Form 40-APP/A Origin Real Estate Credi
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E-mailAs filed with the Securities and Exchange Commission on August 27, 2025
file No. 812-15790
UNITED STATES OF AMERICA
BEFORE THE
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
First Amended and Restated Application Pursuant to Section 6(c) of the Investment Company Act of 1940, as amended (the “Act”) for an Order Granting Certain Exemptions from the Provisions of Sections 18(a)(2), 18(c) and 18(i) Thereunder, Pursuant to Sections 6(c) and 23(c) of the Act for an Order Granting Certain Exemptions from Rule 23c-3 Thereunder and Pursuant to Section 17(d) of the Act and Rule 17d-1 Thereunder for an Order Permitting Certain Arrangements
EXPEDITED REVIEW REQUESTED UNDER 17 CFR 270.0-5(d)
In the Matter of the Application of:
________________________________
Origin Real Estate Credit Fund
(formerly, Origin Real Estate Credit Interval Fund)
Origin Credit Advisers, LLC
________________________________
Please direct all communications and orders regarding this Application to:
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Michael McVickar General Counsel, Origin Investments Chief Compliance Officer, Origin Credit Advisers, LLC Chicago, IL 60601 (312) 635-3704
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WITH COPIES TO:
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Joseph M. Mannon Vedder Price P.C. (312) 609-7883 |
Vedder Price P.C. |
Thomas Briney President & Chief Investment Officer 4600 S. Syracuse Street, 9th Floor Denver, CO 80237 (303) 256-6497 |
This Application (including Exhibits) coNSISTS OF 71 pages
Table of Contents
EXHIBITS
Exhibit A—Resolutions of the Board of Trustees of Origin Real Estate Credit Fund
Exhibit B—Verifications of Origin Real Estate Credit Fund and Origin Credit Advisers, LLC
i
UNITED STATES OF AMERICA
BEFORE THE
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
|
IN THE MATTER OF
ORIGIN REAL ESTATE CREDIT FUND
and
ORIGIN CREDIT ADVISERS, LLC
Investment Company Act of 1940
File No. 812-15790 |
FIRST AMENDED AND RESTATED APPLICATION PURSUANT TO SECTION 6(c) OF THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE “ACT”) FOR AN ORDER GRANTING CERTAIN EXEMPTIONS FROM THE PROVISIONS OF SECTIONS 18(a)(2), 18(c) AND 18(i) OF THE ACT, PURSUANT TO SECTIONS 6(c) AND 23(c) OF THE ACT FOR AN ORDER GRANTING CERTAIN EXEMPTIONS FROM RULE 23c-3 THEREUNDER, AND PURSUANT TO SECTION 17(d) OF THE ACT AND RULE 17d-1 THEREUNDER FOR AN ORDER PERMITTING CERTAIN ARRANGEMENTS
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EXPEDITED REVIEW REQUESTED UNDER 17 CFR 270.0-5(d).
Origin Real Estate Credit Fund (formerly, Origin Real Estate Credit Interval Fund) (the “Initial Fund”) is a newly organized Delaware statutory trust that is registered under the Act and that will operate as a continuously offered, non-diversified, closed-end management investment company and will be structured as an interval fund pursuant to Rule 23c-3 under the Act. Origin Credit Advisers, LLC (the “Adviser”) will serve as the Initial Fund’s investment adviser. The Initial Fund and the Adviser are referred to herein as the “Applicants.”
The Applicants hereby seek an order (the “Order”) from the U.S. Securities and Exchange Commission (the “Commission”) (i) pursuant to Section 6(c) of the Act for an exemption from Sections 18(a)(2), 18(c) and 18(i) of the Act; (ii) pursuant to Sections 6(c) and 23(c) of the Act, for an exemption from Rule 23c-3 under the Act and (iii) pursuant to Section 17(d) of the Act and Rule 17d-1 under the Act to permit the Initial Fund to issue four separate classes of shares of beneficial interest (“Shares”)1 and to impose early withdrawal charges (“EWCs”) and asset-based distribution and/or service fees with respect to certain classes.
Applicants request that the Order also apply to any continuously offered registered closed-end management investment company that may be organized in the future for which the Adviser or any entity controlling, controlled by, or under common control with the Adviser (as that term is defined in Section 2(a)(9) of the Act) or any successor in interest to any such entity2 acts as investment adviser, and that operates as an interval fund pursuant to Rule 23c-3 under the Act or provides periodic liquidity with respect to its Shares pursuant to Rule 13e-4 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (each, a “Future Fund” and, together with the Initial Fund, the “Funds” or each, a “Fund”).3 Any of the Funds relying on this relief in the future will do so in compliance with the terms and conditions of this first amended and restated application (the “Application”). Applicants represent that each entity presently intending to rely on the requested relief is listed as an Applicant.
1 As used in this Application, “Shares” includes any other equivalent designation of a proportionate ownership interest of the Initial Fund (or any other registered closed-end management investment company relying on the requested Order).
2 A successor in interest is limited to an entity that results from a reorganization into another jurisdiction or a change in the type of business organization.
3 The terms “control” and “investment adviser” are used throughout this Application as those terms are defined in Sections 2(a)(9) and 2(a)(20) of the Act, respectively.
1
On May 9, 2025, the Initial Fund filed an initial registration statement on Form N-2, which, as of the date of this Application, has not yet been declared effective by the Commission, seeking to register Shares of the Initial Fund to be offered for public sale under the Securities Act of 1933, as amended (the “Securities Act”) and to operate as an interval fund pursuant to Rule 23c-3 under the Act (the “Initial Registration Statement”). The Initial Registration Statement applies to the offering of four separate classes of Shares of beneficial interest in the Initial Fund, designated as Class A Shares, Class E Shares, Class I Shares and Class O Shares. If the requested relief is granted, the Initial Fund anticipates making a continuous public offering of its Class A Shares, Class E Shares, Class I Shares and Class O Shares, each with its own fee and expense structure. Until such exemptive relief requested in this Application is granted, the Initial Fund will offer only one class of Shares for sale, the Class O Shares, and the Class A Shares, Class E Shares and Class I Shares will not be offered to investors. Additional offerings by any Fund relying on the requested relief may be offered on a private placement or public offering basis.
Shares of the Funds will not be listed on any securities exchange, nor quoted on any quotation medium, and the Funds do not expect there to be a secondary trading market for their Shares.
It is currently contemplated that the Initial Fund’s Class O Shares will not be subject to other expenses such as distribution and/or service fees nor will they be subject to an EWC. Each of the Initial Fund’s Class A Shares, Class E Shares and Class I Shares may be subject to other expenses, including a distribution and/or service fee, but will not be subject to an EWC. The Funds may in the future offer additional classes of Shares and/or another sales charge, fee or expense structure.
Applicants represent that any asset-based service and/or distribution fees for each class of Shares of the Funds will comply with the provisions of the Financial Industry Regulatory Authority, Inc. (“FINRA”) Rule 2341 (formerly, NASD Rule 2830) (the “FINRA Sales Charge Rule”).4 All references in this Application to the FINRA Sales Charge Rule include any FINRA successor or replacement rule to the FINRA Sales Charge Rule.
Origin Real Estate Credit Fund
The Initial Fund is a newly organized Delaware statutory trust that is registered under the Act as a continuously offered, non-diversified, closed-end management investment company that will operate as an interval fund pursuant to Rule 23c-3 under the Act. As of the date of the filing of this Application, the Initial Fund’s Initial Registration Statement has not yet been declared effective by the Commission. Pursuant to a fundamental policy adopted by the Initial Fund’s Board of Trustees (the “Board”) and approved by the Initial Fund’s sole initial shareholder, the Initial Fund will conduct quarterly repurchase offers for between 5% and 25% of the Initial Fund’s then-outstanding Shares at net asset value (“NAV”), reduced by any applicable repurchase fee.
4 As adopted, FINRA Rule 2341 superseded Rule 2830(d) of the Conduct Rules of the National Association of Securities Dealers, Inc. See Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Adopt NASD Rule 2830 as FINRA Rule 2341 (Investment Company Securities) in Consolidated FINRA Rulebook, Securities Exchange Act Release No. 78130 (Jun. 22, 2016).
2
The Initial Fund’s primary investment objectives are to maximize current income and preserve investor capital, with a secondary focus on long-term capital appreciation. The Initial Fund concentrates its investments (i.e., invests more than 25% of its assets) in the real estate industry. The Initial Fund pursues its investment objectives by investing in a portfolio of commercial multifamily real estate-related investments. “Commercial multifamily real estate-related investments” in this context refers to investments related to multifamily residential real estate that is commercially owned, financed and managed, and considered to be a type of commercial real estate. Multifamily real estate may include, among other things, professionally managed multifamily properties or one or more tracts of land to support new homebuilding construction for multifamily units, which may include secondary retail and office space and certain amenities, such as parking garages, clubhouses and common areas. The Initial Fund executes its investment strategy primarily by seeking to invest opportunistically in a portfolio of investments across the following primary asset classes: commercial real estate-related loans and other debt investments; commercial real estate-related equity securities, including, but not limited to, preferred equity issued by real estate investment trusts and securities issued by real estate operating companies; other real estate-related structured and securitized investments; and commercial real estate.
The Adviser has broad discretion to allocate the Initial Fund’s assets among the above-noted primary asset classes, and other real estate-related assets. There is no maximum or minimum percentage of the Initial Fund’s assets that may be allocated to any asset class, although the Initial Fund’s direct ownership of commercial real estate is expected to be limited to acquisitions of property securing an existing investment that has become impaired, provided the investment is suitable and permissible for the Initial Fund. The primary category of commercial real estate underlying the Initial Fund’s investments will be multifamily properties; however, other categories of commercial real estate may include industrial, mixed use, hospitality, office, and retail.
Under normal circumstances, the Initial Fund will invest at least 80% of its net assets (plus the amount of any borrowings for investment purposes) in commercial real estate, the securities of real estate and real estate-related issuers, and real estate-related loans or other real estate-related debt securities. For this purpose, real estate-related companies are those that derive at least 50% of their revenues or profits from the ownership, construction, management, financing or sale of real estate, or have at least 50% of the fair market value of their assets invested in real estate. The Initial Fund may invest in securities that are rated below investment grade by rating agencies or that would be rated below investment grade if they were rated. There are no limits on the Initial Fund’s investments in below investment grade securities. The Initial Fund’s address is 4600 S. Syracuse Street, 9th Floor, Denver, Colorado 80237.
Each of the Other Funds (as defined below) will adopt fundamental investment policies and make periodic repurchase offers to its shareholders in compliance with Rule 23c-35 or will provide periodic liquidity with respect to its Shares pursuant to Rule 13e-4 under the Exchange Act. Any repurchase offers made by the Funds will be made to all holders of Shares of each such Fund as of the selected record date.
Each Fund that operates or will operate as an interval fund pursuant to Rule 23c-3 under the Act may offer its shareholders an exchange feature under which the shareholders of the Fund may, in connection with such Fund’s periodic repurchase offers, exchange their Shares of the Fund for shares of the same class of (i) registered open-end investment companies or (ii) other registered closed-end investment companies that comply with Rule 23c-3 under the Act and continuously offer their shares at net asset value, that are in the Fund’s group of investment companies (collectively, the “Other Funds”). Shares of a Fund operating pursuant to Rule 23c-3 that are exchanged for shares of Other Funds will be included as part of the repurchase offer amount for such Fund as specified in Rule 23c-3 under the Act. Any exchange option will comply with Rule 11a-3 under the Act, as if the Fund were an open-end investment company subject to Rule 11a-3. In complying with Rule 11a-3, each Fund will treat an EWC as if it were a contingent deferred sales load (“CDSL”).6
5 Rule 23c-3 and Regulation M under the Exchange Act permit an interval fund to make repurchase offers to repurchase its shares while engaging in a continuous offering of its shares pursuant to Rule 415 under the Securities Act.
6 A CDSL, assessed by an open-end fund pursuant to Rule 6c-10 under the Act, is a distribution-related charge payable to the distributor. Pursuant to the requested order, the EWCs will likewise be a distribution-related charge payable to the distributor as distinguished from a repurchase fee which is payable to a Fund to compensate long-term shareholders for the expenses related to shorter-term investors, in light of the Fund’s generally longer-term investment horizons and investment operations.
3
Shares of a Fund will be subject to a repurchase fee at a rate of no greater than 2% of the aggregate net asset value of a shareholder’s Shares repurchased by the Fund if the interval between the date of purchase of the Shares and the valuation date with respect to the repurchase of those Shares is less than one year. A repurchase fee charged by a Fund is not the same as a CDSL assessed by an open-end fund pursuant to Rule 6c-10 under the Act, as CDSLs are distribution-related charges payable to a distributor, whereas the repurchase fee is payable to the Fund to compensate long-term shareholders for the expenses related to shorter-term investors, in light of the Fund’s generally longer-term investment horizons and investment operations.
Any repurchase fee imposed by a Fund will equally apply to all classes of Shares of a Fund, in compliance with Section 18 of the Act and Rule 18f-3 thereunder. To the extent a Fund determines to waive, impose scheduled variations of, or eliminate any such repurchase fee, it will do so in compliance with the requirements of Rule 22d-1 under the Act as if the repurchase fee was a CDSL and as if the Fund was an open-end investment company. A Fund’s waiver of, scheduled variation in, or elimination of any such repurchase fee will apply uniformly to all shareholders of the Fund regardless of class.
The Adviser, which is organized as a Delaware limited liability company, is an investment adviser registered with the Commission under the Investment Advisers Act of 1940, as amended (the “Advisers Act”). The Adviser will serve as the Initial Fund’s investment adviser pursuant to an advisory agreement (the “Investment Management Agreement”). Prior to the Initial Fund’s commencement of operations, the Investment Management Agreement will be approved by the Initial Fund’s Board, including a majority of the trustees who are not “interested persons” (as defined in Section 2(a)(19) of the Act) of the Initial Fund and by the Initial Fund’s sole initial shareholder, in the manner required by Sections 15(a) and (c) of the Act. The Applicants are not seeking any exemptions from the provisions of the Act with respect to the Investment Management Agreement. Under the terms of the Investment Management Agreement, and subject to the authority of the Board, the Adviser will be responsible for the overall management of the Initial Fund’s activities, including investment strategies, investment goals, asset allocation, leverage limitations, reporting requirements and other guidelines in addition to the general monitoring of the Initial Fund’s portfolio, subject to the oversight of the Board. The Adviser will have sole discretion to make all investments. The Adviser’s address is 4600 S. Syracuse Street, 9th Floor, Denver, CO 802376.
From time to time, the Initial Fund may create additional classes of shares, the terms of which may differ from the other share classes in the following respects: (i) the amount of fees permitted by different distribution plans and/or different service fee arrangements; (ii) voting rights with respect to a distribution and/or service plan of a class; (iii) different class designations; (iv) the impact of any class expenses directly attributable to a particular class of shares allocated on a class basis as described in this Application; (v) any differences in dividends and net asset value resulting from differences in fees under a distribution plan and/or service fee arrangement or in class expenses; (vi) any EWCs or other sales load structure; and (vii) exchange or conversion privileges of the classes as permitted under the Act.
4
Each Fund will allocate all expenses incurred by it among the various classes of Shares based on the net assets of the Fund attributable to each such class, except that the net asset value and expenses of each class will reflect the expenses associated with the distribution and/or service plan of that class (if any), service fees attributable to that class (if any), including transfer agency fees, and any other incremental expenses of that class. Incremental expenses of a Fund attributable to a particular class are limited to (i) incremental transfer agent fees identified by the transfer agent as being attributable to that class of Shares; (ii) printing and postage expenses relating to preparing and distributing materials such as shareholder reports, prospectuses and proxies to current shareholders of that class of Shares; (iii) federal registration fees incurred with respect to shares of that class of Shares; (iv) blue sky fees incurred with respect to sales of that class of Shares; (v) expenses of administrative personnel and services as required to support the shareholders of that class; (vi) auditors’ fees, litigation expenses and other legal fees and expenses relating solely to that class of Shares; (vii) additional “trustees” fees incurred as a result of issues relating to that class of Shares; (viii) additional accounting expenses relating solely to that class of Shares; (ix) expenses incurred in connection with shareholder meetings as a result of issues relating to that class of Shares; and (x) any other incremental expenses subsequently identified that should be properly allocated to that class of Shares consistent with Rule 18f-3 under the Act. Because of the different distribution and/or service fees, and any other class expenses that may be attributable to each class of Shares, the net income attributable to, and the dividends payable on, each class of Shares may differ from each other. As a result, the net asset value per share of the classes may differ at times. Expenses of a Fund allocated to a particular class of Shares will be borne on a pro rata basis by each outstanding share of that class. Distribution and/or service fees will be paid pursuant to a distribution and/or service plan with respect to a class.
Applicants request exemptive relief to the extent that a Fund’s issuance and sale of multiple classes of Shares might be deemed to result in the issuance of a class of “senior security”7 within the meaning of Section 18(g) of the Act that would violate the provisions of Section 18(a)(2) of the Act, violate the equal voting provisions of Section 18(i) of the Act, and if more than one class of senior security were issued, violate Section 18(c) of the Act.
Applicants request exemptive relief from Rule 23c-3(b)(1) to the extent that rule is construed to prohibit the imposition of an EWC by the Funds.
7 Section 18(g) defines senior security to include any stock of a class having a priority over any other class as to distribution of assets or payment of dividends. Share classes that have different asset-based service or distribution charges have different total expenses and, thus, different net incomes. As a result, each class will have a different net asset value, receive a different distribution amount or both. A class with a higher net asset value may be considered to have a priority as to the distribution of assets. A class receiving a higher dividend may be considered to have a priority over classes with lower dividends. Exemption for Open-End Management Investment Companies Issuing Multiple Classes of Shares; Disclosure by Multiple Class and MasterFeeder Funds; Class Voting on Distribution Plans, Inv. Co. Rel. No. 20915 (Feb. 23, 1995) at n. 17 and accompanying text.
5
Asset-Based Distribution and/or Service Fees
Applicants request an Order pursuant to Section 17(d) and Rule 17d-1 to the extent necessary for a Fund to pay asset-based distribution and/or service fees.
Pursuant to Section 6(c) of the Act, the Commission may, by order on application, conditionally or unconditionally, exempt any person, security or transaction, or any class or classes of persons, securities or transactions from any provision or provisions of the Act or from any rule or regulation under the Act, if and to the extent that the exemption is necessary or appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the Act.
Section 23(c) of the Act provides, in relevant part, that no registered closed-end investment company shall purchase securities of which it is the issuer, except: (a) on a securities exchange or other open market; (b) pursuant to tenders, after reasonable opportunity to submit tenders given to all holders of securities of the class to be purchased; or (c) under such other circumstances as the Commission may permit by rules and regulations or orders for the protection of investors.
Section 23(c)(3) provides that the Commission may issue an order that would permit a closed-end investment company to repurchase its shares in circumstances in which the repurchase is made in a manner or on a basis that does not unfairly discriminate against any holders of the class or classes of securities to be purchased.
Section 17(d) of the Act and Rule 17d-1 under the Act prohibit an affiliated person of a registered investment company or an affiliated person of such person, acting as principal, from participating in or effecting any transaction in connection with any joint enterprise or joint arrangement in which the investment company participates unless the Commission issues an order permitting the transaction. In reviewing applications submitted under Section 17(d) and Rule 17d-1, the Commission considers whether the participation of the investment company in a joint enterprise or joint arrangement is consistent with the provisions, policies and purposes of the Act, and the extent to which the participation is on a basis different from or less advantageous than that of other participants.
In its 1992 study entitled Protecting Investors: A Half Century of Investment Company Regulation (“Protecting Investors”), the Commission’s Division of Investment Management recognized that the Act imposes a rigid classification system that dictates many important regulatory consequences.8 For example, the characterization of a management company as “open-end” or “closed-end” has historically been crucial to the determination of the degree of liquidity the fund’s shareholders will have, and thus the liquidity required of the fund’s investments.
Furthermore, except as noted below, there has been no middle ground between the two extremes. Open-end funds have offered complete liquidity to their shareholders and thus required virtually complete liquidity of the underlying investments, while closed-end funds have been subject to requirements that in fact restrict the liquidity they are permitted to offer their investors. Under this bipolar system of regulation, neither form has provided the best vehicle for offering portfolios that have substantial, but not complete, liquidity. In Protecting Investors, the Staff determined that, given the changes in the securities market since 1940—in particular the emergence of semi-liquid investment opportunities—it was appropriate to re-examine the classification system and its regulatory requirements.9
The one exception to the liquid/illiquid dichotomy has been the so called “prime-rate funds.” These funds, first introduced in 1988, invest primarily in loans and provide shareholders liquidity through periodic tender offers or, more recently, periodic repurchases under Rule 23c-3.
Protecting Investors recognized that the rigidity of the Act’s classification system had become a limitation on sponsors’ ability to offer innovative products that would take advantage of the vast array of semi-liquid portfolio securities currently existing. The report also noted the pioneering efforts of the prime rate funds and the market success they had experienced.10 The report thus concluded that it would be appropriate to provide the opportunity for investment companies to “chart new territory” between the two extremes of the open-end and closed-end forms, consistent with the goals of investor protection.11 The Division of Investment Management thus recommended giving the industry the ability to employ new redemption and repurchase procedures, subject to Commission rulemaking and oversight.
8 SEC Staff Report, Protecting Investors: A Half Century of Investment Company Regulation (May 1992), at 421.
9 Id. at 424.
10 Id. at 439-40.
11 Id. at 424.
6
In accordance with this recommendation, and shortly after Protecting Investors was published, the Commission proposed for comment a new rule designed to assist the industry in this endeavor.12 The Commission proposed Rule 23c-3, which began from the closed-end, illiquid perspective under Section 23(c), and provided flexibility to increase shareholder liquidity through periodic repurchase offers under simplified procedures. Rule 23c-3 was adopted in April 1993.13
The prime rate funds were cited in both Protecting Investors and the Proposing Release as the prototype for the interval concept.14 Nonetheless, while the prime rate funds broke the path for innovation in this area, developments since the origin of these funds make further innovation appropriate. Ample precedent exists for the implementation of a multiple class system and the imposition of asset-based distribution and/or service fees for which the Funds seek relief. Since 1998, the Commission has granted relief to, among others, the following closed-end investment companies to issue multiple classes of shares, to impose EWCs and to impose distribution and/or service fees, e.g., iDirect Private Markets Fund, SEG Partners Long/Short Equity Fund, Coatue CTEK Fund, Capital Group KKR Multi-Sector+, Global X Venture Fund, HarbourVest Private Investments Fund, Privacore PCAAM Alternative Income Fund, TCW Private Asset Income Fund, Callodine Specialty Income Fund, Diamond Hill Securitized Credit Fund, Redwood Real Estate Income Fund, Wellington Global Multi-Strategy Fund, Aether Infrastructure & Natural Resources Fund, Alpha Alternative Assets Fund, John Hancock Asset-Based Lending Fund and John Hancock Investment Management LLC, Oaktree Diversified Income Fund Inc., PGIM Private Real Estate Fund, Inc., Bow River Capital Evergreen Fund, AFA Multi-Manager Credit Fund, BNY Mellon Alcentra Opportunistic Global Credit Income Fund, Calamos-Avenue Opportunities Fund, NB Crossroads Private Markets Access Fund LLC, First Eagle Credit Opportunities Fund, Primark Private Equity Investments Fund, 361 Social Infrastructure Fund; GSO Asset Management LLC, Resource Credit Income Fund; Keystone Private Income Fund, Hamilton Lane Private Assets Fund, KKR Credit Opportunities Portfolio, Conversus StepStone Private Markets, Prospect Capital Management L.P., Goldman Sachs Real Estate Diversified Income Fund, CIM Real Assets & Credit Fund, Hartford Schroders Opportunistic Income Fund, Axonic Alternative Income Fund, Principal Diversified Select Income Fund, American Beacon Sound Point Enhanced Income Fund, and BlackRock Credit Strategies Fund.15
12 Inv. Co. Act Rel. No. 18869 (Jul. 28, 1992) (the “Proposing Release”).
13 Inv. Co. Act Rel. No. 19399 (Apr. 7, 1993) (the “Adopting Release”). The Commission also had proposed Rule 22e-3, which began from the open-end, complete liquidity perspective under Section 22 of the Act, and permitted periodic or delayed, rather than constant liquidity. The Commission neither adopted nor withdrew proposed Rule 22e-3. To the Applicants’ knowledge, the Commission has taken no further action with respect to Rule 22e-3.
