Bluerock’s BPRE Waives Fees as Direct Property Push Tops $250M
Bluerock Private Real Estate Fund (NYSE: BPRE) has closed roughly $250 million of direct real estate investments and has another $450 million under contract or in its investment pipeline, the publicly traded closed-end fund disclosed this week, as it continues unwinding the fund-of-funds structure that once defined it.
The fund, listed on the New York Stock Exchange under the ticker BPRE, also entered into a new administrative services agreement with its adviser, Bluerock Fund Advisor, effective July 1. Under the agreement, the fund will pay an annual fee of 0.2% of its average managed assets, defined as net assets plus outstanding borrowings and any preferred stock liquidation preference, calculated and paid monthly.
The adviser is voluntarily waiving the portion of that fee tied to the fund’s remaining stakes in outside institutional investment vehicles, a waiver equal to about 53% of the total fee based on the fund’s holdings as of July 1. Bluerock said the waiver is intended to ensure the expense savings from exiting those third-party funds flow through to shareholders rather than being offset by the new administrative charge.
The fund built its portfolio by investing in institutional vehicles managed by outside sponsors, an approach that layered an additional expense on shareholders at the underlying-fund level. As it moves capital out of those vehicles and into directly owned property, the fund eliminates that layer of expense, but takes on new administrative work: joint-venture administration, property-level debt administration, entity governance, real estate investment trust qualification monitoring, and NYSE listing compliance. The new agreement compensates the adviser for that work.
The administrative services agreement remains in effect until terminated and can be ended on 60 days’ written notice by a majority of the fund’s independent trustees, by a majority vote of outstanding shares, or by the adviser. Any amendment requires approval by the board of trustees, including a majority of its independent members.
The disclosure gives shareholders one of the first concrete looks at how the fund intends to translate its direct-ownership rotation into an actual expense reduction, rather than a strategic goal stated only in general terms. The fund did not disclose the dollar value of its remaining institutional-vehicle holdings or a timeline for completing the rotation.
The news continues a public transformation AltsWire has tracked since shareholders approved the fund’s shift to an NYSE listing roughly nine months ago. Since listing, the fund – formerly known as Bluerock Total Income+ Real Estate Fund – has raised its distribution multiple times, most recently to an annualized rate equal to 7% of net asset value for June, according to the company.
Last month, parent company Bluerock filed a third amendment to its application for co-investment exemptive relief, broadening the scope of the order it is seeking to include open-end registered funds – not just closed-end vehicles and business development companies. The updated application, filed with the U.S. Securities and Exchange Commission, covers BPRE, as well as Bluerock High Income Institutional Credit Fund, a nontraded closed-end fund.
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