O
n December 16 the Bluerock Total Income + Real Estate Fund will begin trading on the NYSE, and a Monday SEC filing warns investors that a modest decline in value is likely at launch. The fund’s net asset value was $25.12 per share when the filing was made, and the company expects an initial discount to NAV because of pent‑up liquidity demand from existing shareholders.

    Closed‑end funds often trade below NAV after listing, but larger closed‑end and real‑estate funds similar to TI+ usually trade near or slightly above NAV, appealing to both retail and institutional investors. Over the summer the firm projected a “substantial discount” to NAV. The fund, launched in 2012 as an interval vehicle, will convert to a closed‑end structure next week, offering daily liquidity instead of the limited liquidity of the interval format.

    The filing notes that the average discount for listed closed‑end funds is 4.8 %. Large closed‑end funds and large real‑estate closed‑end funds, however, tend to trade at a small premium. John Cox, CEO of Cox Capital Partners, cautions that a discount close to 4 % is optimistic if the underlying assets are already trading at a discount and investors are eager to exit.

    Financial advisors often liquidate interval real‑estate funds or non‑traded REITs to diversify portfolios and maintain steady yields. Rising interest rates since early 2023 have pressured real‑estate funds, increasing capital costs and reducing returns. Illiquid or semi‑liquid funds can raise concerns for clients seeking liquidity.

    For comparison, the FS Specialty Lending Fund, with $1.9 billion in assets, reported an NAV of $18.60 per share on November 4. It began NYSE trading ten days later at $14 per share, a 24.7 % discount to NAV.