REAL ESTATE - August 10, 2021 - Forum Capital Advisors Launches Debt Fund
BY ANDREA ZANDER
Forum Capital Advisors has launched its latest investment offering: the Forum CRE Income Fund (FCREIF), a 1940 Act private placement continuously offered closed-end tender fund focusing on investment opportunities within commercial real estate debt. FCREIF offers high-net-worth individuals, institutions, family offices and financial intermediaries access to commercial real estate debt and represents a restructuring of the firm’s successful Forum Integrated Income Fund (FIIF), which closed in December 2020 with $50 million.
“Based on the strong performance of our first debt offering, Forum Integrated Income Fund, and in response to feedback from many of our investors who wanted to add to their investment, we have listened and taken action with the introduction of FCREIF,” said Darren Fisk, Forum founder and CEO. “FCREIF is designed to provide access to commercial real estate debt investments at a time when investors are looking for better portfolio diversification alternatives and new income options. We are really excited about FCREIF and look forward to providing investors with a new opportunity to access the commercial real estate debt space.”
Commercial real estate debt is an asset class that is not traditionally easily accessible to retail investors and is an alternative potential source of income and diversification at a time when both are hard to find. Forum has a track record of delivering commercial real estate debt opportunities, and FCREIF brings sophisticated real estate asset management directly to investors at a relatively reasonable investment minimum.
Research suggests retail investors are traditionally underallocated to alternative investments and real estate, especially when compared to institutional investors. FCREIF strives to be a real estate investment that is not burdened with high fees and low liquidity, or highly correlated with the S&P 500 Index and other traditional assets. FCREIF provides a limited liquidity feature and has historically exhibited low correlation to the broad stock market, which can help diversify and insulate portfolios.
This article was originally published in Real Assets Advisor on August 10, 2021, and is available here.
Important Investment Considerations
Investors should consider the investment objectives, risks, charges, and expenses carefully before investing. For a prospectus or summary prospectus with this and other information about the Fund, please call 303.501.8804 or visit www.FCREIF.com Read the prospectus or summary prospectus carefully before investing.
Diversification does not ensure a profit or protect against a loss.
Investing in the Fund involves risks, including the risk that an investor may receive little or no return on his, her or its investment or that an investor may lose part or all of such investment. Therefore, investors should consider carefully the following principal risks before investing in the Fund. There is no assurance that the Fund will achieve its performance or investment objectives or achieve any targeted rate of return or return of capital or any target distribution yield. Shareholders may lose some or all of their invested capital, and prospective investors should not purchase the Fund' shares unless they can readily bear the consequence of such loss. Limited liquidity is provided to shareholders only through the Fund's quarterly repurchase offers. There is no guarantee that shareholders will be able to sell all of the shares they desire in a quarterly repurchase offer. The Fund's investments are also subject to liquidity risk. Funds with principal investment strategies that involve securities of companies with smaller market capitalizations, derivatives or securities with substantial market and credit risk tend to have the greatest exposure to liquidity risk.
As a non-diversified investment company, the Fund may invest more than 5% of its total assets in the securities of one or more issuers. The Fund may therefore be more susceptible than a diversified fund to being adversely affected by events impacting a single borrower, geographic location, security or investment type. The Fund's investments in real estate debt are expected to be secured by real estate assets. The Fund's concentration in the real estate sector may increase the volatility of the Fund's returns and may also expose the Fund to the risk of economic downturns in this sector to a greater extent than if its portfolio also included investments in other sectors. Further, there is no limit regarding the amount of Fund assets that may be invested in any single geographic area within the United States. To the extent the Fund concentrates its investments in a limited number of assets or geographic areas, the Fund will be subject to certain risks relating to concentrated investments. Commercial real estate debt instruments (e.g., mortgages, mezzanine loans and preferred equity) that are secured by commercial property are subject to risks of delinquency and foreclosure and risks of loss that are greater than similar risks associated with loans made on the security of single-family residential properties. The Fund expects to invest a portion of its assets in pools or tranches of commercial mortgage-backed securities (CMBS)*. In a rising interest rate environment, the value of CMBS may be adversely affected when payments on underlying mortgages do not occur as anticipated, resulting in the extension of the security's effective maturity and the related increase in interest rate sensitivity of a longer-term instrument. Subordinate CMBS are also subject to greater credit risk than those CMBS that are more highly rated. Mortgage loans on commercial properties generally lack standardized terms, which may complicate their structure and increase due diligence costs. Commercial mortgage loans also tend to have shorter maturities than single-family residential mortgage loans and are generally not fully amortizing, which means that they may have a significant principal balance or “balloon” payment due on maturity.
Placement Agent: Foreside Fund Services, LLC
*A security backed by commercial and multifamily mortgages rather than residential real estate.