14 Protecting Investors at 439-40; Proposing Release at 27.
15 See, e.g., iDirect Private Markets Fund, et al., Inv. Co. Rel. Nos. 35474 (Feb. 21, 2025) (Notice) and 35497 (Mar. 14, 2025) (Order); SEG Partners Long/Short Equity Fund, et al., Inv. Co. Rel. Nos. 35466 (Feb. 6, 2025) (Notice) and 35491 (Mar. 4, 2025) (Order); Coatue CTEK Fund and Coatue Management, L.L.C., Inv. Co. Rel. Nos. 35417 (Dec. 13, 2024) (Notice) and 35443 (Jan. 8, 2025) (Order); Capital Group KKR Multi-Sector+, et al., Inv. Co. Rel. Nos. 35410 (Dec. 9, 2024) (Notice) and 35441 (Jan. 6, 2025) (Order); Global X Venture Fund and Global X Management Company, LLC, Inv. Co. Rel. Nos. 35408 (Dec. 9, 2024) (Notice) and 35440 (Jan. 6, 2025) (Order); HarbourVest Private Investments Fund and HarbourVest Registered Advisers L.P., Inv. Co. Rel. Nos. 35409 (Dec. 9, 2024) (Notice) and 35439 (Jan. 6, 2025) (Order); Privacore PCAAM Alternative Income Fund, et al., Inv. Co. Rel. Nos. 35403 (Nov. 27, 2024) (Notice) and 35431 (Dec. 26, 2024) (Order); TCW Private Asset Income Fund and TCW Asset Backed Finance Management Company LLC, Investment Co. Rel. Nos. 35401 (Nov. 26, 2024) (Notice) and 35429 (Dec. 23, 2024) (Order); Callodine Specialty Income Fund and Callodine Capital Management, LP, Investment Co. Rel. Nos. 35399 (Nov. 26, 2024) (Notice) and 35428 (Dec. 23, 2024) (Order); Diamond Hill Securitized Credit Fund and Diamond Hill Capital Management, Inc., Inv. Co. Rel. Nos. 35385 (Nov. 14, 2024) (Notice) and 35414 (Dec. 10, 2024) (Order); Redwood Real Estate Income Fund and Redwood Investment Management, LLC, Inv. Co. Rel. Nos. 35382 (Nov. 12, 2024) (Notice) and 35413 (Dec. 10, 2024) (Order); Wellington Global Multi-Strategy Fund and Wellington Management Company LLP, Inv. Co. Rel. Nos. 35317 (Sept. 10, 2024) (Notice) and 35353 (Oct. 8, 2024) (Order); Aether Infrastructure & Natural Resources Fund, et al., Inv. Co. Rel. Nos. 35168 (Apr. 10, 2024) (Notice) and 35186 (May 7, 2024) (Order); Alpha Alternative Assets Fund and Alpha Growth Management LLC, Inv. Co. Rel. No. 34530 (Mar. 9, 2022) (Notice) and 34555 (Apr. 5, 2022) (Order); John Hancock Asset-Based Lending Fund and John Hancock Investment Management LLC, Inv. Co. Rel. No. 34491 (Jan. 31, 2022) (Notice) and 34524 (Mar. 3, 2022) (Order); Oaktree Fund Advisors, LLC and Oaktree Diversified Income Fund Inc., Inv. Co. Rel. No. 34436 (Dec. 10, 2021) (Notice) and 34464 (Jan. 5, 2022) (Order); PGIM Private Real Estate Fund, Inc., Inv. Co. Rel. No. 34434 (Dec. 3, 2021) (Notice) and 34455 (Dec. 29, 2021) (Order); Bow River Capital Evergreen Fund, et al., Inv. Co. Rel. No. 34421 (Nov. 19, 2021) (Notice) and 34442 (Dec. 15, 2021) (Order); AFA Multi-Manager Credit Fund and Alternative Fund Advisors, LLC, Inv. Co. Rel. No. 34414 (Nov. 2, 2021) (Notice) and 34430 (Dec. 1, 2021) (Order); BNY Mellon Alcentra Opportunistic Global Credit Income Fund and BNY Mellon Investment Adviser, Inc., Inv. Co. Rel. No. 34320 (Jun. 29, 2021) (Notice) and 34344 (Jul. 26, 2021) (Order); Calamos-Avenue Opportunities Fund and Calamos Avenue Management, LLC, Inv. Co. Rel. No. 34300 (Jun. 14, 2021) (Notice) and 34327 (Jul. 12, 2021) (Order); NB Crossroads Private Markets Access Fund LLC and Neuberger Berman Investment Advisers LLC, Inv. Co. Rel. No. 34094 (Nov. 13, 2020) (Notice) and 34132 (Dec. 8, 2020) (Order); First Eagle Credit Opportunities Fund, et al., Inv. Co. Rel. No. 34080 (Oct. 30, 2020) (Notice) and 34216 (Dec. 1, 2020) (Order); Primark Private Equity Investments Fund and Primark Advisors LLC, Inv. Co. Rel. No. 34054 (Oct. 20, 2020) (Notice) and 34098 (Nov. 17, 2020) (Order); 361 Social Infrastructure Fund and 361 Infrastructure Partners, LLC, Inv. Co. Rel. No. 34051 (Oct. 15, 2020) (Notice) and 34091 (Nov. 10, 2020) (Order); GSO Asset Management LLC and Blackstone Private Credit Fund, Inv. Co. Rel. No. 34011 (Sept. 14, 2020) (Notice) and 34044 (Oct. 6, 2020) (Order); Resource Credit Income Fund and Sierra Crest Investment Management LLC, Inv. Co. Rel. No. 34001 (Sept. 2, 2020) (Notice) and 34033 (Sept. 29, 2020) (Order); Owl Rock Capital Corporation II, et al., Inv. Co. Rel. No. 33972 (Aug. 17, 2020) (Notice) and 34012 (Sept. 15, 2020) (Order); Keystone Private Income Fund and Keystone National Group, LLC, Inv. Co. Rel. No. 33917 (Jul. 1, 2020) (Notice) and Inv. Co. Rel. No. 33957 (Jul. 28, 2020) (Order); Hamilton Lane Private Assets Fund and Hamilton Lane Advisors, L.L.C., Inv. Co. Rel. No. 33896 (Jun. 17, 2020) (Notice) and Inv. Co. Rel. No. 33926 (Jul. 14, 2020) (Order); KKR Credit Opportunities Portfolio and KKR Credit Advisors (US) LLC, Inv. Co. Rel. No. 33840 (Apr. 16, 2020) (Notice) and Inv. Co. Rel. No. 33863 (May 12, 2020) (Order); Conversus StepStone Private Markets and StepStone Conversus LLC, Inv. Co. Rel. No. 33815 (Mar. 12, 2020) (Notice) and Inv. Co. Rel. No. 33851 (Apr. 23, 2020) (Order); Prospect Capital Management L.P., et al., Inv. Co. Rel. No. 33800 (Feb. 19, 2020) (Notice) and Inv. Co. Rel. No. 33822 (Mar. 24, 2020) (Order); Goldman Sachs Real Estate Diversified Income Fund, et al, Inv. Co. Rel. No. 33743 (Jan. 9, 2020) (Notice) and Inv. Co. Rel. No. 33797 (Feb. 4, 2020) (Order); CIM Real Assets & Credit Fund, et al., Inv. Co. Rel. No. 33630 (Sept. 23, 2019) (Notice) and Inv. Co. Rel. No. 33659 (Oct. 22, 2019) (Order); Hartford Schroders Opportunistic Income Fund and Hartford Funds Management Company, LLC, Inv. Co. Rel. No. 33610 (Aug. 27, 2019) (Notice) and Inv. Co. Rel. No. 33632 (Sept. 24, 2019) (Order); Axonic Alternative Income Fund and Axonic Capital LLC, Inv. Co. Rel. No. 33508 (Jun. 13, 2019) (Notice) and Inv. Co. Rel. No. 33553 (Jul. 15, 2019) (Order); Principal Diversified Select Income Fund, et al., Inv. Co. Rel. No. 33441 (Apr. 8, 2019) (Notice) and Inv. Co. Rel. No. 33466 (May 6, 2019) (Order); American Beacon Sound Point Enhanced Income Fund, et al., Inv. Co. Rel. No. 33393 (Mar. 8, 2019) (Notice) and Inv. Co. Rel. No. 33439 (Apr. 3, 2019) (Order); BlackRock Credit Strategies Fund, et al., Inv. Co. Rel. No. 33388 (Mar. 5, 2019) (Notice) and Inv. Co. Rel. No. 33437 (Apr. 2, 2019) (Order).
7
Multiple Classes of Shares - Exemptions from Sections 18(a)(2), 18(c) and 18(i) of the Act
The Applicants request exemptive relief to the extent that the Initial Fund’s issuance and sale of multiple classes of Shares of beneficial interest might be deemed to result in the issuance of a class of “senior security”16 within the meaning of Section 18(g) of the Act that would violate the provisions of Section 18(a)(2) of the Act, violate the equal voting provisions of Section 18(i) of the Act, and if more than one class of senior security were issued, violate Section 18(c) of the Act.
A registered closed-end investment company may have only one class of senior security representing indebtedness and only one class of stock that is a senior security. With respect to the class of stock that is a senior security, i.e., preferred stock, the preferred stock must have certain rights as described in Section 18(a)(2). Section 18(a)(2)(A) and (B) makes it unlawful for a registered closed-end investment company to issue a senior security that is a stock unless (a) immediately after such issuance it will have an asset coverage of at least 200% and (b) provision is made to prohibit the declaration of any distribution, upon its common stock, or the purchase of any such common stock, unless in every such case such senior security has at the time of the declaration of any such distribution, or at the time of any such purchase, an asset coverage of at least 200% after deducting the amount of such distribution or purchase price, as the case may be. Section 18(a)(2)(C) and (D) makes it unlawful for a registered closed-end investment company to issue a senior security that is a stock unless stockholders have the right, voting separately as a class, to: (i) elect at least two directors at all times; (ii) elect a majority of the directors if at any time dividends on such class of securities have been unpaid in an amount equal to two full years’ dividends on such securities; and (iii) approve any plan of reorganization adversely affecting their securities or any action requiring a vote of security holders as set forth in section 13(a).17 Section 18(a)(2)(E) requires that such class of stock will have “complete priority over any other class as to distribution of assets and payment of dividends, which dividends shall be cumulative.”
Section 18(i) provides: “Except as provided in subsection (a) of this section, or as otherwise required by law, every share of stock hereafter issued by a registered management company ... shall be voting stock and have equal voting rights with every other outstanding voting stock: Provided, That this subsection shall not apply ... to shares issued in accordance with any rules, regulations, or orders which the Commission may make permitting such issue.”
Finally, Section 18(c) of the Act provides that “it shall be unlawful for any registered closed-end investment company ... to issue or sell any senior security which is a stock if immediately thereafter such company will have outstanding more than one class of senior security which is a stock,” except that “any such class of ... stock may be issued in one or more series, provided, that no such series shall have a preference or priority over any other series upon the distribution of the assets of such registered closed-end company or in respect of the payment of interest or dividends...”
The multi-class system proposed herein may result in Shares of a class having priority over another class as to payment of dividends and having unequal voting rights, because under the proposed system (i) shareholders of different classes would pay different distribution and/or service fees (and related costs as described above), different administrative fees and any other incremental expenses that should be properly allocated to a particular class, and (ii) each class would be entitled to exclusive voting rights with respect to matters solely related to that class.
16 See note 7.
17 Section 13(a) requires, among other things, that a majority of a fund’s outstanding voting securities must approve converting to a mutual fund format.
8
Applicants believe that the implementation of the proposed multi-class system will enhance shareholder options. Under a multiclass system, an investor can choose the method of purchasing Shares that is most beneficial given the amount of their purchase, the length of time the investor expects to hold their Shares, and other relevant circumstances. The proposed arrangements would permit a Fund to both facilitate the distribution of its securities and provide investors with a broader choice of shareholder services.
By contrast, if a Fund were required to organize separate investment portfolios for each class of Shares, the success of the new portfolios might be limited. Unless each new portfolio grew at a sufficient rate and to a sufficient size, it could be faced with liquidity and diversification problems that would prevent the portfolio from producing a favorable return.
Under the proposal, owners of each class of Shares may be relieved under the multi-class system of a portion of the fixed costs normally associated with investing in investment companies because these costs potentially would be spread over a greater number of Shares than they would be if the classes were separate funds or portfolios. As a Fund grows in volume of assets, the investors will derive benefits from economies of scale that would not be available at smaller volumes. The Commission has long recognized that multiple class arrangements can be structured so that the concerns underlying the Act’s “senior security” provisions are satisfied. After having granted numerous exemptive orders (“multiple class exemptive orders”) to open-end investment companies permitting those funds to issue two or more classes of shares representing interests in the same portfolio,18 the Commission adopted Rule 18f-3 under the Act in 1995, which now permits open-end funds to maintain or create multiple classes without seeking individual exemptive orders, as long as certain conditions are met.19
Applicants believe that the proposed closed-end investment company multiple class structure does not raise concerns underlying Section 18 of the Act to any greater degree than open-end investment companies’ multiple class structures. The proposed multiple class structure does not relate to borrowings and will not adversely affect a Fund’s assets. In addition, the proposed structure will not increase the speculative character of each Fund’s Shares. Applicants also believe that the proposed allocation of expenses relating to distribution and/or services and voting rights is equitable and will not discriminate against any group or class of shareholders.
Applicants believe that the rationale for, and conditions contained in, Rule 18f-3 are as applicable to a closed-end investment company seeking to offer multiple classes of common shares with varying distribution and/or service arrangements in a single portfolio as they are to open-end funds. Each Fund will comply with the provisions of Rule 18f-3 as if it were an open-end investment company, including, among others, its provisions relating to differences in expenses, special allocations of other expenses, voting rights, conversions and exchanges and disclosures. In fact, each Fund in many ways resembles an open-end fund in its manner of operation and in the distribution of its common Shares.
18 See, e.g., Sierra Trust Funds, et al., Inv. Co. Act Rel. No. 20093 (Feb. 23, 1994) (Notice) and Inv. Co. Act Rel. No. 20153 (Mar. 22, 1994) (Order); see also Exemption for Open-End Management Investment Companies Issuing Multiple Classes of Shares; Disclosure by Multiple Class and Master-Feeder Funds, Inv. Co. Act Rel. No. 19955 (Dec. 15, 1993).
19 See Inv. Co. Act Rel. No. 20915 (Feb. 23, 1995). As adopted, Rule 18f-3 creates an exemption for mutual funds that issue multiple classes of shares with varying arrangements for the distribution of securities and the provision of services to shareholders. In connection with the adoption of Rule 18f-3, the Commission also amended Rule 12b-1 under the Act to clarify that each class of shares must have separate 12b-1 plan provisions. Moreover, any action on the 12b-1 plan (i.e., director or shareholder approval) must take place separately for each class. The Commission has adopted amendments to Rule 18f-3 that expand and clarify the methods by which a multiple class fund may allocate income, gains, losses and expenses and that clarify the shareholder voting provisions of the rule.
9
In particular, the Funds will offer their Shares continuously at a price based on net asset value, plus any applicable front-end load. Differences among classes will, as detailed above, relate largely to differences in distribution and/or service arrangements. Applicants note that open-end and closed-end funds are subject to different technical provisions governing the issuance of senior securities. However, those technical differences do not appear relevant here. Although closed-end funds may not issue multiple classes of common shares without exemptive relief, the Commission has granted specific exemptive relief to similarly situated closed-end funds.20 Provisions regulating the issuance by closed-end funds of debt or preferred stock should have no bearing on an application by a closed-end fund for an exemptive order permitting the issuance of multiple classes of common stock. Therefore, Applicants propose to base the conditions under which the Funds would issue multiple classes of shares of beneficial interest on those contained in Rule 18f-3.
Applicants believe that the proposed allocation of expenses and voting rights relating to the asset-based distribution and/or service fees applicable to the different classes of Shares of each Fund in the manner described above is equitable and would not discriminate against any group of shareholders. Each Applicant is aware of the need for full disclosure of the proposed multi-class system in each Fund’s prospectus and of the differences among the various classes and the different expenses of each class of Shares offered. Each Fund will include in its prospectus disclosure of the fees, expenses and other characteristics of each class of Shares offered for sale by the prospectus, as is required for open-end multi-class funds under Form N-1A.21 Applicants also note that the Commission has adopted rule and form amendments to require registered open-end management investment companies to disclose fund expenses borne by shareholders during the reporting period in shareholder reports22 and to describe in their prospectuses any arrangements that result in breakpoints in, or elimination of, sales loads.23 Each Fund will include these disclosures in its shareholder reports and prospectus.
Each Fund will comply with any requirements that the Commission or FINRA may adopt regarding disclosure at the point of sale and in transaction confirmations about the costs and conflicts of interest arising out of the distribution of open-end investment company shares, and regarding prospectus disclosure of sales loads and revenue sharing arrangements, as if those requirements applied to each Fund. In addition, each Fund will contractually require that any distributor of the Fund’s Shares comply with such requirements in connection with the distribution of such Fund’s Shares.
20 See Alpha Alternative Assets Fund et al., supra note 15; John Hancock Asset-Based Lending Fund et al., supra note 15; Oaktree Fund Advisors, LLC et al., supra note 15; PGIM Private Real Estate Fund, Inc. et al., supra note 15; Bow River Capital Evergreen Fund, et al., supra note 15; AFA Multi-Manager Credit Fund et al., supra note 15; BNY Mellon Alcentra Opportunistic Global Credit Income Fund et al., supra note 15; Calamos-Avenue Opportunities Fund et al., supra note 15; NB Crossroads Private Markets Access Fund LLC et al., supra note 15; First Eagle Credit Opportunities Fund et al., supra note 15; Primark Private Equity Investments Fund et al., supra note 15; 361 Social Infrastructure Fund et al., supra note 15; GSO Asset Management LLC et al., supra note 15; Resource Credit Income Fund et al., supra note 15; Keystone Private Income Fund et al., supra note 15; Hamilton Lane Private Assets Fund et al., supra note 15; KKR Credit Opportunities Portfolio et al., supra note 15; Conversus StepStone Private Markets et al., supra note 15; Prospect Capital Management L.P. et al., supra note 15; Goldman Sachs Real Estate Diversified Income Fund et al., supra note 15; CIM Real Assets & Credit Fund et al., supra note 15; Hartford Schroders Opportunistic Income Fund et al., supra note 15; Axonic Alternative Income Fund et al., supra note 15; Principal Diversified Select Income Fund et al., supra note 15; American Beacon Sound Point Enhanced Income Fund et al., supra note 15; and BlackRock Credit Strategies Fund et al., supra note 15.
21 In all respects other than class-by-class disclosure, each Fund will comply with the requirements of Form N-2.
22 Shareholder Reports and Quarterly Portfolio Disclosure of Registered Management Investment Companies, Inv. Co. Act Rel. No. 26372 (Feb. 27, 2004) (adopting release).
23 Disclosure of Breakpoint Discounts by Mutual Funds, Inv. Co. Act Rel. No. 26464 (Jun. 7, 2004) (adopting release).
10
In June 2006, the Commission adopted enhanced fee disclosure requirements for fund of funds including registered funds of hedge funds.24 Applicants will comply with all such applicable disclosure requirements.
The requested relief is similar to the exemptions discussed above granted by the Commission to, among others, iDirect Private Markets Fund, SEG Partners Long/Short Equity Fund, Coatue CTEK Fund, Capital Group KKR Multi-Sector+, Global X Venture Fund, HarbourVest Private Investments Fund, Privacore PCAAM Alternative Income Fund, TCW Private Asset Income Fund, Callodine Specialty Income Fund, Diamond Hill Securitized Credit Fund, Redwood Real Estate Income Fund, Wellington Global Multi-Strategy Fund, Aether Infrastructure & Natural Resources Fund, Alpha Alternative Assets Fund, John Hancock Asset-Based Lending Fund, Oaktree Diversified Income Fund Inc., PGIM Private Real Estate Fund, Inc., Bow River Capital Evergreen Fund, AFA Multi-Manager Credit Fund, BNY Mellon Alcentra Opportunistic Global Credit Income Fund, Calamos-Avenue Opportunities Fund, NB Crossroads Private Markets Access Fund LLC, First Eagle Credit Opportunities Fund, Primark Private Equity Investments Fund, 361 Social Infrastructure Fund, GSO Asset Management LLC, Resource Credit Income Fund, Keystone Private Income Fund, Hamilton Lane Private Assets Fund, KKR Credit Opportunities Portfolio, Conversus StepStone Private Markets, Prospect Capital Management L.P., Goldman Sachs Real Estate Diversified Income Fund, CIM Real Assets & Credit Fund, Hartford Schroders Opportunistic Income Fund, Axonic Alternative Income Fund, Principal Diversified Select Income Fund, American Beacon Sound Point Enhanced Income Fund, and BlackRock Credit Strategies Fund.25 Accordingly, the Applicants believe there is ample precedent for the implementation of a multi-class system.
Rule 23c-3 under the Act permits an interval fund to make repurchase offers of between 5 and 25 percent of its outstanding shares at net asset value at periodic intervals pursuant to a fundamental policy of the interval fund. Rule 23c-3(b)(1) requires an interval fund to repurchase shares at net asset value and expressly permits the interval fund to deduct from repurchase proceeds only a repurchase fee, not to exceed two percent of proceeds, that is paid to the interval fund and is reasonably intended to compensate the fund for expenses directly related to the repurchase.
24 Fund of Funds Investments, Inv. Co. Act Rel. Nos. 26198 (Oct. 1, 2003) (proposing release) and 27399 (Jun. 20, 2006) (adopting release). See also Rules 12d1-1, et seq. of the Act.
