PREDEX is an interval fund designed to offer access to private core real estate through investment in flagship U.S. core property funds managed by leading institutional real estate sponsors. Most of the targeted institutional private funds are included in the NCREIF Fund Index – Open End Diversified Core Equity (“NFI-ODCE”)1 . The underlying institutional funds own high-quality office, industrial, retail and apartment properties primarily located across the top 25 U.S. metropolitan areas. Income from these properties (after expenses) is passed through the funds to PREDEX, which provides quarterly distributions to its shareholders.
How PREDEX Works
What is the NFI-ODCE Index?
PREDEX operates within the NFI-ODCE guidelines for leverage, property type and geographic diversification. Since 1978, the NFI-ODCE has been widely used to represent the stabilized, income-producing commercial and multi-family real estate market. Funds included in the NFI-ODCE invest in private equity real estate and operate under a strict set of criteria:
- Real Estate. At least 80% of the fund’s gross assets are invested in private equity direct real estate.
- Domain. At least 95% of the market value of real estate must be invested in the U.S.
- Property Types. At least 75% of the market value of real estate must be invested in office, industrial, apartment and retail property types.
- Stabilized. At least 75% of the fund’s gross assets must be invested in properties that are 75% or more leased.
- Leverage. Leverage is limited to 35% of the market value of total gross assets.
- Diversification. No more than 60% of the market value of real estate may be invested in one property type, and must be invested in three of the four main property types, with a minimum of 5% in each of the three types. No more than 65% in one geographic region.
Funds in the NFI-ODCE must also comply with the NCREIF PREA Reporting Standards, including annual external appraisals and audits, quarterly valuations, and time-weighted returns.
The PREDEX Structure
PREDEX is designed to provide an institutional-quality real estate investment to investors.
PREDEX provides access to private core real estate through the convenience of an interval fund. Please browse through the topics below to find out more about investing in PREDEX.
PREDEX seeks consistent income and long-term capital appreciation by investing in a portfolio of flagship U.S. core property funds managed by leading institutional real estate sponsors. Our underlying funds own interests in more than 3,500 properties valued at more than $250 billion.
Why can’t PREDEX be a pure index fund?
PREDEX cannot be a pure index of the NFI-ODCE because to do so, it would have to own all of the member funds weighted by their net asset values—an impossible task due to the uneven timing of capital calls and quarterly liquidity. PREDEX seeks to represent the characteristics of the NFI-ODCE.
Interval Funds and Redemptions
As an interval fund, PREDEX offers quarterly share repurchases for no less than 5% of the Fund’s total shares outstanding. Share repurchases are offered at net asset value (NAV).
All of an investor’s tendered shares will be repurchased if the combined total shares tendered by all investors is less than the repurchase offer amount. If total shareholder requests exceed the repurchase offer amount, PREDEX will repurchase shares on a pro rata basis. There is no guarantee that an investor will be able to sell all shares in a repurchase offer. Quarterly share redemption is available throughout the life of the fund.
Daily NAV Pricing
Like open-end mutual funds, PREDEX provides transparency through daily pricing at net asset value (NAV). This is different from publicly traded real estate securities, which are priced based on daily trading activity. It is believed that appraisal NAV pricing may contribute to less volatility of PREDEX shares.
PREDEX offers a low-cost, passive investment strategy, which means that management fees may be lower than those of other investment options. The annual asset management fee is 0.55%. The Summary of Fund Expenses in the prospectus dated September 1, 2021, reports that investors may pay total annual expenses of 1.36%, 1.76% and 1.77% per annum as a percentage of net assets attributable to shares of Class I, Class T and Class W, respectively. The Adviser and the Fund have entered into an Expense Limitation Agreement under which the Adviser has agreed contractually to waive its fees and to pay or absorb the ordinary operating expenses (excluding interest and extraordinary expenses, if any) of the Fund until at least August 31, 2022 to the extent that they exceed 1.10%, 1.35% and 1.35% per annum for Class I, Class T and Class W, respectively.
Minimum Initial Investment
The minimum initial investment is $1,000,000 for Class I shares. However, investment advisers may aggregate client accounts for the purpose of meeting the investment minimum. The Adviser may also waive the minimum investment at their discretion.
The minimum initial investment is $2,500 for Class T and Class W shares.
Underlying Fund Sponsors
PREDEX invests in the flagship U.S. core property funds managed by leading institutional real estate sponsors including:
|AEW Capital Management|
American Realty Advisors
Barings Real Estate
BlackRock Real Estate
|DWS / RREEF|
GWL / EverWest
Invesco Real Estate
Jones Lang LaSalle
Morgan Stanley Real Estate Investing
Principal Real Estate Investors
|PGIM Real Estate
Sentinel Real Estate
Stockbridge Capital Group
UBS Realty Investors
USAA Real Estate
PREDEX Service Providers
Custodians: BNY Mellon and UMB Bank
Auditor: RSM US LLP
Administrator / Transfer Agent: Ultimus Fund Solutions
Distributor: Northern Lights Distributors
Managed by Experienced Professionals
The management team brings a wealth of industry experience to its leadership of PREDEX.
