Versus Capital Advisors LLC is targeting registered investment advisers with a new share class of its private multimanager real estate fund.
Versus was granted an exemption from the Securities and Exchange Commission on Monday that allowed it to offer a second share class of its Versus Capital Multi-Manager Real Estate Income Fund (VCMIX), which doesn't charge distribution fees or an early-withdrawal penalty. It is the first closed end fund to offer multiple share classes.
The new I shares, which were launched Thursday, carry an expense ratio of 2.55% when the fees of the underlying managers are included, and have a minimum investment of $1 million.
The original F shares, which were launched earlier this year, have a one-year early-withdrawal penalty of 2% and charge a continuous 75-basis-point distribution fee. The total expense ratio for those shares, which have a $10,000 minimum and are intended for brokers, is 3.3%.
Chief executive Mark Quam said the new shares offer RIAs an opportunity to invest in direct real estate without having to worry about the liquidity or high fees that come with nontraded REITS.
“RIAs like lower-fee products,” he said. “They've watched nontraded REITs for years but have refused to invest in them because of the high fees.”
The fund invests in multiple institutional real estate managers, such as J.P. Morgan Asset Management and Invesco Real Estate. Its shares are available daily for purchase but can be redeemed only quarterly. The fund will offer between 5% of 25% of total assets for redemption every quarter, Mr. Quam said.
The Versus fund is targeting a 5% to 5.5% distribution. It will make its first distribution in the third quarter.
Income has been one of the main drivers of sales of nontraded REITs, which are on pace for $10 billion in sales this year. The robust sales are in spite of
a number of issues the funds have run into regarding valuations, which are only rarely disclosed.