25 See iDirect Private Markets Fund, supra note 15; SEG Partners Long/Short Equity Fund, supra note 15; Coatue CTEK Fund, supra note 15; Capital Group KKR Multi-Sector+, supra note 15; Global X Venture Fund, supra note 15; HarbourVest Private Investments Fund, supra note 15; Privacore PCAAM Alternative Income Fund, supra note 15; TCW Private Asset Income Fund, supra note 15; Callodine Specialty Income Fund, supra note 15; Diamond Hill Securitized Credit Fund, supra note 15; Redwood Real Estate Income Fund, supra note 15; Wellington Global Multi-Strategy Fund, supra note 15; Aether Infrastructure & Natural Resources Fund, supra note 15; Alpha Alternative Assets Fund et al., supra note 15; John Hancock Asset-Based Lending Fund et al., supra note 15; Oaktree Fund Advisors, LLC et al., supra note 15; PGIM Private Real Estate Fund, Inc. et al., supra note 15; Bow River Capital Evergreen Fund, et al., supra note 15; AFA Multi-Manager Credit Fund et al., supra note 15; BNY Mellon Alcentra Opportunistic Global Credit Income Fund et al., supra note 15; Calamos-Avenue Opportunities Fund et al., supra note 15; NB Crossroads Private Markets Access Fund LLC et al., supra note 15; First Eagle Credit Opportunities Fund et al., supra note 15; Primark Private Equity Investments Fund et al., supra note 15; 361 Social Infrastructure Fund et al., supra note 15; GSO Asset Management LLC et al., supra note 15; Resource Credit Income Fund et al., supra note 15; Keystone Private Income Fund et al., supra note 15; Hamilton Lane Private Assets Fund et al., supra note 15; KKR Credit Opportunities Portfolio et al., supra note 15; Conversus StepStone Private Markets et al., supra note 15; Prospect Capital Management L.P. et al., supra note 15; Goldman Sachs Real Estate Diversified Income Fund et al., supra note 15; CIM Real Assets & Credit Fund et al., supra note 15; Hartford Schroders Opportunistic Income Fund et al., supra note 15; Axonic Alternative Income Fund et al., supra note 15; Principal Diversified Select Income Fund et al., supra note 15; American Beacon Sound Point Enhanced Income Fund et al., supra note 15; and BlackRock Credit Strategies Fund et al., supra note 15.
11
The Applicants seek relief from this requirement of Rule 23c-3(b)(1) to the extent necessary for the Funds to impose EWCs, which are distribution-related fees payable to a distributor, on Shares submitted for repurchase that have been held for less than a specified period. The Funds are seeking to impose EWCs that are the functional equivalent of the CDSLs that open-end investment companies may charge under Rule 6c-10 under the Act. The Funds intend to assess EWCs in much the same way non-interval funds currently assess EWCs. As more fully described below, these charges will be paid to the distributor and are functionally similar to CDSLs imposed by open-end funds. Relief to permit the imposition of EWCs would be consistent with the approach the Commission has taken with respect to CDSLs imposed by open-end funds which offer their securities continuously, as the Fund does for its Shares of beneficial interest. Any EWCs imposed by the Funds will comply with Rule 6c-10 under the Act as if the rule were applicable to closed-end funds.
In the Adopting Release, the Commission stated that “the requirement [of Rule 23c-3(b)(1)] that repurchases take place at net asset value and the limitation of repurchase fees to two percent implicitly preclude the imposition” of CDSLs.26 The Commission stated, however, that even though it was not proposing any provisions regarding the use of CDSLs by interval funds, “Such consideration may be appropriate after the Commission considers whether to adopt proposed Rule 6c-10, which would permit the imposition of CDSLs by open-end companies, and has the opportunity to monitor the effects of the NASD sales charge rule upon distribution charges of open-end companies, which goes into effect in July of [1993].”27
Since adopting Rule 23c-3, the Commission has adopted Rule 6c-10. That rule adopts a flexible approach, and permits openend funds to charge CDSLs as long as (i) the amount of the CDSL does not exceed a specified percentage of net asset value or offering price at the time of the purchase, (ii) the terms of the sales load comply with the provisions of the FINRA Sales Charge Rule, governing sales charges for open-end funds and (iii) deferred sales loads are imposed in a non-discriminatory fashion (scheduled variations or elimination of sales loads in accordance with Rule 22d-1 are permitted). Rule 6c-10 is grounded in policy considerations supporting the employment of CDSLs where there are adequate safeguards for the investor. These same policy considerations support imposition of EWCs in the interval fund context and are a solid basis for the Commission to grant exemptive relief to permit interval funds to impose EWCs.
With respect to the policy considerations supporting imposition of EWCs, as the Commission recognized when it promulgated Rule 23c-3, several non-interval funds that had been making periodic repurchase offers to their shareholders imposed EWCs comparable to CDSLs.28 Traditional closed-end funds, which do not regularly offer to repurchase shares, do not generally impose EWCs although nothing in the Act would preclude them from doing so. Section 23(c)(2) of the Act does not regulate the price at which shares may be purchased in a tender offer. When a closed-end fund continuously offers its shares at net asset value and provides its shareholders with periodic opportunities to tender their shares, however, the fund’s distributor (like the distributor of an open-end fund) may need to recover distribution costs from shareholders who exit their investments early. Moreover, like open-end funds, interval funds need to discourage investors from moving their money quickly in and out of the fund, a practice that imposes costs on all shareholders.
26 Adopting Release. Rule 23c-3(b)(l) provides in pertinent part: “The company shall repurchase the stock for cash at net asset value determined on the repurchase pricing date... The company may deduct from the repurchase proceeds only a repurchase fee not to exceed two percent of the proceeds, that is paid to the company for expenses directly related to the repurchase.”
27 Id.
28 Adopting Release, Section II.A.7.c. Section 23(c)(2) does not require that repurchases be made at net asset value.
12
Neither the Proposing Release nor the Adopting Release suggests that the purpose underlying Rule 23c-3(b)(l)’s requirements that repurchases take place at net asset value is to preclude interval funds from imposing EWCs. Rather, its purpose is to prohibit funds from discriminating among shareholders in prices paid for shares tendered in a repurchase offer.29 The best price rules under Rule 23c-l(a)(9) under the Act and Rule 13e-4(f)(8)(ii) under the Exchange Act address this same concern. The Commission staff does not construe those rules to forbid closed-end funds making repurchase offers under Section 23(c)(2) from imposing EWCs.30 There is, in the Applicants’ view, no rational basis to apply Rule 23c-3(b)(l)’s requirements differently. Moreover, each Fund will be treating all similarly situated shareholders the same. Each Fund will disclose to all shareholders the applicability of the EWCs (and any scheduled waivers of the EWCs) to each category of shareholders and, as a result, no inequitable treatment of shareholders with respect to the price paid in a repurchase offer will result. Each Fund also will disclose EWCs in accordance with the requirements of Form N-1A concerning CDSLs.
As required by Rule 6c-10 for open-end funds, each Fund relying on the Order will comply with shareholder service and distribution fee limits imposed by the FINRA Sales Charge Rule on the same basis as if it were an open-end investment company. In this regard, a Fund will pay service and distribution fees pursuant to plans that are designed to meet the requirements of the FINRA Sales Charge Rule on the same basis as if it were an open-end investment company subject to that rule.
The Commission has previously granted the same type of exemptive relief requested herein.31 In each case, the Commission granted relief from Rule 23c-3(b)(l) to an interval fund to charge EWCs to certain shareholders who tender for repurchase shares that have been held for less than a specified period.
29 See Proposing Release, Section II.A.7; Adopting Release, Section II.A.7.
30 See Adopting Release, Section II.A.7.c. (recognizing that several closed-end funds making periodic repurchases pursuant to Section 23(c)(2) impose early withdrawal charges).
31 See iDirect Private Markets Fund, supra note 15; SEG Partners Long/Short Equity Fund, supra note 15; Coatue CTEK Fund, supra note 15; Capital Group KKR Multi-Sector+, supra note 15; Global X Venture Fund, supra note 15; HarbourVest Private Investments Fund, supra note 15; Privacore PCAAM Alternative Income Fund, supra note 15; TCW Private Asset Income Fund, supra note 15; Callodine Specialty Income Fund, supra note 15; Diamond Hill Securitized Credit Fund, supra note 15; Redwood Real Estate Income Fund, supra note 15; Wellington Global Multi-Strategy Fund, supra note 15; Aether Infrastructure & Natural Resources Fund, supra note 15; Alpha Alternative Assets Fund et al., supra note 15; John Hancock Asset-Based Lending Fund et al., supra note 15; Oaktree Fund Advisors, LLC et al., supra note 15; PGIM Private Real Estate Fund, Inc. et al., supra note 15; Bow River Capital Evergreen Fund, et al., supra note 15; AFA Multi-Manager Credit Fund et al., supra note 15; BNY Mellon Alcentra Opportunistic Global Credit Income Fund et al., supra note 15; Calamos-Avenue Opportunities Fund et al., supra note 15; NB Crossroads Private Markets Access Fund LLC et al., supra note 15; First Eagle Credit Opportunities Fund et al., supra note 15; Primark Private Equity Investments Fund et al., supra note 15; 361 Social Infrastructure Fund et al., supra note 15; GSO Asset Management LLC et al., supra note 15; Resource Credit Income Fund et al., supra note 15; Keystone Private Income Fund et al., supra note 15; Hamilton Lane Private Assets Fund et al., supra note 15; KKR Credit Opportunities Portfolio et al., supra note 15; Conversus StepStone Private Markets et al., supra note 15; Prospect Capital Management L.P. et al., supra note 15; Goldman Sachs Real Estate Diversified Income Fund et al., supra note 15; CIM Real Assets & Credit Fund et al., supra note 15; Hartford Schroders Opportunistic Income Fund et al., supra note 15; Axonic Alternative Income Fund et al., supra note 15; Principal Diversified Select Income Fund et al., supra note 15; American Beacon Sound Point Enhanced Income Fund et al., supra note 15; and BlackRock Credit Strategies Fund et al., supra note 15.
13
Each Fund may grant waivers of the EWCs on repurchases in connection with certain categories of shareholders or transactions established from time to time. Each Fund will apply the EWCs (and any waivers, scheduled variations or eliminations of the EWCs) uniformly to all shareholders in a given class and consistently with the requirements of Rule 22d-1 under the Act as if the Funds were open-end investment companies. The Shares that benefit from such waivers are less likely to be the cause of rapid turnover in Shares of a Fund, particularly where there are also important policy reasons to waive the EWCs, such as when Shares are tendered for repurchase due to the death, disability or retirement of the shareholder. Events such as death, disability or retirement are not likely to cause high turnover in Shares of a Fund, and financial needs on the part of the shareholder or the shareholder’s family are often precipitated by such events. The EWCs may also be waived in connection with a number of additional circumstances, including the following repurchases of Shares held by employer sponsored benefit plans: (i) repurchases to satisfy participant loan advances; (ii) repurchases in connection with distributions qualifying under the hardship provisions of the Internal Revenue Code of 1986, as amended; and (iii) repurchases representing returns of excess contributions to such plans. Furthermore, if a distributor has not incurred significant promotional expenses (by making up-front payments to selling dealers) in connection with attracting shareholders in a particular category to a Fund, the waiver of the EWCs works to shareholders’ advantage while not harming the distributor economically.
In adopting amended Rule 22d-1 in February 1985, the Commission recognized that the adoption of Rule 22c-1 to “require forward pricing of fund shares largely dispelled concerns about share dilution.” Furthermore, “the sales load variations that have been instituted [through Rules 22d-1 through 22d-5 and exemptive orders prior to February 1985] have improved the competitive environment for the sale of fund shares without disrupting the distribution system for the sale of those shares.”32 In light of these circumstances, the Commission believed that “it is appropriate to permit a broader range of scheduled variation” as permitted in amended Rule 22d-1.33 Rule 22d-1 permits open-end funds to sell their shares at prices that reflect scheduled “variations in, or elimination of, the sales load to particular classes of investors or transactions” provided that the conditions of the rule are met. When Rule 22d-1 was adopted, the status of CDSLs for open-end funds and waivers of those charges were not covered by any rule and were the subject of exemptive orders. Rule 6c-10 permitting CDSLs for open-end funds, adopted in April 1995, permits scheduled variations in, or elimination of, CDSLs for a particular class of shareholders or transactions, provided that the conditions of Rule 22d-1 are satisfied.34 The same policy concerns and competitive benefits applicable to scheduled variations in or elimination of sales loads for open-end funds are applicable to interval funds and the same safeguards built into Rules 22d-1 and 6c-10 that protect the shareholders of open-end funds will protect the shareholders of interval funds so long as interval funds comply with those rules as though applicable to interval funds.
The Applicants submit that it would be impracticable and contrary to the purpose of Rule 23c-3 to preclude interval funds from providing for scheduled variations in, or elimination of, EWCs, subject to appropriate safeguards. For the reasons stated above, Applicants submit that the exemptions requested under Section 6(c) are necessary and appropriate in the public interest and are consistent with the protection of investors and the purposes fairly intended by the policy and provision of the Act.
32 Inv. Co. Act Rel. No. 14390 (Feb. 2, 1985).
33 Id.
34 Rule 22d-1 requires that the scheduled variations in or elimination of the sales load must apply uniformly to all offerees in the class specified and the company must disclose to existing shareholders and prospective investors adequate information concerning any scheduled variation, revise its prospectus and statement of additional information to describe any new variation before making it available to purchasers, and advise existing shareholders of any new variation within one year of when first made available.
14
Asset-Based Distribution and/or Service Fees
Applicants request relief from the provisions of Section 17(d) of the Act and Rule 17d-1 thereunder, to the extent necessary to permit the Funds to impose asset-based distribution and/or service fees (in a manner analogous to Rule 12b-1 fees for an open-end investment company). Section 12(b) of the Act and Rule 12b-1 thereunder do not apply to closed-end investment companies. Accordingly, no provisions of the Act or the rules thereunder explicitly limits the ability of a closed-end fund to impose a distribution and/or service fee.35
Section 17(d) of the Act prohibits an affiliated person of a registered investment company or an affiliated person of such person, acting as principal, from effecting any transaction in which such registered company is a joint, or a joint and several, participant, in contravention of Commission regulations. Rule 17d-1 provides that no joint transaction covered by the rule may be consummated unless the Commission issues an order upon application.
In reviewing applications pursuant to Section 17(d) and Rule 17d-1, the Commission considers whether an investment company’s participation in a joint enterprise or joint arrangement is consistent with the provisions, policies and purposes of the Act, and the extent to which the participation is on a basis different from or less advantageous than that of other participants. Section 17(d) of the Act is intended to prevent or limit abuses arising from conflicts of interest; however, Section 17(d) itself does not prohibit any specific activities, but instead, authorizes the Commission to approve rules to limit or prevent an investment company from being a joint participant on a different or less advantageous basis than other participants. Under Rule 17d-1, it is unlawful for an affiliated person, acting as principal, to participate in or effect any transaction in connection with a joint enterprise or other joint arrangement in which the investment company is a participant, without prior Commission approval. The protections provided for in Section 17(d) essentially allow the Commission to set standards for all transactions concerning an investment company and an affiliate which could be construed as self-dealing or involve overreaching by the affiliate to the detriment of the investment company.
The protections developed and approved by the Commission for open-end investment companies in Rule 12b-1 will be complied with by each Fund in connection with its plan with respect to each class of Shares as if the Fund were an open-end management investment company. Therefore, the Funds will participate in substantially the same way and under substantially the same conditions as would be the case with an open-end investment company imposing asset-based distribution and/or service fees under Rule 12b-1.
Applicants note that, at the same time the Commission adopted Rule 12b-1,36 it also adopted Rule 17d-3 to provide an exemption from Section 17(d) and Rule 17d-l to the extent necessary for arrangements between open-end funds and their affiliated persons or principal underwriters (or affiliated persons of such persons or principal underwriters) whereby payments are made by the open-end fund with respect to distribution, if such agreements are entered into in compliance with Rule 12b-l. In its adopting release, the Commission stated as follows:
The Commission wishes to emphasize that it has no intention of categorizing certain transactions as raising the applicability of Section 17(d) and Rule 17d-3 of the Act. The Commission’s only comment is that to the extent that arrangements in which a fund pays for its distribution costs could involve the fund in a ‘joint enterprise’ with an affiliated person, and if such arrangements were entered into in compliance with Rule 12b-1, the Commission sees no need for prior Commission review and approval of the arrangements.37
35 Applicants do not concede that Section 17(d) applies to the asset-based distribution and/or service fees discussed herein, but requests this exemption to eliminate any uncertainty.
36 See Bearing of Distribution Expenses by Mutual Funds, Inv. Co. Act Rel. No. 11414 (Oct. 28, 1980).
37 Id.
15
As closed-end management investment companies, the Funds may not rely on Rule 17d-3. However, in light of the foregoing, Applicants believe any Section 17(d) concerns the Commission might have in connection with a Fund’s financing the distribution of its Shares should be resolved by the Fund’s undertaking to comply with the provisions of Rules 12b-1 and 17d-3 as if those rules applied to closed-end investment companies. Accordingly, the Funds will comply with Rules 12b-1 and 17d-3 as if those rules applied to closedend investment companies. The Funds represent that the Funds’ imposition of asset-based distribution and/or service fees is consistent with factors considered by the Commission in reviewing applications for relief from Section 17(d) of the Act and Rule 17d-1 thereunder (i.e., that the imposition of such fees as described is consistent with the provisions, policies and purposes of the Act and does not involve participation on a basis different from or less advantageous than that of other participants).
Applicants agree that any order granting the requested relief will be subject to the following condition:
Each Fund relying on the Order will comply with the provisions of Rules 6c-10, 12b-1, 17d-3, 18f-3, 22d-1, and, where applicable, 11a-3 under the Act, as amended from time to time, as if those rules applied to closed-end management investment companies, and will comply with the FINRA Sales Charge Rule, as amended from time to time, as if that rule applied to all closed-end management investment companies.
The Initial Fund’s Declaration of Trust empowers the Board of the Initial Fund to establish different classes of Shares and to take any other action necessary to accomplish the establishment and creation of such classes of Shares. The Board has adopted resolutions, attached as Exhibit A, authorizing the Initial Fund’s officers to file the Application with the Commission.
For the reasons stated above, Applicants submit that the exemptions requested are necessary and appropriate in the public interest and are consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the Act. Applicants further submit that the relief requested pursuant to Section 23(c)(3) will be consistent with the protection of investors and will ensure that Applicants do not unfairly discriminate against any holders of the class of securities to be purchased. Applicants desire that the Commission issue the requested Order pursuant to Rule 0-5 under the Act without conducting a hearing.
Applicants submit that the exemptions requested conform substantially to the precedent cited herein.38
38 See iDirect Private Markets Fund, supra note 15; SEG Partners Long/Short Equity Fund, supra note 15; Coatue CTEK Fund, supra note 15; Capital Group KKR Multi-Sector+, supra note 15; Global X Venture Fund, supra note 15; HarbourVest Private Investments Fund, supra note 15; Privacore PCAAM Alternative Income Fund, supra note 15; TCW Private Asset Income Fund, supra note 15; Callodine Specialty Income Fund, supra note 15; Diamond Hill Securitized Credit Fund, supra note 15; Redwood Real Estate Income Fund, supra note 15; Wellington Global Multi-Strategy Fund, supra note 15; Aether Infrastructure & Natural Resources Fund, supra note 15; Alpha Alternative Assets Fund et al., supra note 15; John Hancock Asset-Based Lending Fund et al., supra note 15; Oaktree Fund Advisors, LLC et al., supra note 15; PGIM Private Real Estate Fund, Inc. et al., supra note 15; Bow River Capital Evergreen Fund, et al., supra note 15; AFA Multi-Manager Credit Fund et al., supra note 15; BNY Mellon Alcentra Opportunistic Global Credit Income Fund et al., supra note 15; Calamos-Avenue Opportunities Fund et al., supra note 15; NB Crossroads Private Markets Access Fund LLC et al., supra note 15; First Eagle Credit Opportunities Fund et al., supra note 15; Primark Private Equity Investments Fund et al., supra note 15; 361 Social Infrastructure Fund et al., supra note 15; GSO Asset Management LLC et al., supra note 15; Resource Credit Income Fund et al., supra note 15; Keystone Private Income Fund et al., supra note 15; Hamilton Lane Private Assets Fund et al., supra note 15; KKR Credit Opportunities Portfolio et al., supra note 15; Conversus StepStone Private Markets et al., supra note 15; Prospect Capital Management L.P. et al., supra note 15; Goldman Sachs Real Estate Diversified Income Fund et al., supra note 15; CIM Real Assets & Credit Fund et al., supra note 15; Hartford Schroders Opportunistic Income Fund et al., supra note 15; Axonic Alternative Income Fund et al., supra note 15; Principal Diversified Select Income Fund et al., supra note 15; American Beacon Sound Point Enhanced Income Fund et al., supra note 15; and BlackRock Credit Strategies Fund et al., supra note 15.
16
As required by Rule 0-2(c)(1) under the Act, each Applicant hereby states that all of the requirements for execution and filing of this Application on behalf of the Applicants have been complied with in accordance with the organizational documents of the Applicants, as applicable, and the undersigned officers of the Applicants are fully authorized to execute this Application. The resolutions of the Initial Fund’s Board are attached as Exhibit A to this Application in accordance with the requirements of Rule 0-2(c)(1) under the Act and the verifications required by Rule 0-2(d) under the Act are attached as Exhibit B to this Application.
Pursuant to Rule 0-2(f) under the Act, the Applicants state that their address is 4600 S. Syracuse Street, 9th Floor, Denver, Colorado 80237 and that all written communications regarding this Application should be directed to the individuals and addresses indicated on the first page of this Application.
* * * * *
[Signature page follows]
17
Applicants have caused this Application to be duly signed on their behalf on the 27th day of August, 2025.
| Origin Real Estate Credit Fund | ||
| (formerly, Origin Real Estate Credit Interval Fund) | ||
| By: | /s/ Michael McVickar | |
| Name: | Michael McVickar | |
| Title: | Chief Legal Officer | |
| Origin Credit Advisers, LLC | ||
| By: | /s/ Thomas Briney | |
| Name: | Thomas Briney | |
| Title: | President and Chief Investment Officer | |
18
Resolutions of the Board of Trustees of Origin Real Estate Credit Fund
RESOLVED, that Origin Real Estate Credit Fund (formerly, Origin Real Estate Credit Interval Fund) (the “Fund”) is authorized to prepare and file with the U.S. Securities and Exchange Commission an application for an exemptive order and any and all amendments thereto, pursuant to Section 6(c) of the Investment Company Act of 1940, as amended (the “1940 Act”), granting an exemption from the provisions of Sections 18(a)(2), 18(c) and 18(i) thereunder and pursuant to Sections 6(c) and 23(c) of the 1940 Act for an order granting certain exemptions from Rule 23c-3 thereunder and pursuant to Section 17(d) of the 1940 Act and Rule 17d-1 thereunder for an order permitting certain arrangements; and it is
FURTHER RESOLVED, that the appropriate officers of the Fund are authorized and directed to take or cause to be taken any and all such actions as may be necessary or desirable to carry out the purpose of the foregoing resolutions, including the filing of any authorizations, documents or approvals as required under the 1940 Act, and the taking of any and all such action shall constitute conclusive evidence of the authority of such officer(s).
