As described in its November 17, 2022 notice to BIT participants, PNC Bank has initiated a process under the Declaration of Trust to provide a 180-day “Notice of Resignation”. In delivering this notice, PNC Bank considered and continues to consider relevant facts and circumstances facing the BIT, including but not limited to, the current status of redemption requests in the queue, redemption requirements under the Declaration of Trust (and applicable law), as well as current conditions in the real estate market and other related factors. PNC Bank has also considered the procedures for appointment of a successor trustee by participants under the Declaration of Trust. During this 180-day notice period, PNC Bank is cooperating with several qualified financial institutions that have expressed interest in acting as successor trustee and will facilitate the process of selecting a successor chosen by participants pursuant to the Declaration of Trust. The resignation period will end on May 16, 2023 (or upon the effective appointment of a successor trustee, whichever is earlier). During this time, PNC Bank will remain the fiduciary Trustee and will continue to administer the BIT prudently in accordance with the Declaration of Trust. While PNC Bank will facilitate the successor appointment process by participants, neither PNC Bank nor any of its affiliates will provide any advice or recommendation with respect to participants’ successor trustee decision. If a successor trustee is not appointed by participants by the close of the Resignation Period, then in accordance with the Declaration of Trust, PNC Bank’s resignation will be deemed ineffective, and PNC Bank may determine to liquidate the assets of the BIT and upon completion of the liquidation, terminate the BIT. This option would be evaluated at that time based on then current facts and circumstances.
The BIT was managed by a trustee unaffiliated with PNC Bank from July 1, 1988 through December 31, 1991.
The AFL-CIO Building Investment Trust (the “BIT”, the “Trust”, or the “Fund”) is a bank collective trust for which PNC Bank, National Association (“PNC Bank” or “Trustee”) is the trustee. PNC Bank is an indirect, wholly-owned subsidiary of The PNC Financial Services Group, Inc. (PNC). PNC may use the service mark “PNC Institutional Asset Management” in connection with certain activities of the Trust. PNC Bank has retained PNC Realty Investors, Inc. (PRI) to provide real estate investment advisory and management services for the BIT. PNC has retained the AFL-CIO Investment Trust Corporation (the “ITC”) to provide investor and labor relation services and AFL-CIO ITC Financial, LLC (ITC Financial), an indirect, wholly-owned subsidiary of the ITC, to provide marketing services in connection with the BIT. ITC Financial is a registered broker-dealer under the U.S. Securities Exchange Commission (SEC) Act of 1934 as amended and member with the Financial Industry Regulatory Authority, Inc. (FINRA). PNC Bank licenses the ability to use the “AFL-CIO” name in the name of the Trust and in connection with the activities of the Trust.
ITC Financial is compensated by PNC Bank with respect to marketing the Trust and therefore has a conflict of interest because it has an incentive to recommend an investment in the Trust. ITC Financial is not affiliated with PNC Bank and is not a current client or investor in a private fund or bank collective trust managed by PNC Bank.
Fees and Expenses: The Trustee receives a trustee fee (the “Trustee Fee”) from the assets of the Trust. The Trustee charges 1.0% on net assets up to or equal to $2 billion, .85% on net assets over $2 billion and less than or equal to $3 billion, and .80% on net assets above $3 billion. The Trustee also charges a .10% fee on uncommitted cash. The Trustee pays the fees for the services PRI, ITC, and ITC Financial out of the Trustee Fee (and not from the assets of the Trust). Other than General Administrative Expenses as set forth in the BIT’s Declaration of Trust, the Trustee pays from Trust assets all expenses incurred in connection with the investment, administration and management of the Trust out of trust assets (and not out of the Trustee Fee).
Risk Factors: A participant’s investments in the BIT are not bank deposits, nor are they backed or guaranteed by PNC or any of its affiliates, and are not issued by, insured by, guaranteed by, or obligations of the FDIC, the Federal Reserve Board, or any government agency. Investment in the BIT involves risk. Investment return and principal value of an investment in the BIT will fluctuate so that a participant’s investment, when redeemed, may be worth more or less than the original investment.
A participant’s redemption of its investment or units in the Trust, or a portion thereof, may be delayed by Trustee for one year (or longer if permissible under applicable law) from the date of the request for such redemption. In April 2020, PNC Bank, as trustee, implemented a redemption queue as permitted in the trust agreement. Prior to 2022, PNC Bank requested, and received, approval from the Office of the Comptroller of the Currency (OCC) to extend the one-year redemption period for an additional year, for the redemption requests submitted in 2Q2020, 3Q2020, 4Q2020, 1Q2021 and 2Q2021. In May 2022, PNC Bank submitted to the OCC two separate requests for extending the withdrawal period allowable for acting upon certain withdrawal requests.
On September 28, 2022, PNC received approval from the OCC to extend the one-year redemption period for an additional year for redemptions submitted in 3Q2021, 4Q2021, and 1Q2022. The OCC did not grant the second set of extensions requested of the withdrawal period for redemptions submitted in 2Q2020, 3Q2020, 4Q2020, 1Q2021 and 2Q2021. At this time, there are no additional extension requests pending with the OCC.
