAT PARTICIPANTS VOTE "FOR"
THE PROPOSED AMENDMENT TO THE DECLARATION OF TRUST
SET FORTH IN PROPOSAL II
PROPOSAL III: TO AMEND AND RESTATE SECTION 3.3(h) OF THE DECLARATION OF
TRUST TO AUTHORIZE THE TRUST TO INVEST IN COMMERCIAL MORTGAGE
BACKED SECURITIES (CMBS) THAT AT THE TIME OF THEIR ACQUISITION
BY THE TRUST ARE RATED IN THE HIGHEST RATING CATEGORY BY AT
LEAST ONE NATIONALLY RECOGNIZED STATISTICAL RATING
ORGANIZATION - SUBJECT TO A LIMIT OF NO MORE THAN 10 PERCENT
OF THE TOTAL VALUE OF THE TRUST'S ASSETS
The proposed amendment to Section 3.3(h) of the Declaration of Trust would
authorize the Trust to invest up to 10 percent of the value of all of its assets
in Commercial Mortgage Backed Securities ("CMBS") that are rated in the highest
rating category by at least one nationally recognized statistical rating
organization, for example Standard & Poor's AAA-rated CMBS. Section 3.3(h) of
the Declaration of Trust provides that the HIT may invest up to 15 percent of
its assets in: (i) United States Treasury obligations; (ii) obligations which
are issued or guaranteed by Fannie Mae, Freddie Mac or the Federal Home Loan
Banks ("FHLBs") (without limitation to the Trust's right to purchase
mortgage-backed securities and obligations); and (iii) obligations which are
backed by Fannie Mae, Freddie Mac or the FHLBs and rated in one of the two
highest rating categories at the time of acquisition. This amendment would add a
new investment authority under this provision to permit investment in CMBS. The
total percentage of portfolio holdings permitted under Section 3.3(h), however,
would remain at no more than 15 percent of the Trust's assets.
Commercial mortgage-backed securities are structured fixed-income
securities backed by commercial real estate loans. As with the bulk of the
Trust's current housing-related investments, principal and interest payments
from the underlying collateral are passed through from the borrowers to the
holders of the CMBS by the servicer. Typically, a CMBS transaction contains
several different classes (hereinafter "tranches") with varying exposure to
default, prepayment and interest rate risk. A CMBS issue is often structured by
"credit-tranching", i.e., creating
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bonds with ratings from AAA to unrated by the use of subordination. Each CMBS
tranche typically receives an interest payment with principal distributed in a
sequential manner beginning with the highest rated tranche. Typically, all
principal and prepayments are first allocated to the current amortizing tranche,
and when that tranche is paid off, principal and prepayments flow to the next
tranche in a "waterfall." In credit-tranched CMBS issues, the loss and paydown
tranches are typically reversed, and the highest rated classes are therefore the
last to be affected by losses and usually the first to receive the early payment
of principal.
The Trust expects that investing in CMBS would provide some or all of the
following potential benefits:
o Asset diversification;
o Additional yield without material additional credit risk;
o High liquidity; and
o Involvement in a growing sector of the Lehman Brothers Aggregate Bond
Index (the Trust's benchmark).
As noted above, the new authority is limited to no more than 10 percent of
the Trust's total assets, within a class of assets that are limited to no more
than 15 percent of the Trust's total assets. In general, the risks of investing
in CMBS reflect the risks of investing in the real estate securing the
underlying mortgage loans. Payments and the timing of payments made in respect
of the CMBS depend on payments received on and other recoveries with respect to
the underlying mortgage loans. These risks reflect the effects of local and
other economic conditions on real estate markets, the ability of tenants to make
loan payments, and the ability of a property to attract and retain tenants.
Though CMBS are not typically credit enhanced, because the Trust will only be
permitted to invest in CMBS rated in the highest category of at least one
nationally recognized statistical rating organization, the Trust believes that
the quality and risk profiles of these investments are generally consistent with
the Trust's current portfolio of investments.
THE BOARD OF TRUSTEES RECOMMENDS THAT PARTICIPANTS VOTE "FOR"
THE PROPOSED AMENDMENT TO THE DECLARATION OF TRUST
SET FORTH IN PROPOSAL III.