Exhibit A
Verifications of Origin Real Estate Credit Fund and Origin Credit Advisers, LLC
The undersigned states that he has duly executed the attached application dated August 27, 2025 for and on behalf of Origin Real Estate Credit Fund (formerly, Origin Real Estate Credit Interval Fund) in his capacity as Chief Legal Officer of such entity and that all actions by the holders and other bodies necessary to authorize the undersigned to execute and file such instrument have been taken. The undersigned further states that he is familiar with such instrument, and the contents thereof, and that the facts therein set forth are true to the best of his knowledge, information and belief.
| Origin Real Estate Credit Fund | ||
| By: | /s/ Michael McVickar | |
| Name: | Michael McVickar | |
| Title: | Chief Legal Officer | |
The undersigned states that he has duly executed the attached application dated August 27, 2025 for and on behalf of Origin Credit Advisers, LLC, in his capacity as President and Chief Investment Officer of such entity and that all actions by the holders and other bodies necessary to authorize the undersigned to execute and file such instrument have been taken. The undersigned further states that he is familiar with such instrument, and the contents thereof, and that the facts therein set forth are true to the best of his knowledge, information and belief.
| Origin Credit Advisers, LLC | ||
| By: | /s/ Thomas Briney | |
| Name: | Thomas Briney | |
| Title: | President and Chief Investment Officer | |
Exhibit B
Exhibit C-1 (Forum) - 1
[Different
first page setting changed from off in original to on in modified.].
UNITED STATES OF AMERICA
AS
FILED WITHBEFORE THE
U.S. SECURITIES AND EXCHANGE COMMISSION
File
No. 812-15224
U.S.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
First Amended and Restated Application Pursuant to Section 6(c) of the Investment Company Act of 1940, as amended (the “Act”) for an Order Granting Certain Exemptions from the Provisions of Sections 18(a)(2), 18(c) and 18(i) Thereunder, Pursuant to Sections 6(c) and 23(c) of the Act for an Order Granting Certain Exemptions from Rule 23c-3 Thereunder and Pursuant to Section 17(d) of the Act and Rule 17d-1 Thereunder for an Order Permitting Certain Arrangements
EXPEDITED REVIEW REQUESTED UNDER 17 CFR 270.0-5(d)
Fifth Amended and Restated
Application Pursuant to Section 6(c) of the Investment Company Act of 1940, as amended (the “Act”) for an Order Granting
Certain Exemptions from the Provisions of Sections 18(a)(2), 18(c) and 18(i) Thereunder, Pursuant to Sections 6(c) and 23(c)
of the Act for an Order Granting Certain Exemptions from Rule 23c-3 Thereunder and Pursuant to Section 17(d) of the Act and Rule
17d-1 Thereunder for an Order Permitting Certain Arrangements
In the Matter of the Application of:
FORUMOrigin
Real Estate INCOMECredit
Fund
(FORMERLY
FORUM CRE INCOME FUNDformerly, Origin Real Estate
Credit Interval Fund)
FORUM
CAPITAL ADVISORS
Origin Credit Advisers, LLC
240 Saint Paul Street
Suite 400
Denver, CO 80206
PLEASE
DIRECT ALL COMMUNICATIONS REGARDING THIS APPLICATION TO:
Please direct all communications and orders regarding this Application to:
| Michael McVickar | ||
| General Counsel, Origin Investments | ||
| Advisers, LLC | ||
| 121 W. Wacker, Suite | ||
| Chicago, IL 60601 | ||
| ( |
Elizabeth Ryan, General Counsel
Forum Capital Advisors LLC
240 Saint Paul Street, Suite
400
Denver, CO 80206
(303) 501-8860
WITH COPIES TO:
Kelley Howes
|
Joseph M. Mannon Vedder Price P.C. (312) 609-7883
|
Vedder Price P.C. |
Thomas Briney President & Chief Investment
Officer 4600 S. Syracuse Street, 9th Floor Denver, CO 80237 (303) 256-6497 |
370 17th Street, Suite 4200
Denver, CO 80202
(303) 592-2237
This
Application (including Exhibits) coNSISTS OF 19
71 pages.
Exhibit C-1 (Forum) - 2
[Different first page setting
changed from off in original to on in modified.].
TABLE OF CONTENTS
(continued)
| Page | |||
| I. THE PROPOSAL | |||
| II. STATEMENT OF FACTS | |||
| A. | |||
| B. | 4 | ||
| C. | Other Provisions | 4 | |
| III. EXEMPTION REQUESTED | 5 | ||
| A. | The Multi-Class System | 5 | |
| B. | Early Withdrawal Charges | 5 | |
| C. | Asset-Based Distribution and/or Service Fees | ||
| IV. COMMISSION AUTHORITY | |||
| V. DISCUSSION | |||
| A. | Background | ||
| B. | Multiple Classes of Shares |
||
| C. | Early Withdrawal Charge | ||
| D. | Waivers of EWCs | ||
| E. | Asset-Based Distribution and/or Service Fees | ||
| VI. APPLICANTS’ CONDITION | |||
| VII. CORPORATE ACTION | |||
| VIII. CONCLUSION | |||
EXHIBITS
Exhibit A—Resolutions of the Board of Trustees of Origin Real Estate Credit Fund
Exhibit B—Verifications of Origin Real Estate Credit Fund and Origin Credit Advisers, LLC
Exhibit C—Marked copies of the Application showing changes from the final versions of the two applications identified as substantially identical under Rule 0-5(e)(3)
Exhibit C-1 (Forum) - 3
UNITED STATES OF AMERICA
BEFORE THE
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
|
IN THE MATTER OF
and
ORIGIN CREDIT ADVISERS, LLC
Investment Company Act of 1940
File No. 812-15790 |
|
EXPEDITED REVIEW REQUESTED UNDER 17 CFR 270.0-5(d).
I. THE PROPOSAL
ForumOrigin
Real Estate IncomeCredit Fund
(formerly Forum CRE Income, Origin Real
Estate Credit Interval Fund) (the “Initial Fund”) and
Forum Capital Advisorsis a newly organized Delaware statutory trust that is registered under
the Act and that will operate as a continuously offered, non-diversified, closed-end management investment company and will be structured
as an interval fund pursuant to Rule 23c-3 under the Act. Origin Credit Advisers, LLC (the “Adviser”)
(together,will serve as the Initial Fund’s
investment adviser. The Initial Fund and the Adviser are referred to herein as the “Applicants.”)
The
Applicants hereby seek an order (the “Order”) from the U.S.
Securities and Exchange Commission (the “Commission”) (i) pursuant to Section 6(c) of the Investment
Company Act of 1940, as amended (the “Act”),
for an exemption from Sections 18(a)(2), 18(c) and 18(i) of the Act,;
(ii) pursuant to Sections 6(c) and 23(c) of the Act, for an exemption from Rule 23c-3 under the Act,
and (iii) pursuant to Section 17(d) of the Act and Rule 17d-1 under the Act,
to permit the Initial Fund to issue multiplefour
separate classes of shares of beneficial interest with asset-based service
and/or distribution fees (“Shares”)39
and to impose early withdrawal charges (“EWCs”).
and asset-based distribution and/or service fees with respect to certain classes.
39 As used in this Application, “Shares” includes any other equivalent designation of a proportionate ownership interest of the Initial Fund (or any other registered closed-end management investment company relying on the requested Order).
Exhibit C-1 (Forum) - 4
Applicants
request that the Order also apply to any continuously offered registered closed-end management investment company existing
now orthat may be organized in the future for which the Adviser or
any entity controlling, controlled by, or under common control with the Adviser (as that term is defined in Section 2(a)(9) of the Act)
or any successor in interest to any such entity140
acts as investment adviser, and whichthat
operates as an interval fund pursuant to Rule 23c-3 under the Act or provides periodic liquidity with respect to its sharesShares
pursuant to Rule 13e-4 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (each,
a “Future Fund” and, together with the Initial Fund, the “Funds”
or each, a “Fund” and collectively, the “Funds”).2).41
Any of the Funds relying on this relief in the future will do so in a manner consistentcompliance
with the terms and conditions of this Fifth Amended and Restated Applicationfirst
amended and restated application (the “Application”). Applicants represent that each entity
presently intending to rely on the requested relief is listed as an Applicant.
On June 14May
9, 20222025, the
Initial Fund filed aan initial
registration statement on Form N-2, which, as of the date of this Application, has not yet been declared
effective by the Commission, seeking to register sharesShares
of the Initial Fund to be offered for public sale under the Securities Act of 1933, as amended
(the “Securities Act”) and to operate as an interval fund pursuant to Rule 23c-3 under the Act (the “Initial
Registration Statement”). The Initial Registration Statement
was declared effective on September 28, 2022. The Registration Statement applies to the offering of threefour
separate classes of sharesShares
of beneficial interestsinterest
in the Initial Fund, designated as Class WA
Shares, Class E Shares, Class I Shares, and Founders
Shares. The Fund currently only offers Founders Shares for saleClass O Shares. If the requested
relief is granted, the Initial Fund anticipates making a continuous public offering of its Class A Shares, Class E Shares, Class I Shares
and Class O Shares, each with its own fee and expense structure. Until such exemptive relief requested in this applicationApplication
is granted, Class Wthe Initial Fund will
offer only one class of Shares for sale, the Class O Shares, and the Class A Shares, Class E Shares and Class I Sharesshares
will not be offered to investors. The Registration Statement was declared effective
on September 28, 2022. Additional offerings by any Fund relying on the requested relief may be offered on a private
placement or public offering basis.
Shares of the Funds will not be listed on any securities exchange, nor quoted on any quotation medium, and the Funds do not expect there to be a secondary trading market for their shares.
None of
the Class W shares, Class I shares, or Founders Shares of the Initial Fund are subject to a front-end sales charge, and no future shares
will be subject to front-end sales charges. The Initial Fund’s Class I shares will be subject to a service fee and other expenses,
but will not be subject to a distribution fee, nor will they be subject to an EWC. The Initial Fund’s Class W shares will be subject
to a distribution fee and other expenses, but will not be subject to a service fee, nor will they be subject to an EWC. The Initial Fund’s
Founders Shares will be subject to other expenses, but will not be subject to a distribution or service fee, nor will they be subject
to an EWC. The Funds may in the future offer additional classes of shares and/or another sales charge, fee or expense structure.
It is currently contemplated that the Initial Fund’s Class O Shares will not be subject to other expenses such as distribution and/or service fees nor will they be subject to an EWC. Each of the Initial Fund’s Class A Shares, Class E Shares and Class I Shares may be subject to other expenses, including a distribution and/or service fee, but will not be subject to an EWC. The Funds may in the future offer additional classes of Shares and/or another sales charge, fee or expense structure.
Applicants
represent that any asset-based service and/or distribution fees for each class of sharesShares
of the Funds will comply with the provisions of the Financial Industry Regulatory Authority, Inc. (“FINRA”)
Rule 2341 (formerly, NASD Rule 2830) (d), the
“FINRA Sales Charge Rule”).342
All references in this Application to the FINRA Sales Charge Rule include any FINRA successor or replacement rule to the FINRA Sales
Charge Rule.
140
A successor in interest is limited to an entity that results from a reorganization into another jurisdiction or a change in the type
of business organization.
2
The terms “control,” and “investment adviser” are used throughout this Application as those terms are defined
in Sections 2(a)(9) and 2(a)(20) of the Act, respectively.
41 The terms “control” and “investment adviser” are used throughout this Application as those terms are defined in Sections 2(a)(9) and 2(a)(20) of the Act, respectively.
342
As adopted, FINRA Rule 2341 superseded Rule 2830(d) of the
Conduct Rules of the National Association of Securities Dealers, Inc. See, Self- Regulatory
Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice
of Filing and Immediate Effectiveness of a Proposed Rule Change to Adopt NASD Rule 2830 as FINRA Rule 2341 (Investment Company Securities)
in Consolidated FINRA Rulebook, Securities Exchange Act Release No. 78130 (JuneJun.
22, 2016). Any reference to the FINRA Sales Charge Rule includes any successor or replacement to the
FINRA Sales Charge Rule.
Exhibit C-1 (Forum) - 5
II. STATEMENT OF FACTS
| A. |
The Initial Fund is a newly
organized Delaware statutory trust that hasis
registered under the Act as a continuously offered, non-diversified, closed-end management investment company that operateswill
operate as an interval fund pursuant to Rule 23c-33-3
under the Act. As of the date of the filing of this Application, the Initial Fund’s Initial
Registration Statement has not yet been declared effective by the Commission. Pursuant to a fundamental policy adopted by
the Initial Fund’s Board of Trustees (the “Board”) and approved by the shareholders
of the Initial FundFund’s
sole initial shareholder, the Initial Fund conductswill
conduct quarterly repurchase offers for between 5% and 25% of the Initial Fund’s then
outstanding sharesthen-outstanding Shares at net asset value
(“NAV”), reduced by any applicable repurchase fee.
The Initial Fund’s primary
investment objectives are to maximize current income and preserve investor capital, with a secondary focus on long-term capital appreciation.
The Initial Fund concentrates its investments (i.e., invests more than 25% of its assets) in the
real estate industry. Under normal circumstances, theThe
Initial Fund will invest at least 80% of its net assets (plus the amount of borrowings
forpursues its investment purposes)objectives
by investing in a portfolio of commercial real estate and commercial loans
and othermultifamily real estate-related investments located
in the United States. Real estate related investments include, but are not limited to, commercial mortgage-backed securities, commercial
real estate collateralized loan obligations. “Commercial multifamily real estate-related
investments” in this context refers to investments related to multifamily residential real estate that is commercially owned,
financed and managed, and considered to be a type of commercial real estate. Multifamily real estate may include, among other things,
professionally managed multifamily properties or one or more tracts of land to support new homebuilding construction for multifamily units,
which may include secondary retail and office space and certain amenities, such as parking garages, clubhouses and common areas. The Initial
Fund executes its investment strategy primarily by seeking to invest opportunistically in a portfolio of investments across the following
primary asset classes: commercial real estate-related loans and other debt investments; commercial real estate-related equity securities,
including, but not limited to, preferred equity issued by real estate investment trusts or
companies that develop, own and operate commercial real estate assets, mezzanine loans backed by commercial real estate assets, and
securities issued by publicly-traded real estate investment
trusts. To a lesser extent, the Initial Fund may also invest directly inoperating companies;
other real estate-related structured and securitized investments; and commercial real estate. The
categories of commercial real estate underlying the Initial Fund’s investments include, but are not limited to, multifamily, industrial,
mixed use, hospitality, office, and retail.
The Adviser has broad discretion to allocate the Initial Fund’s assets among the above-noted primary asset classes, and other real estate-related assets. There is no maximum or minimum percentage of the Initial Fund’s assets that may be allocated to any asset class, although the Initial Fund’s direct ownership of commercial real estate is expected to be limited to acquisitions of property securing an existing investment that has become impaired, provided the investment is suitable and permissible for the Initial Fund. The primary category of commercial real estate underlying the Initial Fund’s investments will be multifamily properties; however, other categories of commercial real estate may include industrial, mixed use, hospitality, office, and retail.
Under
normal circumstances, the Initial Fund will invest at least 80% of its net assets (plus the amount of any borrowings for investment purposes)
in commercial real estate, the securities of real estate and real estate-related issuers, and real estate-related loans or other real
estate-related debt securities. For this purpose, real estate-related companies are those that derive at least 50% of their revenues or
profits from the ownership, construction, management, financing or sale of real estate, or have at least 50% of the fair market value
of their assets invested in real estate. The Initial Fund may invest in securities that are rated below investment grade by
rating agencies or that would be rated below investment grade if they were rated. There are no limits on the Initial Fund’s investments
in below investment grade securities. The Initial Fund’s address is 240 Saint
Paul4600 S. Syracuse Street, Suite
4009th Floor, Denver, Colorado 8020680237.
Exhibit C-1 (Forum) - 6
Each
of the Other Funds (as defined below) will adopt fundamental investment policies and make periodic repurchase offers to its shareholders
in compliance with Rule 23c-3443
or will provide periodic liquidity with respect to its sharesShares
pursuant to Rule 13e-4 under the Exchange Act. Any repurchase offers made by the Funds will be made to all holders of sharesShares
of each such Fund as of the selected record date.
Each Fund that operates or
will operate as an interval fund pursuant to Rule 23c-3 under the Act may offer its shareholders an exchange feature under which the
shareholders of the Fund may, in connection with such Fund’s periodic repurchase offers, exchange their sharesShares
of the Fund for shares of the same class of (i) registered open-end investment companies or (ii) other registered closed-end investment
companies that comply with Rule 23c-3 under the Act and continuously offer their shares at net asset value, that are in the Fund’s
group of investment companies (collectively, the “Other Funds”). Shares of a Fund operating pursuant
to Rule 23c-3 that are exchanged for shares of Other Funds will be included as part of the amount
of the repurchase offer amount for such Fund as specified in Rule 23c-3 under the Act. Any exchange option will comply
with Rule 11a-3 under the Act, as if the Fund were an open-end investment company subject to Rule 11a-3. In complying with Rule 11a-3,
each Fund will treat an EWC as if it were a contingent deferred sales load (“CDSL”).544
Shares of a Fund will be subject
to a repurchase fee at a rate of no greater than 2% of the aggregate net asset value of a shareholder’s sharesShares
repurchased by the Fund if the interval between the date of purchase of the sharesShares
and the valuation date with respect to the repurchase of those sharesShares
is less than one year. A repurchase fee charged by a Fund is not the same as a CDSL assessed by an open-end fund pursuant to Rule 6c-10
under the Act, as CDSLs are distribution-related charges payable to a distributor, whereas the repurchase fee is payable to the Fund to
compensate long-term shareholders for the expenses related to shorter termshorter-term
investors, in light of the Fund’s generally longer-term investment horizons and investment operations.
Any repurchase fee imposed
by a Fund will equally apply to all classes of sharesShares
of a Fund, in compliance with Section 18 of the Act and Rule 18f-3 thereunder. To the extent a Fund determines to waive, impose scheduled
variations of, or eliminate any such repurchase fee, it will do so in compliance with the requirements of Rule 22d-1 under the Act as
if the repurchase fee was a CDSL and as if the Fund was an open-end investment company. A Fund’s waiver of, scheduled variation
in, or elimination of, any such repurchase fee will apply uniformly
to all shareholders of the Fund regardless of class.
| B. |
The Adviser, which is organized
as a Delaware limited liability company, is an investment adviser registered with the Commission under the Investment Advisers Act of
1940, as amended (the “Advisers Act”). The Adviser serveswill
serve as the Initial Fund’s investment adviser pursuant to an advisory agreement (the “Investment Management
Agreement”), which has been approved (i) by the.
Prior to the Initial Fund’s commencement of operations, the Investment Management Agreement will be approved by the Initial Fund’s
Board, including a majority of the trustees who are not “interested persons” (as defined in Section 2(a)(19) of the Act) of
the Initial Fund and (ii) by the Initial Fund’s shareholderssole
initial shareholder, in the manner required by Sections 15(a) and (c) of the Act. The Applicants are not seeking any exemptions
from the provisions of the Act with respect to the Investment Management Agreement. Under the terms of the Investment Management Agreement,
and subject to the authority of the Board, the Adviser iswill
be responsible for overseeing the overall
management of the Initial Fund’s activities, including investment strategies,
investment goals, asset allocation, leverage limitations, reporting requirements and other guidelines in addition to the general monitoring
of the Initial Fund’s portfoliosportfolio,
subject to the oversight of the Board. The Adviser haswill
have sole discretion to make all investments. The Adviser’s address is 240
Saint Paul4600 S. Syracuse Street, Suite
4009th Floor, Denver, Colorado
80206CO 802376.
443
Rule 23c-3 and Regulation M under the Exchange Act permit an interval fund to make repurchase offers to repurchase its shares while engaging
in a continuous offering of its shares pursuant to Rule 415 under the Securities Act of 1933, as amended.
544
A CDSL, assessed by an open-end fund pursuant to Rule 6c-10 under the Act, is a distribution-related charge payable to the distributor.
Pursuant to the requested order, the EWCs will likewise be a distribution-related charge payable to the distributor as distinguished
from a repurchase fee which is payable to a Fund to compensate long-term shareholders for the expenses related to shorter
termshorter-term investors, in light of the Fund’s generally longer-term
investment horizons and investment operations.
Exhibit C-1 (Forum) - 7
| C. | Other Provisions |
From time to time, the Initial
Fund may create additional classes of shares, the terms of which may differ from the other share classes in the following respects: (i)
the amount of fees permitted by different distribution plans and/or different service fee arrangements; (ii) voting rights with respect
to a distribution and/or service plan of a class; (iii) different class designations; (iv) the impact of any class expenses directly attributable
to a particular class of shares allocated on a class basis as described in this applicationApplication;
(v) any differences in dividends and net asset value resulting from differences in fees under a distribution plan and/or service fee arrangement
or in class expenses; (vi) any EWCs or other sales load structure; and (vii) exchange or conversion privileges of the classes as permitted
under the Act.
Each Fund will allocate
all expenses incurred by it among the various classes of sharesShares
based on the net assets of the Fund attributable to each such class, except that the net asset value and expenses of each class will
reflect the expenses associated with the distribution and/or service plan of that class (if any), servicesservice
fees attributable to that class (if any), including transfer agency fees, and any other incremental expenses of that class.
Incremental expenses of a Fund attributable to a particular class are limited to (i) incremental transfer agent fees identified by
the transfer agent as being attributable to that class of sharesShares;
(ii) printing and postage expenses relating to preparing and distributing materials such as shareholder reports, prospectuses and
proxies to current shareholders of that class of sharesShares;
(iii) federal registration fees incurred with respect to shares of that class of sharesShares;
(iv) blue sky fees incurred with respect to sales of that class of sharesShares;
(v) expenses of administrative personnel and services as required to support the shareholders of that class; (vi) auditors’
fees, litigation expenses and other legal fees and expenses relating solely to that class of sharesShares;
(vii) additional “trustees” fees
incurred as a result of issues relating to that class of sharesShares;
(viii) additional accounting expenses relating solely to that class of sharesShares;
(ix) expenses incurred in connection with shareholder meetings as a result of issues relating to that class of sharesShares;
and (x) any other incremental expenses subsequently identified that should be properly allocated to that class of sharesShares
consistent with Rule 18f-3 under the Act. Because of the different distribution and/or service fees, services and
any other class expenses that may be attributable to each class of sharesShares,
the net income attributable to, and the dividends payable on, each class of sharesShares
may differ from each other. As a result, the net asset value per share of the classes may differ at times. Expenses of a Fund
allocated to a particular class of sharesShares
will be borne on a pro rata basis by each outstanding share of that class. Distribution and/or service fees will be paid pursuant to
a distribution and/or service plan with respect to a class.
III. EXEMPTION REQUESTED
| A. | The Multi-Class System |
Applicants request exemptive
relief to the extent that a Fund’s issuance and sale of multiple classes of sharesShares
might be deemed to result in the issuance of a class of “senior security”645
within the meaning of Section 18(g) of the Act that would violate the provisions of Section 18(a)(2) of the Act, violate the equal voting
provisions of Section 18(i) of the Act, and if more than one class of senior security were issued, violate Section 18(c) of the Act.
| B. | Early Withdrawal Charges |
The
Applicants request exemptive relief from Rule 23c-3(b)(1) to the extent that rule is construed to prohibit the imposition
of an EWC by the Funds.
| C. | Asset-Based Distribution and/or Service Fees |
Applicants request an Order pursuant to Section 17(d) and Rule 17d-1 to the extent necessary for a Fund to pay asset-based distribution and/or service fees.