Both the leadership team and the funds in which PREDEX is invested have long, well-established track records of up to 45 years in length. The principals bring a broad range of real estate investment experience to PREDEX, including the creation and management of other institutional real estate funds.
PREDEX Capital Management, LLC
- Formerly President of CNL Fund Advisors; Managing Director, AIG Global Real Estate; Executive Managing Director, CB Richard Ellis Investors; Director-Real Estate, Ameritech Pension Trust; President, Lend Lease Investments; Co-Founder, The Landsing Corporation
- Served on Board of Directors for Pension Real Estate Association (PREA) and National Association of Real Estate Investment Trusts
(NAREIT); President, Stanford Business School Alumni Association
- MBA, Stanford Graduate School of Business; BA, University of Virginia
- Formerly CFO for more than two years at CITIC Securities International Partners which conducted investment banking and private equity from offices in Los Angeles, New York, Hong Kong and Beijing
- Prior to that, he was a partner for fifteen years at Strome Investment Management which managed hedge funds with assets in excess of $1 billion. As CFO he managed the operations of their private funds, was a member of the investment risk and valuation committees, and participated in the due diligence and allocation of capital to other managers
- Former CPA and Audit Manager with Big 4 Accounting Firm, working exclusively in the investment industry with advisers and funds. He served on their national quality review program for the Investment Company practice
- Formerly Executive Vice President for 27 years at Bailard, Inc. in Foster City, CA. A global investment firm with assets in excess of $4 billion
- Experience includes executive leadership, business development and client service
- Distributed global asset allocation and alternative products (real estate, hedge funds, emerging life sciences, technology exchange fund) to institutional investors, financial intermediaries, family offices and fund-of-funds
- Served on Board of Directors for the Western Pension and Benefits Conference and started the Silicon Valley chapter
- Formerly the Director of Investment Operations and head of the Portfolio Management Committee for a wealth adviser team in Los Angeles with $300 million in client assets
- Prior to that, served as a Manager of the Wealth Management department of a nearly $200 million investment advisory firm where he helped oversee the firm’s investment models and client portfolios including the due diligence and placement of private funds for qualified investors
- Chartered Financial Analyst with MA in Economics from California State University, Long Beach and BA in Economics from the University of Michigan, Ann Arbor
- Formerly Marketing Coordinator at a well-established real estate contractor in Southern CA specializing in premier retail and mixed-use projects
- Previously served as Global Wealth Relationship Associate at BBVA Compass (40th largest bank in the U.S.) for the Southern CA region where she created financial plans, monitored account compliance and expanded client relationships
- Former External Audit Intern with KPMG, conducting control tests and verifying accuracy of financial information
- MBA from University of California, Irvine and B.S. in Accounting from the University of Alabama, Birmingham
Independent Trustees of the Fund
- Formerly Chairman, Vice-Chairman and CEO at Piper Jaffray Companies in Minneapolis; Joined Piper Jaffray in 1969 and served as Assistant Equity Syndicate Manager, Director of Securities Trading, and Director of Sales & Marketing
- Currently a Senior Regent at St. Olaf College, and Chair of Minnesota Comeback. He also serves as board member of Minnesota Public Radio, EdAllies, Educators for Excellence, and The Leuthold Group
- Served as Chair of Abbott Northwestern Hospital; Chair of Washburn Child Guidance Center; Vice-Chair of the Minneapolis Downtown Council, Board of Governors of the Securities Industry Association; Chair of the NYSE Regional Firms Advisory Group; Trustee of the Stanford University Business School Trust
- MBA, Stanford Graduate School of Business; BA, Economics, Williams College
- Formerly Director, Private Real Estate, Russell Investments; Principal & Director of Research, Institutional Property Consultants; Vice President, Public Storage Inc.
- Experience includes running Russell’s discretionary multi-manager private real estate business with $3.2 B in AUM; leading Institutional Property Consultants’ real estate asset class research, manager selection and due diligence processes
- Served as a member of the Pension Real Estate Association (PREA), the European Association for Investors in Non-listed Real Estate Vehicles (INREV), & the Editorial Board of the Institutional Real Estate Letter
- MBA, University of California, Los Angeles; BS, Biochemistry, University of California, Los Angeles
- Professor Emeritus, University of California-Irvine
- Former Director, Center for Real Estate and Professor Real Estate Finance at the Merage School of Business, UC Irvine
- Former Chair of the Department of Real Estate and Urban Land Economics at the University of Wisconsin
- Former Co-Editor of Real Estate Economics
- His recent research on real estate illiquidity provides institutional investors with important tools to ascertain proper allocations to real estate in mixed-asset portfolios
- PhD, Real Estate Finance, Massachusetts Institute of Technology; BS, MS, Engineering, Rice University; MS, City and Regional Planning, Harvard University
1 NCREIF Fund Index – Open End Diversified Core Equity (NFI-ODCE) is an index of investment returns reporting on both a historical and current basis the results of 41 open-end commingled funds pursuing a diversified core investment strategy. See ncreif.org for more information on the NFI-ODCE and its guidelines. Investors cannot directly invest in an index; unmanaged index returns do not reflect any fees, expenses or sales charges. Past performance does not guarantee future results.