OTHER MATTERS
The Trust currently has no independent investment adviser other than
Wellington Management Company LLP., which manages certain of the Trust's
investments with a scheduled maturity not to exceed 24 months. Wellington
Management Company is a Massachusetts limited liability partnership and a
registered investment adviser. Its principal offices are located at 75 State
Street, Boston, Massachusetts 02109.
At the date of this Proxy Statement, the Trustees know of no other matters
that may come before the Meeting. If any other matter properly comes before the
Meeting, it is the intention of the persons named in the enclosed form of Proxy
to vote the Units represented by such Proxy in accordance with their best
judgment.
Participants who are unable to attend the Meeting in person are urged to
forward their Proxies without delay. A prompt response will be appreciated.
By Order of the Board of Trustees
/s/ Stephen Coyle
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Stephen Coyle
Chief Executive Officer
5
AFL-CIO HOUSING INVESTMENT TRUST
PROXY
2006 Special Meeting of Participants
The undersigned hereby appoints Helen R. Kanovsky and Mary C. Moynihan and
each of them with power to act without the other and with full power of
substitution, as proxies for and on behalf of the undersigned, to vote all Units
of Participation which the undersigned is entitled to vote at the Special
Meeting of Participants to be held February 22, 2006 and all adjournments
thereof, with all the powers that the undersigned would possess if personally
present and particularly (but without limiting the generality of the foregoing)
to vote and act as follows:
(I) To approve an amendment to Section 3.3(d)(ii)(A)(2) of the Declaration
of Trust, to change the loan to value ratio requirement from 75 percent to 80
percent for construction and permanent mortgage loans and/or securities where
the project receives the benefits of Federal Low Income Housing Tax Credits:
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FOR [ ] AGAINST [ ] ABSTAIN [ ]
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(II) To approve an amendment to Section 3.3(d)(iv) of the Declaration of
Trust to authorize the Trust to invest in bridge loans for developments that are
eligible to receive and have allocations or other rights to receive Federal
Rehabilitation Tax Credits:
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FOR [ ] AGAINST [ ] ABSTAIN [ ]
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(III) To approve an amendment to Section 3.3(h) of the Declaration of
Trust to authorize the Trust to invest in Commercial Mortgage Backed Securities
(CMBS) that at the time of their acquisition by the Trust are rated in the
highest rating category by at least one nationally recognized statistical rating
agency - subject to a limit of no more than 10 percent of the total value of the
Trust's assets:
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FOR [ ] AGAINST [ ] ABSTAIN [ ]
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(IV) Upon such other matters as may properly come before the meeting.
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FOR [ ] AGAINST [ ] ABSTAIN [ ]
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The Trustees recommend a vote FOR the above items. ANY PROXY NOT MARKED
OTHERWISE WILL BE TREATED AS A VOTE FOR THE ITEMS.
The Units of Participation represented hereby will be voted in accordance
with instructions contained in this Proxy.
The undersigned hereby ratifies and confirms all that said proxies or
their substitutes or any of them may lawfully do by virtue hereof. The
undersigned hereby acknowledges receipt of the Notice of 2006 Special Meeting of
Participants to be held February 22, 2006 and the Proxy Statement dated January
30, 2006.
Please sign your name and indicate your capacity as designee, attorney, trustee
or official of a Participant.
Dated: , 2006
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Participant ID:
Participant Name:
Number of Units:
By:
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(Signature)
(Name - please print)
Title:
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(please print)
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To vote via Internet, please use the following User Name and Password*:
User Name:
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Password:
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THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF THE TRUST.
IMPORTANT: THIS PROXY MAY BE VOTED IN ANY OF THREE (3) WAYS:
BY MAIL: PLEASE SIGN, DATE AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
SELF-ADDRESSED, STAMPED ENVELOPE.
BY FACSIMILE: PLEASE SIGN, DATE AND FAX THIS PROXY TO
(202) 331-8190.
BY INTERNET: PLEASE GO TO http://www.aflcio-hit.com/proxy AND ENTER THE
USER NAME AND PASSWORD INDICATED ABOVE.*
PLEASE NOTE THAT ALL VOTES MUST BE TIME-STAMPED OR POSTMARKED
BY MIDNIGHT ON FEBRUARY 21, 2006.
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* Please note the User Name and Password are case-sensitive.