645
Section 18(g) defines senior security to include any stock of a class having a priority over any other class as to distribution of assets
or payment of dividends. Share classes that have different asset-based service or distribution charges have different total expenses
and, thus, different net incomes. As a result, each class will have a different net asset value, receive a different distribution amount
or both. A class with a higher net asset value may be considered to have a priority as to the distribution of assets. A class receiving
a higher dividend may be considered to have a priority over classes with lower dividends. Exemption for Open-End Management Investment
Companies Issuing Multiple Classes of Shares; Disclosure by Multiple Class and Master-FeederMaster-Feeder
Funds; Class Voting on Distribution Plans, Inv. Co. Rel. No. 20915 (Feb. 23, 1995) at n. 17 and accompanying text.
Exhibit C-1 (Forum) - 8
IV. COMMISSION AUTHORITY
Pursuant to Section 6(c) of the Act, the Commission may, by order on application, conditionally or unconditionally, exempt any person, security or transaction, or any class or classes of persons, securities or transactions from any provision or provisions of the Act or from any rule or regulation under the Act, if and to the extent that the exemption is necessary or appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the Act.
Section 23(c) of the Act provides, in relevant part, that no registered closed-end investment company shall purchase securities of which it is the issuer, except: (a) on a securities exchange or other open market; (b) pursuant to tenders, after reasonable opportunity to submit tenders given to all holders of securities of the class to be purchased; or (c) under such other circumstances as the Commission may permit by rules and regulations or orders for the protection of investors.
Section 23(c)(3) provides that the Commission may issue an order that would permit a closed-end investment company to repurchase its shares in circumstances in which the repurchase is made in a manner or on a basis that does not unfairly discriminate against any holders of the class or classes of securities to be purchased.
Section 17(d) of the Act and Rule 17d-1 under the Act prohibit an affiliated person of a registered investment company or an affiliated person of such person, acting as principal, from participating in or effecting any transaction in connection with any joint enterprise or joint arrangement in which the investment company participates unless the Commission issues an order permitting the transaction. In reviewing applications submitted under Section 17(d) and Rule 17d-1, the Commission considers whether the participation of the investment company in a joint enterprise or joint arrangement is consistent with the provisions, policies and purposes of the Act, and the extent to which the participation is on a basis different from or less advantageous than that of other participants.
V. DISCUSSION
| A. | Background |
In its 1992 study entitled
Protecting Investors: A Half Century of Investment Company Regulation (“Protecting Investors”), the
Commission’s Division of Investment Management recognized that the Act imposes a rigid classification system that dictates many
important regulatory consequences.746
For example, the characterization of a management company as “open-end” or “closed-end” has historically been
crucial to the determination of the degree of liquidity the fund’s shareholders will have, and thus the liquidity required of the
fund’s investments.
Furthermore, except as noted
below, there has been no middle ground between the two extremes. Open-end funds have offered complete liquidity to their shareholders
and thus required virtually complete liquidity of the underlying investments, while closed-end funds have been subject to requirements
that in fact restrict the liquidity they are permitted to offer their investors. Under this bipolar system of regulation, neither form
has provided the best vehicle for offering portfolios that have substantial, but not complete, liquidity. In Protecting Investors,
the Staff determined that, given the changes in the securities market since 1940 –
—in particular the emergence of semi-liquid investment opportunities –
—it was appropriate to re-examine the classification system and its regulatory
requirements.47
The one exception to the liquid/illiquid dichotomy has been the so called “prime-rate funds.” These funds, first introduced in 1988, invest primarily in loans and provide shareholders liquidity through periodic tender offers or, more recently, periodic repurchases under Rule 23c-3.
Protecting
Investors recognized that the rigidity of the Act’s classification system had become a limitation on sponsors’ ability
to offer innovative products that would take advantage of the vast array of semi-liquid portfolio securities currently existing. The
report also noted the pioneering efforts of the prime rate funds and the market success they had experienced.848
The report thus concluded that it would be appropriate to provide the opportunity for investment companies to “chart new territory”
between the two extremes of the open-end and closed-end forms, consistent with the goals of investor protection.949
The Division of Investment Management thus recommended giving the industry the ability to employ new redemption and repurchase procedures,
subject to Commission rulemaking and oversight.
746
SEC Staff Report, Protecting Investors: A Half Century of Investment Company Regulation (May 1992), at 421.
47 Id. at 424.
848
Id. at 439-40.
949
Id. at 424.
Exhibit C-1 (Forum) - 9
In accordance with this recommendation,
and shortly after Protecting Investors was published, the Commission proposed for comment a new rule designed to assist the industry
in this endeavor.1050
The Commission proposed Rule 23c- 3, which began from the closed-end, illiquid perspective under Section 23(c), and provided flexibility
to increase shareholder liquidity through periodic repurchase offers under simplified procedures. Rule 23c-3 was adopted in April 1993.1151
The prime rate funds were
cited in both Protecting Investors and the Proposing Release as the prototype for the interval concept.1252
Nonetheless, while the prime rate funds broke the path for innovation in this area, developments since the origin of these funds make
further innovation appropriate. Ample precedent exists for the implementation of a multiple-classmultiple
class system, and the imposition of asset-based distribution
and/or service fees for which the Funds seek relief. Since 1998, the Commission has
granted relief to, among others, the following closed-end investment companies to issue multiple classes of shares, to impose EWCs and
to impose distribution and/or service fees, e.g., iDirect
Private Markets Fund, SEG Partners Long/Short Equity Fund, Coatue CTEK Fund, Capital Group KKR Multi-Sector+, Global X Venture Fund,
HarbourVest Private Investments Fund, Privacore PCAAM Alternative Income Fund, TCW Private Asset Income Fund, Callodine Specialty Income
Fund, Diamond Hill Securitized Credit Fund, Redwood Real Estate Income Fund, Wellington Global Multi-Strategy Fund, Aether Infrastructure
& Natural Resources Fund, Alpha Alternative Assets Fund, John Hancock Asset-Based Lending Fund and John Hancock Investment
Management LLC, Oaktree Diversified Income Fund Inc., PGIM Private Real Estate Fund, Inc., Bow River Capital Evergreen Fund, AFA Multi-Manager
Credit Fund, BNY Mellon Alcentra Opportunistic Global Credit Income Fund, Calamos-Avenue Opportunities Fund, NB Crossroads Private Markets
Access Fund LLC;,
First Eagle Credit Opportunities Fund;,
Primark Private Equity Investments Fund;,
361 Social Infrastructure Fund; GSO Asset Management LLC;,
Resource Credit Income Fund; Keystone Private Income Fund;,
Hamilton Lane Private Assets Fund;,
KKR Credit Opportunities Portfolio;,
Conversus StepStone Private Markets;,
Prospect Capital Management L.P.;,
Goldman Sachs Real Estate Diversified Income Fund;,
CIM Real Assets & Credit Fund;,
Hartford Schroders Opportunistic Income Fund;,
Axonic Alternative Income Fund;,
Principal Diversified Select Income Fund;,
American Beacon Sound Point Enhanced Income Fund;,
and BlackRock Credit Strategies Fund.1353
1050
Inv. Co. Act Rel. No. 18869 (JulyJul. 28, 1992)
(the “Proposing Release”).
1151
Inv. Co. Act Rel. No. 19399 (AprilApr. 7, 1993)
(the “Adopting Release”). The Commission also had proposed Rule 22e-3, which began from the open-end, complete
liquidity perspective under Section 22 of the Act, and permitted periodic or delayed, rather than constant liquidity. The Commission
neither adopted nor withdrew proposed Rule 22e-3. To the Applicants’ knowledge, the Commission has taken no further action with
respect to Rule 22e-3.
1252
Protecting Investors at 439-40; Proposing Release at 27.
1353
See, e.g., iDirect
Private Markets Fund, et al., Inv. Co. Rel. Nos. 35474 (Feb. 21, 2025) (Notice) and 35497 (Mar. 14, 2025) (Order); SEG Partners Long/Short
Equity Fund, et al., Inv. Co. Rel. Nos. 35466 (Feb. 6, 2025) (Notice) and 35491 (Mar. 4, 2025) (Order); Coatue CTEK Fund and Coatue Management,
L.L.C., Inv. Co. Rel. Nos. 35417 (Dec. 13, 2024) (Notice) and 35443 (Jan. 8, 2025) (Order); Capital Group KKR Multi-Sector+, et al.,
Inv. Co. Rel. Nos. 35410 (Dec. 9, 2024) (Notice) and 35441 (Jan. 6, 2025) (Order); Global X Venture Fund and Global X Management Company,
LLC, Inv. Co. Rel. Nos. 35408 (Dec. 9, 2024) (Notice) and 35440 (Jan. 6, 2025) (Order); HarbourVest Private Investments Fund and HarbourVest
Registered Advisers L.P., Inv. Co. Rel. Nos. 35409 (Dec. 9, 2024) (Notice) and 35439 (Jan. 6, 2025) (Order); Privacore PCAAM Alternative
Income Fund, et al., Inv. Co. Rel. Nos. 35403 (Nov. 27, 2024) (Notice) and 35431 (Dec. 26, 2024) (Order); TCW Private Asset Income Fund
and TCW Asset Backed Finance Management Company LLC, Investment Co. Rel. Nos. 35401 (Nov. 26, 2024) (Notice) and 35429 (Dec. 23, 2024)
(Order); Callodine Specialty Income Fund and Callodine Capital Management, LP, Investment Co. Rel. Nos. 35399 (Nov. 26, 2024) (Notice)
and 35428 (Dec. 23, 2024) (Order); Diamond Hill Securitized Credit Fund and Diamond Hill Capital Management, Inc., Inv. Co. Rel. Nos.
35385 (Nov. 14, 2024) (Notice) and 35414 (Dec. 10, 2024) (Order); Redwood Real Estate Income Fund and Redwood Investment Management,
LLC, Inv. Co. Rel. Nos. 35382 (Nov. 12, 2024) (Notice) and 35413 (Dec. 10, 2024) (Order); Wellington Global Multi-Strategy Fund and Wellington
Management Company LLP, Inv. Co. Rel. Nos. 35317 (Sept. 10, 2024) (Notice) and 35353 (Oct. 8, 2024) (Order); Aether Infrastructure &
Natural Resources Fund, et al., Inv. Co. Rel. Nos. 35168 (Apr. 10, 2024) (Notice) and 35186 (May 7, 2024) (Order); Alpha Alternative
Assets Fund and Alpha Growth Management LLC, Inv. Co. Rel. No. 34530 (Mar. 9, 2022) (Notice) and 34555 (Apr. 5, 2022) (Order); John Hancock
Asset-Based Lending Fund and John Hancock Investment Management LLC, Inv. Co. Rel. No. 34491 (Jan. 31, 2022) (Notice) and 34524 (Mar.
3, 2022) (Order); Oaktree Fund Advisors, LLC and Oaktree Diversified Income Fund Inc., Inv. Co. Rel. No. 34436 (Dec. 10, 2021) (Notice)
and 34464 (Jan. 5, 2022) (Order); PGIM Private Real Estate Fund, Inc., Inv. Co. Rel. No. 34434 (Dec. 3, 2021) (Notice) and 34455 (Dec.
29, 2021) (Order); Bow River Capital Evergreen Fund, et al., Inv. Co. Rel. No. 34421 (Nov. 19, 2021) (Notice) and 34442 (Dec. 15, 2021)
(Order); AFA Multi-Manager Credit Fund and Alternative Fund Advisors, LLC, Inv. Co. Rel. No. 34414 (Nov. 2, 2021) (Notice) and 34430
(Dec. 1, 2021) (Order); BNY Mellon Alcentra Opportunistic Global Credit Income Fund and BNY Mellon Investment Adviser, Inc., Inv. Co.
Rel. No. 34320 (Jun. 29, 2021) (Notice) and 34344 (Jul. 26, 2021) (Order); Calamos-Avenue Opportunities Fund and Calamos Avenue Management,
LLC, Inv. Co. Rel. No. 34300 (Jun. 14, 2021) (Notice) and 34327 (Jul. 12, 2021) (Order); NB Crossroads Private Markets Access Fund LLC
and Neuberger Berman Investment Advisers LLC, Inv. Co. Rel. No. 34094 (Nov. 13, 2020) (Notice) and 34132 (Dec. 8, 2020) (Order),;
First Eagle Credit Opportunities Fund, et al., Inv. Co. Rel. No. 34080 (Oct. 30, 2020) (Notice) and 34216 (Dec. 1, 2020) (Order),;
Primark Private Equity Investments Fund and Primark Advisors LLC, Inv. Co. Rel. No. 34054 (Oct. 20, 2020) (Notice) and 34098 (Nov. 17,
2020) (Order),; 361 Social Infrastructure Fund and 361 Infrastructure Partners, LLC, Inv. Co. Rel. No. 34051
(Oct. 15, 2020) (Notice) and 34091 (Nov. 10, 2020) (Order),; GSO Asset Management LLC and Blackstone Private
Credit Fund, Inv. Co. Rel. No. 34011 (Sept. 14, 2020) (Notice) and 34044 (Oct. 6, 2020) (Order),; Resource Credit
Income Fund and Sierra Crest Investment Management LLC, Inv. Co. Rel. No. 34001 (Sept. 2, 2020) (Notice) and 34033 (Sept. 29, 2020) (Order),;
Owl Rock Capital Corporation II, et al., Inv. Co. Rel. No. 33972 (Aug. 17, 2020) (Notice) and 34012 (Sept. 15, 2020) (Order),;
Keystone Private Income Fund and Keystone National Group, LLC, Inv. Co. Rel. No. 33917 (JulyJul.
1, 2020) (Notice) and Inv. Co. Rel. No. 33957 (JulyJul.
28, 2020) (Order),; Hamilton Lane Private Assets Fund and Hamilton Lane Advisors, L.L.C., Inv. Co. Rel. No. 33896
(JuneJun. 17, 2020) (Notice) and Inv. Co. Rel.
No. 33926 (JulyJul. 14, 2020) (Order),;
KKR Credit Opportunities Portfolio and KKR Credit Advisors (US) LLC, Inv. Co. Rel. No. 33840 (Apr. 16, 2020) (Notice) and Inv. Co. Rel.
No. 33863 (May 12, 2020) (Order),; Conversus StepStone Private Markets and StepStone Conversus LLC, Inv. Co.
Rel. No. 33815 (Mar. 12, 2020) (Notice) and Inv. Co. Rel. No. 33851 (Apr. 23, 2020) (Order),; Prospect Capital
Management L.P., et al., Inv. Co. Rel. No. 33800 (Feb. 19, 2020) (Notice) and Inv. Co. Rel. No. 33822 (Mar. 24, 2020) (Order),;
Goldman Sachs Real Estate Diversified Income Fund, et al, Inv. Co. Rel. No. 33743 (Jan. 9, 2020) (Notice) and Inv. Co. Rel. No. 33797
(Feb. 4, 2020) (Order),; CIM Real Assets & Credit Fund, et al., Inv. Co. Rel. No. 33630 (Sept. 23, 2019)
(Notice) and Inv. Co. Rel. No. 33659 (Oct. 22, 2019) (Order); Hartford Schroders Opportunistic Income Fund and Hartford Funds Management
Company, LLC, Inv. Co. Rel. No. 33610 (Aug. 27, 2019) (Notice) and Inv. Co. Rel. No. 33632 (Sept. 24, 2019) (Order); Axonic Alternative
Income Fund and Axonic Capital LLC, Inv. Co. Rel. No. 33508 (Jun. 13, 2019) (Notice) and Inv. Co. Rel. No. 33553 (Jul. 15, 2019) (Order);
Principal Diversified Select Income Fund, et al., Inv. Co. Rel. No. 33441 (Apr. 8, 2019) (Notice) and Inv. Co. Rel. No. 33466 (May 6,
2019) (Order); American Beacon Sound Point Enhanced Income Fund, et al., Inv. Co. Rel. No. 33393 (Mar. 8, 2019) (Notice) and Inv. Co.
Rel. No. 33439 (Apr. 3, 2019) (Order); BlackRock Credit Strategies Fund, et al., Inv. Co. Rel. No. 33388 (Mar. 5, 2019) (Notice) and
Inv. Co. Rel. No. 33437 (Apr. 2, 2019) (Order).
Exhibit C-1 (Forum) - 10
| B. | Multiple Classes of Shares |
The Applicants request exemptive
relief to the extent that the Initial Fund’s issuance and sale of multiple classes of sharesShares
of beneficial interest might be deemed to result in the issuance of a class of “senior security”1454
within the meaning of Section 18(g) of the Act that would violate the provisions of Section 18(a)(2) of the Act, violate the equal voting
provisions of Section 18(i) of the Act, and if more than one class of senior security were issued, violate Section 18(c) of the Act.
A registered closed-end investment
company may have only one class of senior security representing indebtedness and only one class of stock that is a senior security. With
respect to the class of stock that is a senior security, i.e., preferred stock, the preferred stock must have certain rights as described
in Section 18(a)(2) of the Acgt. Section 18(a)(2)(A) and (B) makes it
unlawful for a registered closed-end investment company to issue a senior security that is a stock unless (a) immediately after such issuance
it will have an asset coverage of at least 200% and (b) provision is made to prohibit the declaration of any distribution, upon its common
stock, or the purchase of any such common stock, unless in every such case such senior security has at the time of the declaration of
any such distribution, or at the time of any such purchase, an asset coverage of at least 200% after deducting the amount of such distribution
or purchase price, as the case may be. Section 18(a)(2)(C) and (D) makes it unlawful for a registered closed-end investment company to
issue a senior security that is a stock unless, stockholders have the
right, voting separately as a class, to: (i) elect at least two directors at all times; (ii) elect a majority of the directors if at any
time dividends on such class of securities have been unpaid in an amount equal to two full years’ dividends on such securities;
and (iii) approve any plan of reorganization adversely affecting their securities or any action requiring a vote of security holders as
set forth in section 13(a).1555
Section 18(a)(2)(E) requires that such class of stock will have “complete priority over any other class as to distribution of assets
and payment of dividends, which dividends shall be cumulative.”
1454
See note 67.
1555
Section 13(a) requires, among other things, that a majority of a fund’s outstanding voting securities must approve converting to
a mutual fund format.
Exhibit C-1 (Forum) - 11
Section 18(i) provides: “Except as provided in subsection (a) of this section, or as otherwise required by law, every share of stock hereafter issued by a registered management company ... shall be voting stock and have equal voting rights with every other outstanding voting stock: Provided, That this subsection shall not apply ... to shares issued in accordance with any rules, regulations, or orders which the Commission may make permitting such issue.”
Finally, Section 18(c) of
the Act provides that “it shall be unlawful for any registered closed-end investment company ... to issue or sell any senior security
which is a stock if immediately thereafter such company will have outstanding more than one class of senior security which is a stock,”
except that “any such class of ... stock may be issued in one or more series:,
provided, that no such series shall have a preference or priority over any other series upon the distribution of the assets of such registered
closed-end company or in respect of the payment of interest or dividends...”
The multi-class system proposed
herein may result in sharesShares
of a class having priority over another class as to payment of dividends and having unequal voting rights, because under the proposed
system (i) shareholders of different classes would pay different distribution and/or service fees (and related costs as described above),
different administrative fees and any other incremental expenses that should be properly allocated to a particular class, and (ii) each
class would be entitled to exclusive voting rights with respect to matters solely related to that class.
Applicants believe that the
implementation of the proposed multi-class system will enhance shareholder options. Under a multi-classmulti-class
system, an investor can choose the method of purchasing sharesShares
that is most beneficial given the amount of their purchase, the length of time the investor expects to hold their sharesShares,
and other relevant circumstances. The proposed arrangements would permit a Fund to facilitate
both facilitate the distribution of its securities and provide investors with
a broader choice of shareholder services.
By contrast, if a Fund were
required to organize separate investment portfolios for each class of sharesShares,
the success of the new portfolios might be limited. Unless each new portfolio grew at a sufficient rate and to a sufficient size, it could
be faced with liquidity and diversification problems that would prevent the portfolio from producing a favorable return.
Under the proposal, owners
of each class of sharesShares
may be relieved under the multi-class system of a portion of the fixed costs normally associated with investing in investment companies
because these costs potentially would be spread over a greater number of sharesShares
than they would be if the classes were separate funds or portfolios. As a Fund grows in volume of assets, the investors will derive benefits
from economies of scale that would not be available at smaller volumes. The Commission has long recognized that multiple class arrangements
can be structured so that the concerns underlying the Act’s “senior security” provisions are satisfied. After having
granted numerous exemptive orders (“multiple class exemptive orders”) to open-end investment companies permitting
those funds to issue two or more classes of shares representing interests in the same portfolio,1656
the Commission adopted Rule 18f-3 under the Act in 1995, which now permits open-end funds to maintain or create multiple classes without
seeking individual exemptive orders, as long as certain conditions are met.1757
1656
See, e.g., Sierra Trust Funds, et al., InvestmentInv.
Co. Act Rel. No. 20093 (FebruaryFeb.
23, 1994) (Notice) and InvestmentInv.
Co. Act Rel. No. 20153 (MarchMar.
22, 1994) (Order); see also Exemption for Open-End Management Investment Companies Issuing Multiple Classes of sharesShares;
Disclosure by Multiple Class and Master-Feeder Funds, InvestmentInv.
Co. Act Rel. No. 19955 (DecemberDec.
15, 1993).
1757
See Inv. Co. Act Rel. No. 20915 (FebruaryFeb.
23, 1995). As adopted, Rule 18f-3 creates an exemption for mutual funds that issue multiple classes of shares with varying arrangements
for the distribution of securities and the provision of services to shareholders. In connection with the adoption of Rule 18f-3, the
Commission also amended Rule 12b-1 under the Act to clarify that each class of shares must have separate 12b-1 plan provisions. Moreover,
any action on the 12b-1 plan (i.e., director or shareholder approval) must take place separately for each class. The Commission has adopted
amendments to Rule 18f-3 that expand and clarify the methods by which a multiple class fund may allocate income, gains, losses and expenses
and that clarify the shareholder voting provisions of the rule.
Exhibit C-1 (Forum) - 12
Applicants believe that the
proposed closed-end investment company multiple class structure does not raise concerns underlying Section 18 of the Act to any greater
degree than open-end investment companies’ multiple class structures. The proposed multiple class structure does not relate to borrowings
and will not adversely affect a Fund’s assets. In addition, the proposed structure will not increase the speculative character of
each Fund’s sharesShares.
Applicants also believe that the proposed allocation of expenses relating to distribution and/or services and voting rights is equitable
and will not discriminate against any group or class of shareholders.
Applicants believe that the
rationale for, and conditions contained in, Rule 18f-3 are as applicable to a closed-end investment company seeking to offer multiple
classes of common shares with varying distribution and/or service arrangements in a single portfolio as they are to open-
endopen-end funds. Each Fund will comply with the provisions of Rule 18f-3 as
if it were an open-end investment company, including, among others, its provisions relating to differences in expenses, special allocations
of other expenses, voting rights, conversions and exchanges and disclosures. In fact, each Fund in many ways resembles an open-end fund
in its manner of operation and in the distribution of its common sharesShares.