As of February 6, 2023, the queue was approximately $1.9 billion. The relatively large redemption queue will continue to require substantial efforts to generate liquidity from asset sales and other sources to pay these redemptions going forward.
The BIT generally invests directly or indirectly in commercial real estate through equity investments. The BIT may also in the future invest in real estate through the provision of financing. Equity investments are subject to risks inherent in or customarily associated with the ownership of income-producing real estate, and real estate financing involves risks inherent in or customarily associated with the risks of financing secured directly or indirectly by income producing real estate.
The BIT’s assets are valued at fair market value, or in the absence of fair market value, in accordance with the processes set forth in the Investment Memorandum and the Trust Agreement. In the case of real estate investments for which there is no published market price, fair market value is determined by using third party appraisals or the sales price reflected in a contract of sale. Notwithstanding the foregoing, the value of such investments reflected in the net asset value of the Fund may differ materially from the prices at which the Trustee would be able to sell, dispose, or liquidate such investments.
Due to such inherent risks, investment returns can be expected to fluctuate and operating cash flow and the Trust’s ability to make redemptions or distributions could be adversely affected. Moreover, due to the nature of real estate, investments may be illiquid. Such illiquidity may affect the Trust’s operating cash flow, which, in turn, may delay the ability to satisfy redemption requests. Additionally, the BIT or its investments may obtain financing. Such investments are subject to the inherent risks arising from the use of financing, and such risks may increase volatility of a Fund’s performance and may increase the Fund’s losses.
The information contained in this material is not intended to be a comprehensive description of any investment product or capability. Rather the information is intended only to aid and be used by representatives of PNC Bank, PRI, ITC and/ or ITC Financial in providing information and education regarding the BIT. Neither the information herein, nor any opinion expressed herein, is intended (or should be viewed) as individualized impartial investment recommendations or a suggested course action for an investor to follow, as it is not intended to reflect all of the factors that an investor’s particular situation may warrant when considering an investment and does not consider any individual investor’s specific objectives, circumstances or needs, nor does it identify or define all of the risks that may be associated with potential investments. Accordingly, this material is not intended to be viewed or construed as a recommendation, offer or solicitation to purchase or sell any product, security, commodity, currency or other financial instrument, including an interest in the BIT, but is intended only to help evaluate the BIT as a possible investment. The information being provided does not constitute “investment advice” that would make PNC Bank or any affiliate of PNC Bank, PRI, ITC or ITC Financial a “fiduciary” within the meaning of Section 3(21)(A)(ii) of the Employee Retirement Income Security Act of 1974, as amended. Investors in, or potential investors of, the BIT should consider carefully the BIT’s investment objectives, risks and expenses before investing therein. Investors should consult their own advisors and investment professionals to evaluate the merits and risks of investment.
In accordance with BIT union labor policies, in its role as Trustee of the BIT, PNC Bank is at all times subject to compliance with its fiduciary responsibilities under ERISA to act in a prudent manner solely in the interest of the Trust’s participants and their beneficiaries. The primary objective of the BIT’s union labor policies is to confirm that all projects in which the Trust invests must first and foremost meet the Trust’s primary investment objective of delivering competitive risk-adjusted investment returns.
Except as otherwise disclosed, the materials, representations and opinions presented herein are those of PNC Bank, and are of a general nature and do not constitute the provision by PNC, PRI, ITC or ITC Financial of investment, legal, tax, or accounting advice to any person. Opinions expressed herein are subject to change without notice. The information from third party sources was obtained from sources deemed reliable. Such information is not guaranteed as to its accuracy.
Information contained in the material above regarding or providing past performance should not be considered representative, and is no guarantee, of future performance or results. Forward looking statements contained in the material above involve certain assumptions, including but not limited to the performance of the real estate market, which could cause actual outcomes and results to differ materially from the views expressed in the material above.
More information regarding the investments, risks, and expenses of the BIT, copies of the latest Investment Memorandum and the applicable plan documents for the BIT, including the Trust Agreement and a form of Participation Agreement, may be obtained by contacting 855-530-0640 or . Please read the Investment Memorandum carefully before investing in the BIT.
PNC does not provide legal, tax or accounting advice and does not provide services in any jurisdiction in which it is not authorized to conduct business. PNC Bank is not registered as a municipal advisor under the Dodd-Frank Wall Street Reform and Consumer Protection Act.
The Fund is operated by PNC Bank who has filed a claim of exclusion from the definition of the term “commodity pool operator” under the Commodity Exchange Act (CEA), and therefore, PNC Bank is not subject to registration or regulation as a pool operator under the CEA.
Not FDIC Insured. No Bank Guarantee. May Lose Value. For Institutional Use Only- Not for Use with Retail Investors. Withdrawal Restrictions Apply.
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