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Fidelity has jumped into private commercial real estate (CRE). This FIDELITY CORE REAL ESTATE FUND fund requires investor accreditation, $25K initial minimum, +$5K additional monthly additions, ER 1.0% plus 12.5% of performance over +5%.
Fund will not be listed or traded on exchanges.
After 3 years of operations, quarterly redemptions up to 5% of fund assets allowed at the option of Fidelity.
It is suggested as an addition to traditional 60-40 stock-bond portfolios.
Note that Blackstone BREIT and Starwood SREIT have been in the news due to reaching their quarterly 5% redemption limits.
TIAA Real Estate Account VA QREARX is different in that it its Liquidity Guarantee (from TIAA) allows quarterly redemptions of any amount.
Listed real estate funds behave differently due to their leverage and market factors. Examples include VNQ, XLRE, FRESX, and hybrid FRIFX. Fidelity also has multi-asset FMSDX that combines stocks-bonds-alternatives.
An interesting time for Fidelity to enter private CRE area.
May be @TheShadow can find more information on its filing.
Thanks @yogibearbull I'd need a lot of extra money that would classify as 'probably never needed' to lock monies into these private equity positions, as this one.
From the song; 'Don't Fence me In'
'I want to ride to the ridge where the west commences Gaze at the moon till i lose my senses I can't look at hobbles and i can't stand fences Don't..... fence me in.'
Real estate funds have been mentioned recently in monthly commentaries by @Devo, @msf, @David_Snowball, and possibly others.
@Mark, additional amounts are optional. But they are allowed monthly.
This should be treated as news of interest to some.
FWIW, I have access to TIAA QREARX and have a position in it. But many don't have access to it and ask about possible alternatives, so I keep an eye on this area.
Private real estate has too much friction and illiquidity. Paying 1% management fee + 12.5% over 5% hurdle is a perfect product for advisors. Bond like returns, opaque pricing, low mark to market volatility. Meanwhile, the public real estate is too volatile. Wonder if the private guys use the public real estate as a hedge in turn increasing the volatility of the public. maybe just stay from it all till its becomes out of favor.
Fidelity CRE is really new to the scene. May be a while to find something on it. Did find DoubleLine has a registration filing for a commercial real estate ETF filed last month.
Filing shows 2 ETFs - DL CRE ETF (debt) and DL Mortgage ETF (also debt). Both are active and with some leverage (unspecified % or limits, but "borrowing" is mentioned a lot). IMO, DL CRE ETF name may be misleading as it is all debt, no equity (although they may use equity-linked debt instruments). Of course, being ETFs, they will be listed and trade on exchange.
I got burned decades ago on non traded real estate partnerships. The main reason for that crash was dramatic tax policy changes, but ever since I am very leery of buying something I can't sell, especially something where you depend on management to tell you what it's is worth.
Comments
I'd need a lot of extra money that would classify as 'probably never needed' to lock monies into these private equity positions, as this one.
From the song; 'Don't Fence me In'
'I want to ride to the ridge where the west commences
Gaze at the moon till i lose my senses
I can't look at hobbles and i can't stand fences
Don't..... fence me in.'
@Mark, additional amounts are optional. But they are allowed monthly.
This should be treated as news of interest to some.
FWIW, I have access to TIAA QREARX and have a position in it. But many don't have access to it and ask about possible alternatives, so I keep an eye on this area.
https://www.sec.gov/Archives/edgar/data/1886172/000119312523008255/d313200d485apos.htm
Filing shows 2 ETFs - DL CRE ETF (debt) and DL Mortgage ETF (also debt). Both are active and with some leverage (unspecified % or limits, but "borrowing" is mentioned a lot). IMO, DL CRE ETF name may be misleading as it is all debt, no equity (although they may use equity-linked debt instruments). Of course, being ETFs, they will be listed and trade on exchange.
I'll pass, thanks. I like to stay liquid...and not just in aged scotch!