The Accordant ODCE Index Fund(ODCEX) is a new interval fund/REIT hybrid that launched in September.
ODCEX was formerly known as the IDR Core Property Index Fund, and it launched in 2019 as a privately offered tender offer fund/REIT. In August, Shareholders approved the appointment of a new advisor and subadvisor. They also made several structural changes including converting the corporate form from a Maryland corporation to a Delaware Statutory Trust, and converting from a tender offer fund to an interval fund.
The following graphic summarizes the conversion:
The benefits of converting to an interval fund
Why convert from a tender offer fund to an interval fund?
According to the proxy statement, the board unanimously determined that publicly offered interval funds had greater market acceptance. By converting to an interval fund ODCEX expects to raise more capital, and achieve greater efficiencies of scale. the fund should be available through all major clearing platforms. The conversion to an interval fund will result in an easier onboarding process . Investors will no longer be required to fill out subscription documents. Additionally, under the prior structure, NAV was struck quarterly, but under the new interval fund structure, NAV is published daily. The board noted that this would provide greater certainty for investors.
ODCEX Investing Strategy
ODCEX employs an indexing approach that seeks to track the NCREIF Fund Index- Open End Diversified Core Equity Index(NFI-ODCE Index) on a net-of-fee basis. The NFI ODCE Index comprises over $300 billion in market value across 3000 properties diversified across 35 of the largest U.S. Markets. Asset classes covered include industrial, apartment, office, retail and specialty. The average value per asset in the index is over $100 million, so it would normally be accessible to large institutions. By using an indexing approach, ODCEX makes this investment available to a wider range of investors. Note that the USQ Core Real Estate Fund also invests in NFI ODCE assets.
The fund’s performance has closely tracked its index since inception:
The minimum initial investment in ODCEX is $2,500 for Class A shares, $500,000 for Class I Shares, and $5,000,000 for Class Y Shares.
ODCEX also increased the management fee from 0.40% of NAV to 0.60% of NAV. However, the new fee is still less than half of the 1.26% average fee for real estate interval funds. For more details on fee levels across the interval fund sector, check out a recent report that Interval Fund Tracker wrote with Ultimus Fund Solutions.
About Accordant Investments LLC
According to the prospectus, Accordant Investments LLC:
is seeking to enable more investors to adopt real estate by providing products optimized for a particular characteristic of real estate (income in the case of the Fund) that utilize all of the portfolio management tools available to attempt to achieve the product’s investment objective.
Accordant is a wholly owned subsidiary of Emphasis Capital LLC.