In particular, the Funds
will offer their sharesShares
continuously at a price based on net asset value, plus any applicable front-end load. Differences among classes will, as detailed
above, relate largely to differences in distribution and/or service arrangements. Applicants note that open-end and closed-end funds
are subject to different technical provisions governing the issuance of senior securities. However, those technical differences do
not appear relevant here. Although closed-end funds may not issue multiple classes of common shares without exemptive relief, the
Commission has granted specific exemptive relief to similarly-situatedsimilarly
situated closed-end funds.1858
Provisions regulating the issuance by closed-end funds of debt or preferred stock should have no bearing on an application by a
closed-end fund for an exemptive order permitting the issuance of multiple classes of common stock. Therefore, Applicants propose to
base the conditions under which the Funds would issue multiple classes of shares of beneficial interest on those contained in Rule
18f-3.
Applicants believe that the
proposed allocation of expenses and voting rights relating to the asset-based distribution and/or service fees applicable to the different
classes of sharesShares of each
Fund in the manner described above is equitable and would not discriminate against any group of shareholders. Each Applicant is aware
of the need for full disclosure of the proposed multi-class system in each Fund’s prospectus and of the differences among the various
classes and the different expenses of each class of sharesShares
offered. Each Fund will include in its prospectus disclosure of the fees, expenses and other characteristics of each class of sharesShares
offered for sale by the prospectus, as is required for open-end multi-class funds under Form N-1A.1959
Applicants also note that the Commission has adopted rule and form amendments to require registered open-end management investment companies
to disclose fund expenses borne by shareholders during the reporting period in shareholder reports2060
and to describe in their prospectuses any arrangements that result in breakpoints in, or elimination of, sales loads.2161
Each Fund will include these disclosures in its shareholder reports and prospectus.
1858
See Alpha Alternative Assets Fund et al., supra note 15; John Hancock Asset-Based Lending Fund et al., supra note
15; Oaktree Fund Advisors, LLC et al., supra note 15; PGIM Private Real Estate Fund, Inc. et al., supra note 15; Bow River
Capital Evergreen Fund, et al., supra note 15; AFA Multi-Manager Credit Fund et al., supra note 15; BNY Mellon Alcentra
Opportunistic Global Credit Income Fund et al., supra note 15; Calamos-Avenue Opportunities Fund et al., supra note 15;
NB Crossroads Private Markets Access Fund LLC et al., supra note 15; First Eagle Credit Opportunities Fund et al., supra note
15; Primark Private Equity Investments Fund et al., supra note 15; 361 Social Infrastructure Fund et al., supra note 15;
GSO Asset Management LLC et al., supra note 15; Resource Credit Income Fund et al., supra note 15; Keystone Private Income
Fund et al., supra note 15; Hamilton Lane Private Assets Fund et al., supra note 15; KKR Credit Opportunities Portfolio
et al., supra note 15; Conversus StepStone Private Markets et al., supra note 15; Prospect Capital Management L.P. et al.,
supra note 15; Goldman Sachs Real Estate Diversified Income Fund et al., supra note 15; CIM Real Assets & Credit Fund
et al., supra note 15; Hartford Schroders Opportunistic Income Fund et al., supra note 15; Axonic Alternative Income Fund
et al., supra note 15; Principal Diversified Select Income Fund et al., supra note 15; American Beacon Sound Point Enhanced
Income Fund et al., supra note 15; and BlackRock Credit Strategies Fund et al., supra note 15.
1959
In all respects other than class-by-class disclosure, each Fund will comply with the requirements of Form N-2.
2060
Shareholder Reports and Quarterly Portfolio Disclosure of Registered Management Investment Companies, Inv. Co. Act Rel. No. 26372
(Feb. 27, 2004) (adopting release).
2161
Disclosure of Breakpoint Discounts by Mutual Funds, InvestmentInv.
Co. Act Rel. No. 26464 (JuneJun. 7, 2004) (adopting
release).
Exhibit C-1 (Forum) - 13
Each Fund will comply with
any requirements that the Commission or FINRA may adopt regarding disclosure at the point of sale and in transaction confirmations about
the costs and conflicts of interest arising out of the distribution of open-end investment company shares, and regarding prospectus disclosure
of sales loads and revenue sharing arrangements, as if those requirements applied to each Fund. In addition, each Fund will contractually
require that any distributor of the Fund’s sharesShares
comply with such requirements in connection with the distribution of such Fund’s sharesShares.
In June 2006, the Commission
adopted enhanced fee disclosure requirements for fund of funds including registered funds of hedge funds.2262
Applicants will comply with all such applicable disclosure requirements.
The requested relief is
similar to the exemptions discussed above granted by the Commission to, among others, iDirect Private
Markets Fund, SEG Partners Long/Short Equity Fund, Coatue CTEK Fund, Capital Group KKR Multi-Sector+, Global X Venture Fund,
HarbourVest Private Investments Fund, Privacore PCAAM Alternative Income Fund, TCW Private Asset Income Fund, Callodine Specialty
Income Fund, Diamond Hill Securitized Credit Fund, Redwood Real Estate Income Fund, Wellington Global Multi-Strategy Fund, Aether
Infrastructure & Natural Resources Fund, Alpha Alternative Assets Fund, John Hancock Asset-Based Lending Fund,
Oaktree Diversified Income Fund Inc., PGIM Private Real Estate Fund, Inc., Bow River Capital Evergreen Fund, AFA Multi-Manager
Credit Fund, BNY Mellon Alcentra Opportunistic Global Credit Income Fund, Calamos-Avenue Opportunities Fund, NB Crossroads Private
Markets Access Fund LLC;,
First Eagle Credit Opportunities Fund;,
Primark Private Equity Investments Fund;,
361 Social Infrastructure Fund;,
GSO Asset Management LLC;,
Resource Credit Income Fund;,
Keystone Private Income Fund;,
Hamilton Lane Private Assets Fund;,
KKR Credit Opportunities Portfolio;,
Conversus StepStone Private Markets;,
Prospect Capital Management L.P.;,
Goldman Sachs Real Estate Diversified Income Fund;,
CIM Real Assets & Credit Fund;,
Hartford Schroders Opportunistic Income Fund;,
Axonic Alternative Income Fund;,
Principal Diversified Select Income Fund;,
American Beacon Sound Point Enhanced Income Fund;,
and BlackRock Credit Strategies Fund.2363
Accordingly, the Applicants believe there is ample precedent for the implementation of a multi-class system.
| C. | Early Withdrawal Charge |
Rule 23c-3 under the Act permits an interval fund to make repurchase offers of between 5 and 25 percent of its outstanding shares at net asset value at periodic intervals pursuant to a fundamental policy of the interval fund. Rule 23c-3(b)(1) requires an interval fund to repurchase shares at net asset value and expressly permits the interval fund to deduct from repurchase proceeds only a repurchase fee, not to exceed two percent of proceeds, that is paid to the interval fund and is reasonably intended to compensate the fund for expenses directly related to the repurchase.
2262
Fund of Funds Investments, Inv. Co. Act Rel. Nos. 26198 (Oct. 1, 2003) (proposing release) and 27399 (Jun. 20, 2006) (adopting
release). See also Rules 12d1-1, et seq. of the Act.
2363
See iDirect Private Markets Fund, supra note 15; SEG Partners Long/Short Equity Fund, supra
note 15; Coatue CTEK Fund, supra note 15; Capital Group KKR Multi-Sector+, supra note 15; Global X Venture Fund, supra
note 15; HarbourVest Private Investments Fund, supra note 15; Privacore PCAAM Alternative Income Fund, supra note 15; TCW
Private Asset Income Fund, supra note 15; Callodine Specialty Income Fund, supra note 15; Diamond Hill Securitized Credit
Fund, supra note 15; Redwood Real Estate Income Fund, supra note 15; Wellington Global Multi-Strategy Fund, supra
note 15; Aether Infrastructure & Natural Resources Fund, supra note 15; Alpha Alternative Assets Fund et
al., supra note 15; John Hancock Asset-Based Lending Fund et al., supra note 15; Oaktree Fund Advisors, LLC et al., supra
note 15; PGIM Private Real Estate Fund, Inc. et al., supra note 15; Bow River Capital Evergreen Fund, et al., supra note
15; AFA Multi-Manager Credit Fund et al., supra note 15; BNY Mellon Alcentra Opportunistic Global Credit Income Fund et al., supra
note 15; Calamos-Avenue Opportunities Fund et al., supra note 15; NB Crossroads Private Markets Access Fund LLC et al., supra
note 15; First Eagle Credit Opportunities Fund et al., supra note 15; Primark Private Equity Investments Fund et al., supra
note 15; 361 Social Infrastructure Fund et al., supra note 15; GSO Asset Management LLC et al., supra note 15; Resource
Credit Income Fund et al., supra note 15; Keystone Private Income Fund et al., supra note 15; Hamilton Lane Private Assets
Fund et al., supra note 15; KKR Credit Opportunities Portfolio et al., supra note 15; Conversus StepStone Private Markets
et al., supra note 15; Prospect Capital Management L.P. et al., supra note 15; Goldman Sachs Real Estate Diversified Income
Fund et al., supra note 15; CIM Real Assets & Credit Fund et al., supra note 15; Hartford Schroders Opportunistic Income
Fund et al., supra note 15; Axonic Alternative Income Fund et al., supra note 15; Principal Diversified Select Income Fund
et al., supra note 15; American Beacon Sound Point Enhanced Income Fund et al., supra note 15; and BlackRock Credit Strategies
Fund et al., supra note 15.
Exhibit C-1 (Forum) - 14
The Applicants seek relief
from this requirement of Rule 23c-3(b)(1) to the extent necessary for the Funds to impose EWCs, which are distribution
relateddistribution-related fees payable to a distributor, on sharesShares
submitted for repurchase that have been held for less than a specified period. The Funds are seeking to impose EWCs that are the functional
equivalent of the CDSLs that open-end investment companies may charge under Rule 6c-10 under the Act. The Funds intend to assess EWCs
in much the same way non-interval funds currently assess EWCs. As more fully described below, these charges will be paid to the distributor
and are functionally similar to CDSLs imposed by open-end funds. Relief to permit the imposition of EWCs would be consistent with the
approach the Commission has taken with respect to CDSLs imposed by open-end funds which offer their securities continuously, as the Fund
does for its sharesShares of
beneficial interest. Any EWCs imposed by the Funds will comply with Rule 6c-10 under the Act as if the rule were applicable to closed-end
funds.
In the Adopting Release, the
Commission stated that “the requirement [of Rule 23c-3(b)(1)] that repurchases take place at net asset value and the limitation
of repurchase fees to two percent implicitly preclude the imposition” of CDSLs.2464
The Commission stated, however, that even though it was not proposing any provisions regarding the use of CDSLs by interval funds, “Such
consideration may be appropriate after the Commission considers whether to adopt proposed Rule 6c-10, which would permit the imposition
of CDSLs by open-end companies, and has the opportunity to monitor the effects of the NASD sales charge rule upon distribution charges
of open-end companies, which goes into effect in July of [1993].”2565
Since adopting Rule
23c-3, the Commission has adopted Rule 6c-10. That rule adopts a flexible approach, and permits open-endopen-end
funds to charge CDSLs as long as (i) the amount of the CDSL does not exceed a specified percentage of net asset value or offering
price at the time of the purchase, (ii) the terms of the sales load comply with the provisions of the FINRA Sales Charge Rule,
governing sales charges for open-end funds and (iii) deferred sales loads are imposed in a non-discriminatory fashion (scheduled
variations or elimination of sales loads in accordance with Rule 22d-1 are permitted). Rule 6c-10 is grounded in policy
considerations supporting the employment of CDSLs where there are adequate safeguards for the investor. These same policy
considerations support imposition of EWCs in the interval fund context and are a solid basis for the Commission to grant exemptive
relief to permit interval funds to impose EWCs.
With respect to the policy
considerations supporting imposition of EWCs, as the Commission recognized when it promulgated Rule 23c-3, several non-interval funds
that had been making periodic repurchase offers to their shareholders imposed EWCs comparable to CDSLs.2666
Traditional closed-end funds, which do not regularly offer to repurchase shares, do not generally impose EWCs although nothing in the
Act would preclude them from doing so. Section 23(c)(2) of the Act does not regulate the price at which shares may be purchased in a tender
offer. When a closed-end fund continuously offers its shares at net asset value and provides its shareholders with periodic opportunities
to tender their shares, however, the fund’s distributor (like the distributor of an open-end fund) may need to recover distribution
costs from shareholders who exit their investments early. Moreover, like open-end funds, interval funds need to discourage investors from
moving their money quickly in and out of the fund, a practice that imposes costs on all shareholders.
Neither the Proposing Release
nor the Adopting Release suggests that the purpose underlying Rule 23c-3(b)(1l)’s
requirements that repurchases take place at net asset value is to preclude interval funds from imposing EWCs. Rather, its purpose is to
prohibit funds from discriminating among shareholders in prices paid for shares tendered in a repurchase offer.2767
The best price rules under Rule 23c-123c-l(a)(9)
under the Act and Rule 13e-4(f)(8)(ii) under the Exchange Act address this same concern. The Commission staff does not construe those
rules to forbid closed-end funds making repurchase offers under Section 23(c)(2) from imposing EWCs.2868
There is, in the Applicants’ view, no rational basis to apply Rule 23c-3(b)(1l)’s
requirements differently. Moreover, each Fund will be treating all similarly situated shareholders the same. Each Fund will disclose to
all shareholders the applicability of the EWCs (and any scheduled waivers of the EWCs) to each category of shareholders and, as a result,
no inequitable treatment of shareholders with respect to the price paid in a repurchase offer will result. Each Fund also will disclose
EWCs in accordance with the requirements of Form N-1A concerning CDSLs.
2464
Adopting Release. Rule 23c-3(b)(1l) provides
in pertinent part: “The company shall repurchase the stock for cash at net asset value
determined on the repurchase pricing date…...
The company may deduct from the repurchase proceeds only a repurchase fee not to exceed two percent of the proceeds, that is paid to
the company for expenses directly related to the repurchase.”
2565
Id.
2666
Adopting Release, Section II.A.7.c. Section 23(c)(2) does not require that repurchases be made at net asset value.
2767
See Proposing Release, Section II.A.7; Adopting Release, Section II.A.7.
2868
See Adopting Release, Section II.A.7.c. (recognizing that several closed-end funds making periodic repurchases pursuant to Section 23(c)(2)
impose early withdrawal charges).
Exhibit C-1 (Forum) - 15
As required by Rule 6c-10 for open-end funds, each Fund relying on the Order will comply with shareholder service and distribution fee limits imposed by the FINRA Sales Charge Rule on the same basis as if it were an open-end investment company. In this regard, a Fund will pay service and distribution fees pursuant to plans that are designed to meet the requirements of the FINRA Sales Charge Rule on the same basis as if it were an open-end investment company subject to that rule.
The Commission has previously
granted the same type of exemptive relief requested herein.2969
In each case, the Commission granted relief from Rule 23c-3(b)(1l)
to an interval fund to charge EWCs to certain shareholders who tender for repurchase shares that have been held for less than a specified
period.
| D. | Waivers of EWCs |
Each Fund may grant waivers
of the EWCs on repurchases in connection with certain categories of shareholders or transactions established from time to time. Each Fund
will apply the EWCs (and any waivers, scheduled variations or eliminations of the EWCs) uniformly
to all shareholders in a given class and consistently with the requirements of Rule 22d-1 under the Act as if the Funds were open-end
investment companies. The sharesShares
that benefit from such waivers are less likely to be the cause of rapid turnover in sharesShares
of a Fund, particularly where there are also important policy reasons to waive the EWCs, such as when sharesShares
are tendered for repurchase due to the death, disability or retirement of the shareholder. Events such as death, disability or retirement
are not likely to cause high turnover in sharesShares
of a Fund, and financial needs on the part of the shareholder or the shareholder’s family are often precipitated by such events.
The EWCs may also be waived in connection with a number of additional circumstances, including the following repurchases of sharesShares
held by employer sponsored benefit plans: (i) repurchases to satisfy participant loan advances; (ii) repurchases in connection with distributions
qualifying under the hardship provisions of the Internal Revenue Code of 1986, as amended; and (iii) repurchases representing returns
of excess contributions to such plans. Furthermore, if a distributor has not incurred significant promotional expenses (by making up-front
payments to selling dealers) in connection with attracting shareholders in a particular category to a Fund, the waiver of the EWCs works
to shareholders’ advantage while not harming the distributor economically.
In adopting amended Rule 22d-1
in February 1985, the Commission recognized that the adoption of Rule 22c-1 to “require forward pricing of fund shares largely dispelled
concerns about share dilution.” Furthermore, “the sales load variations that have been instituted [through Rules 22d-1 through
22d-5 and exemptive orders prior to February 1985] have improved the competitive environment for the sale of fund shares without disrupting
the distribution system for the sale of those shares.”3070
In light of these circumstances, the Commission believed that “it is appropriate to permit a broader range of scheduled variation”
as permitted in amended Rule 22d-1.3171
Rule 22d-1 permits open-end funds to sell their shares at prices that reflect scheduled “variations in, or elimination of, the sales
load to particular classes of investors or transactions” provided that the conditions of the rule are met. When Rule 22d-1 was adopted,
the status of CDSLs for open-end funds and waivers of those charges were not covered by any rule and were the subject of exemptive orders.
Rule 6c-10 permitting CDSLs for open-end funds, adopted in April 1995, permits scheduled variations in, or elimination of, CDSLs for a
particular class of shareholders or transactions, provided that the conditions of Rule 22d-1 are satisfied.3272
The same policy concerns and competitive benefits applicable to scheduled variations in or elimination of sales loads for open-end funds
are applicable to interval funds and the same safeguards built into Rules 22d-1 and 6c-10 that protect the shareholders of open-end funds
will protect the shareholders of interval funds so long as interval funds comply with those rules as though applicable to interval funds.
2969
See iDirect Private Markets Fund, supra note 15; SEG Partners Long/Short Equity Fund, supra
note 15; Coatue CTEK Fund, supra note 15; Capital Group KKR Multi-Sector+, supra note 15; Global X Venture Fund, supra
note 15; HarbourVest Private Investments Fund, supra note 15; Privacore PCAAM Alternative Income Fund, supra note 15; TCW
Private Asset Income Fund, supra note 15; Callodine Specialty Income Fund, supra note 15; Diamond Hill Securitized Credit
Fund, supra note 15; Redwood Real Estate Income Fund, supra note 15; Wellington Global Multi-Strategy Fund, supra
note 15; Aether Infrastructure & Natural Resources Fund, supra note 15; Alpha Alternative Assets Fund et
al., supra note 15; John Hancock Asset-Based Lending Fund et al., supra note 15; Oaktree Fund Advisors, LLC et al., supra
note 15; PGIM Private Real Estate Fund, Inc. et al., supra note 15; Bow River Capital Evergreen Fund, et al., supra note
15; AFA Multi-Manager Credit Fund et al., supra note 15; BNY Mellon Alcentra Opportunistic Global Credit Income Fund et al., supra
note 15; Calamos-Avenue Opportunities Fund et al., supra note 15; NB Crossroads Private Markets Access Fund LLC et al., supra
note 15; First Eagle Credit Opportunities Fund et al., supra note 15; Primark Private Equity Investments Fund et al., supra
note 15; 361 Social Infrastructure Fund et al., supra note 15; GSO Asset Management LLC et al., supra note 15; Resource
Credit Income Fund et al., supra note 15; Keystone Private Income Fund et al., supra note 15; Hamilton Lane Private Assets
Fund et al., supra note 15; KKR Credit Opportunities Portfolio et al., supra note 15; Conversus StepStone Private Markets
et al., supra note 15; Prospect Capital Management L.P. et al., supra note 15; Goldman Sachs Real Estate Diversified Income
Fund et al., supra note 15; CIM Real Assets & Credit Fund et al., supra note 15; Hartford Schroders Opportunistic Income
Fund et al., supra note 15; Axonic Alternative Income Fund et al., supra note 15; Principal Diversified Select Income Fund
et al., supra note 15; American Beacon Sound Point Enhanced Income Fund et al., supra note 15; and BlackRock Credit Strategies
Fund et al., supra note 15.
3070
Inv. Co. Act Rel. No. 14390 (FebruaryFeb. 2,
1985).
3171
Id.
3272
Rule 22d-1 requires that the scheduled variations in or elimination of the sales load must apply uniformly to all offerees in the class
specified and the company must disclose to existing shareholders and prospective investors adequate information concerning any scheduled
variation, revise its prospectus and statement of additional information to describe any new variation before making it available to
purchasers, and advise existing shareholders of any new variation within one year of when first made available.
Exhibit C-1 (Forum) - 16
The Applicants submit that
it would be impracticable and contrary to the purpose of Rule 23c-3 to preclude interval funds from providing for scheduled variations
in, or elimination of, EWCs, subject to appropriate safeguards. For the reasons stated above, Applicants submit that the exemptions requested
under sectionSection 6(c) are
necessary and appropriate in the public interest and are consistent with the protection of investors and the purposes fairly intended
by the policy and provision of the Act.
| E. | Asset-Based Distribution and/or Service Fees |
Applicants request
relief from the provisions of Section 17(d) of the Act and Rule 17d-1 thereunder, to the extent necessary to permit the Funds to
impose asset-based distribution and/or service fees (in a manner analogous to Rule 12b-1 fees for an open-end investment company).
Section 12(b) of the Act and Rule 12b-1 thereunder do not apply to closed-end investment companies. Accordingly, no provisions of
the Act or the rules thereunder explicitly limits the ability of a closed-end fund to impose a distribution and/or service fee.3373
Section 17(d) of the Act prohibits an affiliated person of a registered investment company or an affiliated person of such person, acting as principal, from effecting any transaction in which such registered company is a joint, or a joint and several, participant, in contravention of Commission regulations. Rule 17d-1 provides that no joint transaction covered by the rule may be consummated unless the Commission issues an order upon application.
In reviewing applications pursuant to Section 17(d) and Rule 17d-1, the Commission considers whether an investment company’s participation in a joint enterprise or joint arrangement is consistent with the provisions, policies and purposes of the Act, and the extent to which the participation is on a basis different from or less advantageous than that of other participants. Section 17(d) of the Act is intended to prevent or limit abuses arising from conflicts of interest; however, Section 17(d) itself does not prohibit any specific activities, but instead, authorizes the Commission to approve rules to limit or prevent an investment company from being a joint participant on a different or less advantageous basis than other participants. Under Rule 17d-1, it is unlawful for an affiliated person, acting as principal, to participate in or effect any transaction in connection with a joint enterprise or other joint arrangement in which the investment company is a participant, without prior Commission approval. The protections provided for in Section 17(d) essentially allow the Commission to set standards for all transactions concerning an investment company and an affiliate which could be construed as self-dealing or involve overreaching by the affiliate to the detriment of the investment company.
The protections developed
and approved by the Commission for open-end investment companies in Rule 12b-1 will be complied with by each Fund in connection with its
plan with respect to each class of sharesShares
as if the Fund were an open-end management investment company. Therefore, the Funds will participate in substantially the same way and
under substantially the same conditions as would be the case with an open- endopen-end
investment company imposing asset-based distribution and/or shareholder servicingservice
fees under Rule 12b-1.
33
The73 Applicants do not
concede that Section 17(d) applies to the asset-based distribution and/or service fees discussed herein, but requests this exemption
to eliminate any uncertainty.
