The problem that Bluerock is facing in getting shareholder approval, according to industry observers, is that the fund, after a listing, could trade below its net asset value.
The $3.7 billion Bluerock Total Income + Real Estate Fund fell short this week of generating enough investor votes to approve the nontraded interval fund to list and trade on the NYSE. The alternative asset manager’s CEO and founder, Ramin Kamfar, now is campaigning for clients to still vote for the proposal.
The problem that Bluerock is facing in getting shareholder approval, according to industry observers, is that the fund, after a listing, could trade below its net asset value (NAV). That means buyers of the fund’s shares would get a discount but the sellers, many of them long-time holders of the fund and retail investors, would get less per share than the fund has been offering in its limited quarterly purchases per share.
While other proposals for the Bluerock fund were approved by investors, the one for a listing did not, Kamfar wrote to investors Wednesday in a letter. The matter is in part procedural, with the board adjourning the shareholder meeting till later this month. By that time, the fund may garner the votes it needs to list.
The board of trustees “has adjourned the meeting until September 25, 2025, to allow time to solicit additional votes,” Kamfar wrote. “Importantly, approximately 80% of the votes cast” for the needed proposal to list have been in favor of the listing, he added.
Financial advisors often sell clients interval real estate funds or nontraded real estate investment trusts in order to diversify portfolios and deliver steady yields. Real estate funds of all stripes, however, were hit by rising interest rates since the start of 2023. Higher interest rates hurt real estate investors because the cost of capital rises.
Interval funds have limited liquidity and typically buy back up to 5% of clients’ shares per quarter. Bluerock has at least four funds currently, including the Total Income + Real Estate Fund.
According to investment bank Robert A. Stanger & Co. Inc., the fund’s portfolio is 93% concentrated in private real estate securities, and its heaviest concentrations are industrial and diversified, with smaller concentrations in life science and apartments.
The question hanging over the fund is where its NAV will land once it lists on the NYSE. In July, Bluerock addressed that question. In a filing with the Securities and Exchange Commission (SEC), the company stated it expected the fund to trade at a “substantial discount” to its current net asset value.
At the end of May, the Bluerock Total Income + Real Estate Fund said the NAV of its Class A and Class C shares, respectively, were $25.74 and $23.71. The funds’ other share classes had NAVs in a similar range.
In its proxy statement filing with the SEC, the company gave no percentage range to illustrate how much lower than its current NAV it might trade.
In anticipation of a listing, investors in the Bluerock fund have been heading to the exits.
“Fund redemptions have exceeded 5% limits for the past several quarters,” Stanger noted in a research note earlier this year. “The fund has returned $4.3 billion to shareholders over past three years, essentially halving NAV to $4.1B as of 3/31/25.”
“Bluerock can report strong participation in yesterday’s special shareholder meetings,” a company spokesperson wrote in an email, noting that more than a dozen other proposals “were approved with the support of an overwhelming majority of voting shareholders.”
The higher quorum requirements for the proposal to list on the NYSE “have not yet been met, despite being close to the threshold,” the spokesperson added.
The Bluerock Total Income+ Real Estate Fund on July 3 said in a press release it was seeking shareholder approval for the liquidity event, which would convert the fund from a closed-end interval fund to a listed closed-end fund, traded on the NYSE.
The alternative investment industry, which has seen spectacular growth the past decade, is riddled with examples of illiquid real estate funds limping to the finish line if they seek to begin daily trading on the NYSE or NASDAQ. Such a move allows investors to cash out shares, but the risk is not knowing at what price.