PHOENIX-In an effort to provide investors with liquidity based on real estate net asset value, locally based Cole Real Estate Investments has launched its Cole Real Estate Income Strategy (Daily NAV) Inc. fund. Marketed as “Cole Income NAV Strategy,” the non-listed REIT offering will focus on acquiring retail, office and industrial acquisitions, while providing investors the ability to redeem shares, based on NAV.
The fund, which went live last week, is seeded with net-leased retail assets including CVS stores in Austin, Erie, PA and Mansfield, OH; Tractor Supply stores in Lockhart, TX and Brunswick, GA; a Walgreens in Reidsville, NC and The Parke, a 7,533-square-foot, multi-tenant retail asset in San Antonio. The REIT also secured a $50 million secured revolving credit facility from J.P. Morgan Securities LLC.
According to Cole chief investment strategist Indy Karlekar, the fund’s investment strategy won’t differ too much from other Cole funds; the focus will continue to be on quality retail, office and industrial assets with credit-worthy long-term tenants. The difference, however, will be on the investor side.
“This new product was developed to offer investors a stable income with daily liquidity and net asset value,” Karlekar tells Globest.com. “The goal is to help investors generate better portfolio rebalancing and to make adjustments; something that would be impossible in a typical real estate investment.”
Karlekar says the fund, which was 18 months in the making, isn’t listed on a national exchange, but rather, takes into account the portfolio’s daily net asset value, which means less volatility. The minimum investment is $2,500, which Karlekar says is comparable to similar funds. Furthermore, shares of the fund, which will be available for purchase through registered investment advisors and broker-dealers in January, will be offered through a fee-based account, rather than commission.
According to Karlekar, the exchange-listed real estate market has approximately $400 billion for investments, while the non-listed investments are valued at approximately $100 billion. With commercial real estate, in total, being valued at approximately $10 trillion, the prospects for the new fund are huge.
“This new product can be taken to millions of investors who haven’t had a chance to tap into the enormous potential of the real estate market because of liquidity issues,” Karlekar notes. “It can provide true real estate exposure, which goes a long way toward rebalancing a portfolio.”