Exhibit C-1 (Forum) - 17
Applicants note that, at the
same time the Commission adopted Rule 12b-1,3474
it also adopted Rule 17d-3 to provide an exemption from Section 17(d) and Rule 17d-l to the extent necessary for arrangements between
open-end funds and their affiliated persons or principal underwriters (or affiliated persons of such persons or principal underwriters)
whereby payments are made by the open-end fund with respect to distribution, if such agreements are entered into in compliance with Rule
12b-l. In its adopting release, the Commission stated as follows:
The Commission wishes to emphasize that it
has no intention of categorizing certain transactions as raising the applicability of Section 17(d) and Rule 17d-3 of the Act. The Commission’s
only comment is that to the extent that arrangements in which a fund pays for its distribution costs could involve the fund in a ‘joint
enterprise’ with an affiliated person, and if such arrangements were entered into in compliance with Rule 12b-1, the Commission
sees no need for prior Commission review and approval of the arrangements.3575
As closed-end management investment
companies, the Funds may not rely on Rule 17d-3. However, in light of the foregoing, Applicants believe any Section 17(d) concerns the
Commission might have in connection with a Fund’s financing the distribution of its sharesShares
should be resolved by the Fund’s undertaking to comply with the provisions of Rules 12b-1 and 17d-3 as if those rules applied to
closed-end investment companies. Accordingly, the Funds will comply with Rules 12b-1 and 17d-3 as if those rules applied to closed-endclosed-end
investment companies. The Funds represent that the Funds’ imposition of asset-based distribution and/or service fees is consistent
with factors considered by the Commission in reviewing applications for relief from Section 17(d) of the Act and Rule 17d-1 thereunder
(i.e., that the imposition of such fees as described is consistent with the provisions, policies and purposes of the Act and does not
involve participation on a basis different from or less advantageous than that of other participants).
VI. APPLICANTS’ CONDITION
Applicants agree that any order granting the requested relief will be subject to the following condition:
Each Fund relying on the Order will comply with the provisions of Rules 6c-10, 12b-1, 17d-3, 18f-3, 22d-1, and, where applicable, 11a-3 under the Act, as amended from time to time, as if those rules applied to closed-end management investment companies, and will comply with the FINRA Sales Charge Rule, as amended from time to time, as if that rule applied to all closed-end management investment companies.
VII. CORPORATE ACTION
The Initial Fund’s Declaration
of Trust empowers the Board of the Initial Fund to establish different classes of sharesShares
and to take any other action necessary to accomplish the establishment and creation of such classes of sharesShares.
The Board has adopted resolutions, attached as Exhibit A, authorizing the Initial Fund’s officers to file the Application
with the Commission.
VIII. CONCLUSION
For the reasons stated above, Applicants submit that the exemptions requested are necessary and appropriate in the public interest and are consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the Act. Applicants further submit that the relief requested pursuant to Section 23(c)(3) will be consistent with the protection of investors and will ensure that Applicants do not unfairly discriminate against any holders of the class of securities to be purchased. Applicants desire that the Commission issue the requested Order pursuant to Rule 0-5 under the Act without conducting a hearing.
Applicants submit that the
exemptions requested conform substantially to the precedent cited herein.3676
3474
See Bearing of Distribution Expenses by Mutual Funds, Inv. Co. Act Rel. No. 11414 (OctoberOct.
28, 1980).
3575
Id.
3676
See iDirect Private Markets Fund, supra note 15; SEG Partners Long/Short Equity Fund, supra
note 15; Coatue CTEK Fund, supra note 15; Capital Group KKR Multi-Sector+, supra note 15; Global X Venture Fund, supra
note 15; HarbourVest Private Investments Fund, supra note 15; Privacore PCAAM Alternative Income Fund, supra note 15; TCW
Private Asset Income Fund, supra note 15; Callodine Specialty Income Fund, supra note 15; Diamond Hill Securitized Credit
Fund, supra note 15; Redwood Real Estate Income Fund, supra note 15; Wellington Global Multi-Strategy Fund, supra
note 15; Aether Infrastructure & Natural Resources Fund, supra note 15; Alpha Alternative Assets Fund et
al., supra note 15; John Hancock Asset-Based Lending Fund et al., supra note 15; Oaktree Fund Advisors, LLC et al., supra
note 15; PGIM Private Real Estate Fund, Inc. et al., supra note 15; Bow River Capital Evergreen Fund, et al., supra note
15; AFA Multi-Manager Credit Fund et al., supra note 15; BNY Mellon Alcentra Opportunistic Global Credit Income Fund et al., supra
note 15; Calamos-Avenue Opportunities Fund et al., supra note 15; NB Crossroads Private Markets Access Fund LLC et al., supra
note 15; First Eagle Credit Opportunities Fund et al., supra note 15; Primark Private Equity Investments Fund et al., supra
note 15; 361 Social Infrastructure Fund et al., supra note 15; GSO Asset Management LLC et al., supra note 15; Resource
Credit Income Fund et al., supra note 15; Keystone Private Income Fund et al., supra note 15; Hamilton Lane Private Assets
Fund et al., supra note 15; KKR Credit Opportunities Portfolio et al., supra note 15; Conversus StepStone Private Markets
et al., supra note 15; Prospect Capital Management L.P. et al., supra note 15; Goldman Sachs Real Estate Diversified Income
Fund et al., supra note 15; CIM Real Assets & Credit Fund et al., supra note 15; Hartford Schroders Opportunistic Income
Fund et al., supra note 15; Axonic Alternative Income Fund et al., supra note 15; Principal Diversified Select Income Fund
et al., supra note 15; American Beacon Sound Point Enhanced Income Fund et al., supra note 15; and BlackRock Credit Strategies
Fund et al., supra note 15.
Exhibit C-1 (Forum) - 18
As required by Rule 0-2(c)(1)
under the Act, each Applicant hereby states that all of the requirements for execution and filing of this Application on behalf of the
Applicants have been complied with in accordance with the organizational documents of the Applicants, as applicable, and the undersigned
officers of the Applicants are fully authorized to execute this Application. The resolutions of the Initial Fund’s Board are attached
as Exhibit A to this Application in accordance with the requirements of Rule 0-2(c)(1) under the Act and the verifications required by
Rule 0- 20-2(d) under the Act
are attached as Exhibit B to this Application.
Pursuant to Rule 0-2(f) under
the Act, the Applicants state that their address is 240 Saint Paul4600
S. Syracuse Street, Suite 4009th
Floor, Denver, Colorado 80206,80237
and that all written communications regarding this Application should be directed to the individuals and addresses indicated on the first
page of this Application.
* * * * *
[Signature page follows.]
Exhibit C-1 (Forum) - 19
[Link-to-previous
setting changed from off in original to on in modified.].
Applicants have caused this Application to be duly signed on their behalf on the 27th day of August, 2025.
|
Origin Real Estate Credit Fund
By: /s/ Michael McVickar_________________ Name: Michael | |
|
Origin Credit Advisers, LLC
|
Dated: January 6, 2023
Exhibit C-1 (Forum) - 20
[Link-to-previous setting changed
from off in original to on in modified.].
EXHIBIT A
Resolutions of The Board of Trustees of Forum Real Estate Income Fund
(Formerly Forum CRE Income Fund):
EXHIBIT A
Resolutions of the Board of Trustees of Origin Real Estate Credit Fund
RESOLVED, that the
officers of ForumOrigin Real Estate Income
Fund (the “Initial Fund”) be, and each hereby is,Credit Fund (formerly,
Origin Real Estate Credit Interval Fund) (the “Fund”) is authorized to prepare,
execute and submit, on behalf of the Initial Fund, an exemptive application to the and
file with the U.S. Securities and Exchange Commission (the “SEC”)an
application for an exemptive order (i)and
any and all amendments thereto, pursuant to Section 6(c) of the Investment Company Act of 1940,
as amended (the “1940 Act”), forgranting
an exemption from the provisions of Sections
18(a)(2), 18(c) and 18(i) of the Act, (ii)thereunder
and pursuant to Sections 6(c) and 23(c) of the 1940
Act, for
an exemptionorder granting
certain exemptions from Rule 23c-3 under
the Act and (iii)thereunder and pursuant
to Section 17(d) of the 1940 Act and Rule 17d-1
under the Act to permit the Initial Fund to issue multiple classes of shares
and to impose early withdrawal charges and asset-based distribution and/or service fees with respect to a certain class; andthereunder
for an order permitting certain arrangements; and it is
FURTHER RESOLVED, that
the appropriate officers of the Initial
Fund be, and each hereby is,are
authorized and directed to take or cause to be taken any and all such
actions as may be necessary or desirable to carry out the purpose of the foregoing resolutions,
including the filing of
any necessary documents with the SEC
and preparing, executing and filing on behalf of the Initial Fund any such other documents or instruments, as they deem appropriate or
advisable in furtherance of the above resolution, in consultation with counsel, his or her authority to be conclusively evidenced by the
taking of any such actionsauthorizations, documents or approvals as required under the 1940
Act, and the taking of any and all such action shall constitute conclusive evidence of the authority of such officer(s).
Exhibit C-1 (Forum) - 21
EXHIBIT B
Verifications of Forum Real Estate Income Fund and Forum Capital Advisors LLC
EXHIBIT B
Verifications of Origin Real Estate Credit Fund and Origin Credit Advisers, LLC
The undersigned states that
he has duly executed the attached application dated January 6, 2023August
27, 2025 for and on behalf of ForumOrigin
Real Estate IncomeCredit Fund
(formerly, Origin Real Estate Credit Interval Fund) in his capacity as the
PresidentChief Legal Officer of such entity and that all actions by the holders
and other bodies necessary to authorize the undersigned to execute and file such instrument have been taken. The undersigned further states
that he is familiar with such instrument, and the contents thereof, and that the facts therein set forth are true to the best of his knowledge,
information and belief.
Name: Michael Bell Title: President |
Origin Real Estate Credit Fund
By: /s/ Michael
McVickar__
Name: Michael McVickar
Title: Chief Legal Officer
The undersigned states that
he has duly executed the attached application dated January 6, 2023August
27, 2025 for and on behalf of Forum Capital Advisors LLCOrigin
Credit Advisers, LLC, in his capacity as thePresident
and Chief ExecutiveInvestment
Officer of the sole member of such entity and that all actions by the
holders and other bodies necessary to authorize the undersigned to execute and file such instrument have been taken. The undersigned further
states that he is familiar with such instrument, and the contents thereof, and that the facts therein set forth are true to the best of
his knowledge, information and belief.
Name: Darren Fisk Title: Chief Executive Officer | |
Origin Credit Advisers, LLC
By: /s/ Thomas
Briney____________________
Name: Thomas Briney
Title: President and Chief Investment Officer
Exhibit C-1 (Forum) - 22
EXHIBIT C-2
pender changes:
Exhibit C-2 (Pender) - 23
As filed with the Securities and Exchange Commission on August 27, 2025
File No. 812-15790
File No. 812-15406
As filed with the Securities
and Exchange Commission on January 30, 2023
UNITED STATES OF AMERICA
BEFORE THE
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington,
DC 20549
Washington, D.C. 20549
SECONDFirst
Amended and Restated Application Pursuant to Section 6(c) of the Investment Company Act
of 1940, as amended (the “Act”) for an Order Granting Certain Exemptions from the Provisions of Sections 18(a)(2), 18(c)
and 18(i) Thereunder AND,
Pursuant to Sections 6(c) and 23(c)
of the Act for an Order Granting Certain Exemptions from Rule 23c-3 Thereunder and Pursuant
to Section 17(d) of the Act and Rule 17d-1
Thereunder for an Order Permitting Certain Arrangements.
EXPEDITED REVIEW REQUESTED UNDER 17 CFR 270.0-5(d)
In the Matter of the Application of:
________________________________
Origin Real Estate Credit Fund
Pender(formerly,
Origin Real Estate Credit Interval
Fund)
Pender Capital
Management
Origin Credit Advisers, LLC
________________________________
PLEASE SEND ALL COMMUNICATIONS
AND ORDERS TO:
Please direct all communications and orders regarding this Application to:
|
Michael McVickar General Counsel, Origin Investments Chief Compliance Officer, Origin Credit Advisers, LLC Chicago, IL 60601 (312) 635-3704
|
Joshua B. Deringer, Esq.
Veena K. Jain, Esq.
Faegre Drinker Biddle & Reath LLP
One Logan Square, Ste. 2000
Philadelphia, PA 19103
[email protected]
[email protected]
WITH A
COPYCOPIES TO:
|
Joseph M. Mannon Vedder Price P.C. (312) 609-7883 |
Vedder Price P.C. |
Thomas Briney President & Chief Investment
Officer 4600 S. Syracuse Street, 9th Floor Denver, CO 80237 (303) 256-6497 |
Cory Johnson
Chief Executive Officer
Pender Capital Management,
LLC
11766 Wilshire Boulevard, Suite
1460
Los Angeles, CA 90025
This Application (including Exhibits) coNSISTS OF 71 pages
This Application (including
Exhibits) contains 52 pages.
1
Exhibit C-2 (Pender) - 24
TABLE
OF CONTENTS
Exhibit C-2 (Pender) - 25
| I. THE PROPOSAL | 1 | |
| II. STATEMENT OF FACTS | 2 | |
| A. | Origin Real Estate Credit Fund | 2 |
| B. | Origin Credit Advisers, LLC | 4 |
| C. | Other Provisions | 4 |
| III. EXEMPTION REQUESTED | 5 | |
| A. | The Multi-Class System | 5 |
| B. | Early Withdrawal Charges | 5 |
| C. | Asset-Based Distribution and/or Service Fees | 6 |
| IV. COMMISSION AUTHORITY | 6 | |
| V. DISCUSSION | 6 | |
| A. | Background | 6 |
| B. | Multiple Classes of Shares - Exemptions from Sections 18(a)(2), 18(c) and 18(i) of the Act | 9 |
| C. | Early Withdrawal Charge | 12 |
| D. | Waivers of EWCs | 15 |
| E. | Asset-Based Distribution and/or Service Fees | 16 |
| VI. APPLICANTS’ CONDITION | 17 | |
| VII. CORPORATE ACTION | 17 | |
| VIII. CONCLUSION | 17 | |
EXHIBITS
Exhibit A—Resolutions of the
Board of Trustees of PenderOrigin
Real Estate Credit Fund
Exhibit B—Verifications of PenderOrigin
Real Estate Credit Fund and Pender Capital ManagementOrigin
Credit Advisers, LLC
Exhibit C—Marked copies of the First
Amended and Restated Application showing changes from the final versions of the two applications identified as substantially
identical under Rule 0-5(e)(3)
Exhibit C-2 (Pender) - 26
UNITED STATES OF AMERICA
BEFORE THE
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.DC
20549
|
IN THE MATTER OF
File No. |
|
EXPEDITED REVIEW REQUESTED UNDER 17 CFR 270.0-5(d).
I. THE PROPOSAL
PenderOrigin
Real Estate Credit Fund (formerly, Origin Real Estate Credit Interval Fund) (the “Initial
Fund”) is a newly organized Delaware statutory trust that is registered under the Act and that will operate as a continuously
offered, non-diversified, closed-end management investment company thatand
will be operatedstructured as
an interval fund pursuant to Rule 23c-3 under the Act. Pender Capital ManagementOrigin
Credit Advisers, LLC (the “Adviser”) will serve as the Initial Fund’s investment adviser. The
Initial Fund and the Adviser are referred to herein as the “Applicants.”
The Applicants hereby seek
an order (the “Order”) from the U.S. Securities and Exchange Commission (the “Commission”)
(i) pursuant to Section 6(c) of the Act for an exemption from Sections 18(a)(2), 18(c) and 18(i) of the Act; (ii) pursuant to Sections
6(c) and 23(c) of the Act, for an exemption from Rule 23c-3 under the Act and (iii) pursuant to Section 17(d) of the Act and Rule 17d-1
under the Act to permit the Initial Fund to issue multiplefour
separate classes of shares of beneficial interest (“Shares”)77
and to impose early withdrawal charges (“EWCs”) and asset-based distribution and/or service fees with respect
to certain classes.
Applicants request that
the Order also apply to any continuously offered registered closed-end management investment company that has
been previously organized or that may be organized in the future for which the Adviser or any entity controlling,
controlled by, or under common control with the Adviser,
(as that term is defined in Section 2(a)(9) of the Act) or any successor in interest to any such entity,11 78
acts as investment adviser, and that operates as an interval fund pursuant to
Rule 23c-3 under the Act or provides periodic liquidity with respect to its sharesShares
pursuant to Rule 13e-4 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (each, a
“Future Fund,” and,
together with the Initial Fund, the “Funds” or each, a
“Fund”).79
Any of the Funds relying on this relief in the future will do so in compliance with the terms and conditions of this Second
Amended and Restated Applicationfirst amended and restated
application (the “Application”). Applicants represent that each entity presently
intending to rely on the requested relief is listed as an Applicant.
77As used in this Application, “Shares” includes any other equivalent designation of a proportionate ownership interest of the Initial Fund (or any other registered closed-end management investment company relying on the requested Order).
78 A successor in interest is limited to an entity that results from a reorganization into another jurisdiction or a change in the type of business organization.
79 The terms “control” and “investment adviser” are used throughout this Application as those terms are defined in Sections 2(a)(9) and 2(a)(20) of the Act, respectively.
Exhibit C-2 (Pender) - 27
TheOn
May 9, 2025, the Initial Fund has filed an initial registration
statement on Form N-2 (“Initial Registration Statement”) on May 19, 2022,
registering shares of beneficial interest of two initial classes of shares, “I1 Class Shares” and “I2 Class Shares,”,
which, as of the date of this Application, has not yet been declared effective by the Commission, seeking to register Shares of the Initial
Fund to be offered for public sale under the Act and the
Securities Act of 1933, as amended (the “Securities Act”),
each with its own fee and expense structure. and to operate as an interval fund pursuant
to Rule 23c-3 under the Act (the “Initial Registration Statement”). The Initial Registration Statement applies
to the offering of four separate classes of Shares of beneficial interest in the Initial Fund, designated as Class A Shares, Class E Shares,
Class I Shares and Class O Shares. If the requested relief is granted, the Initial Fund anticipates making a continuous public
offering of its I2 Class A Shares,
Class E Shares, Class I Shares and Class O Shares, each with its own fee and expense structure. Until such exemptive relief requested
in this Application is granted, the Initial Fund will offer only one class of Shares for sale, the Class O Shares, and the Class A Shares,
Class E Shares and Class I shares will not be offered to investors. Additional offerings by any Fund relying on the Orderrequested
relief may be offered on a private placement or public offering basis. The
Initial Fund will only offer one class of shares, I1 Class Shares, until receipt of the requested relief.
Shares of the Funds will not be listed on any securities exchange, nor quoted on any quotation medium, and the Funds do not expect there to be a secondary trading market for their shares.
It is currently
contemplated that the Initial Fund’s I1 Class O
Shares will not be subject to other expenses such as distribution and/or service fees nor will
they be subject to an EWC. Each of the Initial Fund’s Class A Shares, Class E Shares and Class I Shares may be subject
to other expenses, including a distribution
and service fee, but not a EWC or front-end sales charge. The I1 Class Shares will not be subject to a distribution and/or service fee
until receipt of the requested relief. The Initial Fund’s I2 Class Shares will be subject to other expenses, but not a
distribution and/or service fee, EWC or front-endbut
will not be subject to an EWC. The Funds may in the future offer additional classes of Shares and/or another sales charge,
fee or expense structure.
Applicants represent
that any asset-based distributionservice
and/or servicedistribution
fees for each class of sharesShares
of the Funds will comply with the provisions of the Financial Industry Regulatory Authority,
Inc. (“FINRA”) Rule 2341 (dformerly,
NASD Rule 2830) (the “FINRA Sales Charge Rule”).80
All references in thethis
Application to the FINRA Sales Charge Rule include any Financial Industry Regulatory
AuthorityFINRA successor or replacement rule to the FINRA Sales Charge Rule.
11
A successor in interest is limited to an entity that results from a reorganization into another jurisdiction or a change in the type
of business organization.
80 As adopted, FINRA Rule 2341 superseded Rule 2830(d) of the Conduct Rules of the National Association of Securities Dealers, Inc. See Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Adopt NASD Rule 2830 as FINRA Rule 2341 (Investment Company Securities) in Consolidated FINRA Rulebook, Securities Exchange Act Release No. 78130 (Jun. 22, 2016).
Exhibit C-2 (Pender) - 28
II. STATEMENT OF FACTS
| A. | Origin Real Estate Credit Fund |
The
Initial Fund has filed a Notification of Registration Filed Pursuant to Section 8(a) of the Act on Form N-8A and the Initial Registration
Statement registering I1 Class Shares and I2 Class Shares under the Act and under the Securities Act. The Initial Fund
is a newly organized Delaware statutory trust.
The Initial Fund is a that is registered under the Act as a continuously offered,
non-diversified, closed-end management investment company that will operate as an interval fund
pursuant to Rule 23c-3 under the Act. The Initial Fund’s investment objective
is to generate risk-adjusted current income, while seeking to prioritize capital preservation through real estate-related investments
that are predominantly credit investments secured by real estate located in the United States. As
of the date of the filing of this Application, the Initial Fund’s Initial Registration Statement has not yet been declared effective
by the Commission. Pursuant to a fundamental policy adopted by the Initial Fund’s Board of Trustees (the “Board”)
and approved by the Initial Fund’s sole initial shareholder, the Initial Fund will conduct quarterly repurchase offers for between
5% and 25% of the Initial Fund’s then-outstanding Shares at net asset value (“NAV”), reduced by any applicable
repurchase fee.
The Initial Fund’s primary investment objectives are to maximize current income and preserve investor capital, with a secondary focus on long-term capital appreciation. The Initial Fund concentrates its investments (i.e., invests more than 25% of its assets) in the real estate industry. The Initial Fund pursues its investment objectives by investing in a portfolio of commercial multifamily real estate-related investments. “Commercial multifamily real estate-related investments” in this context refers to investments related to multifamily residential real estate that is commercially owned, financed and managed, and considered to be a type of commercial real estate. Multifamily real estate may include, among other things, professionally managed multifamily properties or one or more tracts of land to support new homebuilding construction for multifamily units, which may include secondary retail and office space and certain amenities, such as parking garages, clubhouses and common areas. The Initial Fund executes its investment strategy primarily by seeking to invest opportunistically in a portfolio of investments across the following primary asset classes: commercial real estate-related loans and other debt investments; commercial real estate-related equity securities, including, but not limited to, preferred equity issued by real estate investment trusts and securities issued by real estate operating companies; other real estate-related structured and securitized investments; and commercial real estate.
The Adviser has broad discretion to allocate the Initial Fund’s assets among the above-noted primary asset classes, and other real estate-related assets. There is no maximum or minimum percentage of the Initial Fund’s assets that may be allocated to any asset class, although the Initial Fund’s direct ownership of commercial real estate is expected to be limited to acquisitions of property securing an existing investment that has become impaired, provided the investment is suitable and permissible for the Initial Fund. The primary category of commercial real estate underlying the Initial Fund’s investments will be multifamily properties; however, other categories of commercial real estate may include industrial, mixed use, hospitality, office, and retail.
Under normal conditionscircumstances,
the Initial Fund will seek to achieve its
investment objective by investinginvest at least 9580%
of its net assets, including (plus
the amount of any borrowings for investment purposes, in a portfolio of real
estate-related credit investments. These investments include, without limitation: (i) private real estate investments primarily in
the form of debt, and (ii) publicly traded real estate debt) in commercial real estate,
the securities of real estate and real estate-related issuers, and real estate-related loans or other real estate-related debt
securities. For this purpose, real estate-related companies are those that derive at least 50% of their revenues or profits from the
ownership, construction, management, financing or sale of real estate, or have at least 50% of the fair market value of their assets
invested in real estate. The Initial Fund may invest in securities that are rated below investment grade by rating agencies or that
would be rated below investment grade if they were rated. There are no limits on the Initial Fund’s investments in below
investment grade securities. The Initial Fund’s address is c/o
UMB Fund Services, Inc., 235 West Galena4600 S. Syracuse Street, Milwaukee,
WI 53212.9th Floor, Denver, Colorado 80237.
Exhibit C-2 (Pender) - 29
If the
relief requested herein is granted, the Initial Fund intends to offer I2 Class Shares pursuant to a continuous public offering as discussed
above.
The
Initial Fund has adopted a fundamental policy to repurchase a specified percentage of its shares at net asset value on a quarterly basis.
Such repurchase offers will be conducted pursuant to Rule 23c-3 under the Act.2 In order to rely on the requested relief,
a Future FundEach of the Other Funds (as defined below) will adopt fundamental
investment policies in compliance with Rule 23c-3 and make periodic
repurchase offers to its shareholders in compliance with Rule 23c-381
or will provide periodic liquidity with respect to its sharesShares
pursuant to Rule 13e-4 under the Exchange Act. Any repurchase offers made by the Funds will be made to all holders of sharesShares
of each such Fund as of the selected record date.
Each Fund operatingthat
operates or will operate as an interval fund pursuant to Rule 23c-3 under the Act may offer its shareholders an exchange feature
under which the shareholders of the Fund may, in connection with such Fund’s periodic repurchase offers, exchange their sharesShares
of the Fund for shares of the same class of (i) registered open-end investment companies,
or (ii) other registered closed-end investment companies that comply with Rule 23c-3 under the Act and continuously offer
their shares at net asset value, that are in the Fund’s group of investment companies (collectively, the “Other Funds”).
Shares of a Fund operating pursuant to Rule 23c-3 that are exchanged for shares of Other Funds will be included as part of the repurchase
offer amount for such Fund as specified in Rule 23c-3 under the Act. Any exchange option will comply with Rule 11a-3 under the Act, as
if the Fund were an open-end investment company subject to Rule 11a-3. In complying with Rule 11a-3, each Fund will treat an EWC as if
it were a contingent deferred sales load (“CDSL”).382
Shares of a Fund will be subject to a repurchase fee at a rate of no greater than 2% of the aggregate net asset value of a shareholder’s Shares repurchased by the Fund if the interval between the date of purchase of the Shares and the valuation date with respect to the repurchase of those Shares is less than one year. A repurchase fee charged by a Fund is not the same as a CDSL assessed by an open-end fund pursuant to Rule 6c-10 under the Act, as CDSLs are distribution-related charges payable to a distributor, whereas the repurchase fee is payable to the Fund to compensate long-term shareholders for the expenses related to shorter-term investors, in light of the Fund’s generally longer-term investment horizons and investment operations.
Any repurchase fee imposed by a Fund will equally apply to all classes of Shares of a Fund, in compliance with Section 18 of the Act and Rule 18f-3 thereunder. To the extent a Fund determines to waive, impose scheduled variations of, or eliminate any such repurchase fee, it will do so in compliance with the requirements of Rule 22d-1 under the Act as if the repurchase fee was a CDSL and as if the Fund was an open-end investment company. A Fund’s waiver of, scheduled variation in, or elimination of any such repurchase fee will apply uniformly to all shareholders of the Fund regardless of class.
2
Rule 23c-3 and Regulation M under the Exchange Act permit an interval fund to make repurchase offers to repurchase
its shares while engaging in a continuous offering of its shares pursuant to Rule 415 under the Securities Act.
81 Rule 23c-3 and Regulation M under the Exchange Act permit an interval fund to make repurchase offers to repurchase its shares while engaging in a continuous offering of its shares pursuant to Rule 415 under the Securities Act.
382
A CDSL, assessed by an open-end fund pursuant to Rule 6c-10 ofunder
the Act, is a distribution relateddistribution-related
charge payable to the distributor. Pursuant to the requested order, any EWCthe
EWCs will likewise be a distribution-related charge payable to the distributor as distinguished from a repurchase fee which
is payable to thea Fund to compensate long-term
shareholders for the expenses related to shorter termshorter-term
investors, in light of the Fund’s generally longer-term investment horizons and investment operations.
Exhibit C-2 (Pender) - 30
| B. | Origin Credit Advisers, LLC |
The Adviser,
which is organized as a Delaware limited liability company and
a registered, is an investment adviser registered
with the Commission under the Investment Advisers Act of 1940, as amended (the “Advisers Act”). The
Adviser will serve as the Initial Fund’s investment adviser pursuant to an investment
advisory agreement between the Fund and the Adviser (the
“Investment AdvisoryManagement
Agreement”), subject to the approval of.
Prior to the Initial Fund’s commencement of operations, the Investment AdvisoryManagement
Agreement will be approved by the Initial Fund’s Board of
Trustees (the “Board”),, including a majority of the trustees who
are not “interested persons” (as defined in Section 2(a)(19) of the Act) of the Initial Fund and by the Initial Fund’s
original sole initial shareholder,
in the manner required by Sections 15(a) and (c) of the Act. The Applicants are not seeking any exemptions from the provisions of the
Act with respect to the Investment AdvisoryManagement
Agreement. Under the terms of the Investment AdvisoryManagement
Agreement, and subject to the authority of the Board, the Adviser iswill
be responsible for the overall management of the Initial Fund’s business
affairs and selectingactivities, including investment strategies, investment goals, asset
allocation, leverage limitations, reporting requirements and other guidelines in addition to the general monitoring of the
Initial Fund’s investments according to the Initial Fund’s investment objectives,
policies, and restrictionsportfolio, subject to the oversight of the Board. The Adviser will
have sole discretion to make all investments. The Adviser’s address is 11766
Wilshire Boulevard, Suite 1460, Los Angeles, CA 90025.4600 S. Syracuse Street, 9th Floor,
Denver, CO 802376.
| C. | Other Provisions |
From time to time, the Initial
Fund may create additional classes of shares, the terms of which may differ from I1
Class Shares and I2 Class Shares pursuant to and in compliance with Rule 18f-3the other share
classes in the following respects: (i) the amount of fees permitted by different distribution plans and/or different service fee arrangements;
(ii) voting rights with respect to a distribution and/or service plan of a class; (iii) different class designations; (iv) the impact
of any class expenses directly attributable to a particular class of shares allocated on a class basis as described in this Application;
(v) any differences in dividends and net asset value resulting from differences in fees under a distribution plan and/or service fee arrangement
or in class expenses; (vi) any EWCs or other sales load structure; and (vii) exchange or conversion privileges of the classes as permitted
under the Act.
Each Fund will allocate
all expenses incurred by it among the various classes of sharesShares
based on the net assets of thatthe
Fund attributable to each such class, except that the net asset value and expenses of each class will reflect the expenses
associated with the distribution and/or service plan of that class (if any), service fees
attributable to that class (if any), including transfer agency fees, and any other incremental expenses of that class. Incremental
expenses of a Fund attributable to a particular class are limited to (i) incremental transfer agent fees identified by the transfer
agent as being attributable to that class of sharesShares;
(ii) printing and postage expenses relating to preparing and distributing materials such as shareholder reports, prospectuses and
proxies to current shareholders of that class of sharesShares;
(iii) federal registration fees incurred with respect to shares of that class of sharesShares;
(iv) blue sky fees incurred with respect to sales of that class of sharesShares;
(v) expenses of administrative personnel and services as required to support the shareholders of that class; (vi) auditors’
fees, litigation expenses and other legal fees and expenses relating solely to that class of sharesShares;
(vii) additional “trustees’”
fees incurred as a result of issues relating to that class of sharesShares;
(viii) additional accounting expenses relating solely to that class of sharesShares;
(ix) expenses incurred in connection with shareholder meetings as a result of issues relating to that class of sharesShares;
and (x) any other incremental expenses subsequently identified that should be properly allocated to that class of sharesShares
consistent with Rule 18f-3 under the Act. Because of the different distribution fees,and/or
service fees, and any other class expenses that may be attributable to each class of sharesShares,
the net income attributable to, and the dividends payable on, each class of sharesShares
may differ from each other. As a result, the net asset value per share of the classes may differ at times. Expenses of a Fund
allocated to a particular class of sharesShares
will be borne on a pro rata basis by each outstanding share of that class. Distribution and/or service fees
will be paid pursuant to a distribution and/or service plan with respect to a class.
Shares
may be subject to an early repurchase fee at a rate of no greater than two percent of the shareholder’s repurchase proceeds (an
“Early Repurchase Fee”) if the interval between the date of purchase of the shares and the valuation date with respect to
the repurchase of those shares is less than one year. Any Early Repurchase Fee imposed by a Fund will apply to all classes of shares
of the Fund, in compliance with Section 18 of the Act and Rule 18f-3 thereunder. To the extent a Fund determines to waive, impose scheduled
variations of, or eliminate any Early Repurchase Fee, it will do so in compliance with the requirements of Rule 22d-1 under the Act as
if the Early Repurchase Fee were a CDSL and as if the Fund were an open-end investment company and the Fund’s waiver of, scheduled
variation in, or elimination of, any such Early Repurchase Fee will apply uniformly to all shareholders of the Fund regardless of class.
Exhibit C-2 (Pender) - 31
III.
EXEMPTIONS EXEMPTION
REQUESTED
| A. | The Multi-Class System |
Applicants request exemptive
relief to the extent that a Fund’s issuance and sale of multiple classes of sharesShares
might be deemed to result in the issuance of a class of “senior security”483
within the meaning of Section 18(g) of the Act that would violate the provisions of Section 18(a)(2) of the Act, violate the equal voting
provisions of Section 18(i) of the Act, and if more than one class of senior security were issued, violate Section 18(c) of the Act.
| B. | Early Withdrawal Charges |
Applicants request exemptive relief from Rule 23c-3(b)(1) to the extent that rule is construed to prohibit the imposition of an EWC by the Funds.
| C. | Asset-Based Distribution and/or Service Fees |
Applicants request an Order pursuant to Section 17(d) and Rule 17d-1 to the extent necessary for a Fund to pay asset-based distribution and/or service fees.
IV. COMMISSION AUTHORITY
Pursuant to Section 6(c) of the Act, the Commission may, by order on application, conditionally or unconditionally, exempt any person, security or transaction, or any class or classes of persons, securities or transactions from any provision or provisions of the Act or from any rule or regulation under the Act, if and to the extent that the exemption is necessary or appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the Act.
Section 23(c) of the Act provides, in relevant part, that no registered closed-end investment company shall purchase securities of which it is the issuer, except: (a) on a securities exchange or other open market; (b) pursuant to tenders, after reasonable opportunity to submit tenders given to all holders of securities of the class to be purchased; or (c) under such other circumstances as the Commission may permit by rules and regulations or orders for the protection of investors.
Section 23(c)(3) provides that the Commission may issue an order that would permit a closed-end investment company to repurchase its shares in circumstances in which the repurchase is made in a manner or on a basis that does not unfairly discriminate against any holders of the class or classes of securities to be purchased.
483
Section 18(g) defines senior security to include any stock of a class having a priority over any other class as to distribution of assets
or payment of dividends. Share classes that have different asset-based service or distribution charges have different total expenses
and, thus, different net incomes. As a result, each class will have a different NAVnet
asset value, receive a different distribution amount or both. A class with a higher NAVnet
asset value may be considered to have a priority as to the distribution of assets. A class receiving a higher dividend may
be considered to have a priority over classes with lower dividends. Exemption for Open-End
Management Investment Companies Issuing Multiple Classes of Shares; Disclosure by Multiple Class and MasterFeeder Funds; Class Voting
on Distribution Plans, Inv. Co. Rel. No. 20915 (Feb. 23, 1995) at n. 17 and accompanying text.
Exhibit C-2 (Pender) - 32
Section 17(d) of the Act and Rule 17d-1 under the Act prohibit an affiliated person of a registered investment company or an affiliated person of such person, acting as principal, from participating in or effecting any transaction in connection with any joint enterprise or joint arrangement in which the investment company participates unless the Commission issues an order permitting the transaction. In reviewing applications submitted under Section 17(d) and Rule 17d-1, the Commission considers whether the participation of the investment company in a joint enterprise or joint arrangement is consistent with the provisions, policies and purposes of the Act, and the extent to which the participation is on a basis different from or less advantageous than that of other participants.
V. DISCUSSION
| A. | Background |
In its 1992 study entitled
Protecting Investors: A Half Century of Investment Company Regulation (“Protecting Investors”), the Commission’s
Division of Investment Management recognized that the Act imposes a rigid classification system that dictates many important regulatory
consequences.584
For example, the characterization of a management company as “open-end” or “closed-end” has historically been
crucial to the determination of the degree of liquidity athe
fund’s shareholders will have, and thus the liquidity required of such fund'sthe
fund’s investments.
Furthermore, except as noted
below, there has been no middle ground between the two extremes. Open-end funds have offered complete liquidity to their shareholders
and thus required virtually complete liquidity of the underlying investments, while closed-end funds have been subject to requirements
that in fact restrict the liquidity they are permitted to offer their investors. Under this bipolar system of regulation, neither form
has provided the best vehicle for offering portfolios that have substantial, but not complete, liquidity. In Protecting Investors,
the Staff determined that, given the changes in the securities market since 1940—in particular the emergence of semi-liquid
investment opportunities—it was appropriate to re-examine the classification system and its regulatory requirements.685
The one exception to the liquid/illiquid dichotomy has been the so called “prime-rate funds.” These funds, first introduced in 1988, invest primarily in loans and provide shareholders liquidity through periodic tender offers or, more recently, periodic repurchases under Rule 23c-3.
Protecting Investors recognized
that the rigidity of the Act’s classification system had become a limitation on sponsors’ ability to offer innovative products
that would take advantage of the vast array of semi-liquid portfolio securities currently existing. The report also noted the pioneering
efforts of the prime rate funds and the market success they had experienced.786
The report thus concluded that it would be appropriate to provide the opportunity for investment companies to “chart new territory”
between the two extremes of the open-end and closed-end forms, consistent with the goals of investor protection.887
The Division of Investment Management thus recommended giving the industry the ability to employ new redemption and repurchasingrepurchase
procedures, subject to Commission rulemaking and oversight.
In accordance with this recommendation,
and shortly after Protecting Investors was published, the Commission proposed for comment a new rule designed to assist the industry
in this endeavor.988
The Commission proposed Rule 23c-3, which began from the closed-end, illiquid perspective under Section 23(c), and provided flexibility
to increase shareholder liquidity through periodic repurchase offers under simplified procedures. Rule 23c-3 was adopted in April 1993.1089
584
SEC Staff Report, Protecting Investors: A Half Century of Investment Company Regulation 421
(May 1992), at 421.
685
Id. at 424.
786
Id. at 439-40.
887
Id. at 424.
9
Investment88
Inv. Co. Act Rel. No. 18869 (JulyJul. 28, 1992) (the “Proposing
Release”).
10
Investment89
Inv. Co. Act Rel. No. 19399 (AprilApr.
7, 1993) (the “Adopting Release”). The Commission also had proposed Rule 22e-3, which began from the open-end,
complete liquidity perspective under Section 22 of the Act, and permitted periodic or delayed, rather than constant liquidity. The Commission
neither adopted nor withdrew proposed Rule 22e-3. To the Applicants’ knowledge, the Commission has taken no further action with
respect to Rule 22e-3.
Exhibit C-2 (Pender) - 33
The prime rate funds
were cited in both Protecting Investors and the Proposing Release as the prototype for the interval concept.1190
Nonetheless, while the prime rate funds broke the path for innovation in this area, developments since the origin of these funds
make further innovation appropriate. Ample precedent exists for the implementation of a multi-classmultiple
class system and the imposition of asset-based distribution and/or service fees for which the Funds seek relief. Since
1998, the Commission has granted relief to, among
others, the following closed-end investment companies to issue multiple classes of shares, to impose EWCs and to impose
distribution and/or service fees, e.g., iDirect Private Markets Fund, SEG Partners Long/Short
Equity Fund, Coatue CTEK Fund, Capital Group KKR Multi-Sector+, Global X Venture Fund, HarbourVest Private Investments Fund,
Privacore PCAAM Alternative Income Fund, TCW Private Asset Income Fund, Callodine Specialty Income Fund, Diamond Hill Securitized
Credit Fund, Redwood Real Estate Income Fund, Wellington Global Multi-Strategy Fund, Aether Infrastructure & Natural Resources
Fund, Alpha Alternative Assets Fund, John Hancock Asset-Based Lending Fund and John Hancock Investment Management LLC, Oaktree
Diversified Income Fund Inc., PGIM Private Real Estate Fund, Inc., Bow River Capital Evergreen Fund, AFA Multi-Manager
Credit Fund, BNY Mellon Alcentra Opportunistic Global Credit Income Fund, Calamos-Avenue Opportunities Fund, NB
Crossroads Private Markets Access Fund LLC, First Eagle Credit Opportunities Fund, Primark Private Equity Investments Fund, 361
Social Infrastructure Fund; GSO Asset Management LLC, Resource Credit Income Fund; Keystone Private Income Fund, Hamilton Lane
Private Assets Fund, KKR Credit Opportunities Portfolio, 361 Social
InfrastructureConversus StepStone Private Markets, Prospect Capital Management L.P.,
Goldman Sachs Real Estate Diversified Income Fund, and CIM
Real Assets & Credit Fund, et al.12Hartford Schroders
Opportunistic Income Fund, Axonic Alternative Income Fund, Principal Diversified Select Income Fund, American Beacon Sound Point
Enhanced Income Fund, and BlackRock Credit Strategies Fund.91
1190
Protecting Investors at 439-40; Proposing Release at 27.
12
See, e.g., Bow River Capital Evergreen Fund and Bow River Asset Management LLC, Investment Co. Rel. Nos.
34421 (November 19, 2021) (notice) and 34442 (December 15, 2021) (order); AFA Multi-Manager Credit Fund and Alternative Fund Advisors,
LLC, Investment Co. Rel Nos. 34430 (November 2, 2021) (notice) (December 1, 2021) (order); BNY Mellon Alcentra Opportunistic Global Credit
Income Fund and BNY Mellon Investment Adviser, Inc., Investment Co. Rel. Nos. 34320 (June 29,2021) (notice) and 34344 (July 26, 2021)
(order); Calamos Avenue Opportunities Fund and Calamos Avenue Management, LLC, Investment Co. Rel. Nos. 34300 (June 14, 2021) (notice)
and 34327 (July 12, 2021) (order); KKR Credit Opportunities Portfolio and KKR Credit Advisors (US) LLC Investment Co. Rel. Nos. 33840
(April 16, 2020) (notice) and 33863 (May 12, 2020) (order); 361 Social Infrastructure Fund and 361 Infrastructure Partners, LLC, Investment
Co. Rel. Nos. 34051 (October 15, 2020) (notice) and 34091 (November 10, 2020) (order); and CIM Real Assets & Credit Fund, et al.
Investment Co. Rel. Nos. 33630 (September 23, 2019) (notice) and 33659 (October 22, 2019) (order).
91 See, e.g., iDirect Private Markets Fund, et al., Inv. Co. Rel. Nos. 35474 (Feb. 21, 2025) (Notice) and 35497 (Mar. 14, 2025) (Order); SEG Partners Long/Short Equity Fund, et al., Inv. Co. Rel. Nos. 35466 (Feb. 6, 2025) (Notice) and 35491 (Mar. 4, 2025) (Order); Coatue CTEK Fund and Coatue Management, L.L.C., Inv. Co. Rel. Nos. 35417 (Dec. 13, 2024) (Notice) and 35443 (Jan. 8, 2025) (Order); Capital Group KKR Multi-Sector+, et al., Inv. Co. Rel. Nos. 35410 (Dec. 9, 2024) (Notice) and 35441 (Jan. 6, 2025) (Order); Global X Venture Fund and Global X Management Company, LLC, Inv. Co. Rel. Nos. 35408 (Dec. 9, 2024) (Notice) and 35440 (Jan. 6, 2025) (Order); HarbourVest Private Investments Fund and HarbourVest Registered Advisers L.P., Inv. Co. Rel. Nos. 35409 (Dec. 9, 2024) (Notice) and 35439 (Jan. 6, 2025) (Order); Privacore PCAAM Alternative Income Fund, et al., Inv. Co. Rel. Nos. 35403 (Nov. 27, 2024) (Notice) and 35431 (Dec. 26, 2024) (Order); TCW Private Asset Income Fund and TCW Asset Backed Finance Management Company LLC, Investment Co. Rel. Nos. 35401 (Nov. 26, 2024) (Notice) and 35429 (Dec. 23, 2024) (Order); Callodine Specialty Income Fund and Callodine Capital Management, LP, Investment Co. Rel. Nos. 35399 (Nov. 26, 2024) (Notice) and 35428 (Dec. 23, 2024) (Order); Diamond Hill Securitized Credit Fund and Diamond Hill Capital Management, Inc., Inv. Co. Rel. Nos. 35385 (Nov. 14, 2024) (Notice) and 35414 (Dec. 10, 2024) (Order); Redwood Real Estate Income Fund and Redwood Investment Management, LLC, Inv. Co. Rel. Nos. 35382 (Nov. 12, 2024) (Notice) and 35413 (Dec. 10, 2024) (Order); Wellington Global Multi-Strategy Fund and Wellington Management Company LLP, Inv. Co. Rel. Nos. 35317 (Sept. 10, 2024) (Notice) and 35353 (Oct. 8, 2024) (Order); Aether Infrastructure & Natural Resources Fund, et al., Inv. Co. Rel. Nos. 35168 (Apr. 10, 2024) (Notice) and 35186 (May 7, 2024) (Order); Alpha Alternative Assets Fund and Alpha Growth Management LLC, Inv. Co. Rel. No. 34530 (Mar. 9, 2022) (Notice) and 34555 (Apr. 5, 2022) (Order); John Hancock Asset-Based Lending Fund and John Hancock Investment Management LLC, Inv. Co. Rel. No. 34491 (Jan. 31, 2022) (Notice) and 34524 (Mar. 3, 2022) (Order); Oaktree Fund Advisors, LLC and Oaktree Diversified Income Fund Inc., Inv. Co. Rel. No. 34436 (Dec. 10, 2021) (Notice) and 34464 (Jan. 5, 2022) (Order); PGIM Private Real Estate Fund, Inc., Inv. Co. Rel. No. 34434 (Dec. 3, 2021) (Notice) and 34455 (Dec. 29, 2021) (Order); Bow River Capital Evergreen Fund, et al., Inv. Co. Rel. No. 34421 (Nov. 19, 2021) (Notice) and 34442 (Dec. 15, 2021) (Order); AFA Multi-Manager Credit Fund and Alternative Fund Advisors, LLC, Inv. Co. Rel. No. 34414 (Nov. 2, 2021) (Notice) and 34430 (Dec. 1, 2021) (Order); BNY Mellon Alcentra Opportunistic Global Credit Income Fund and BNY Mellon Investment Adviser, Inc., Inv. Co. Rel. No. 34320 (Jun. 29, 2021) (Notice) and 34344 (Jul. 26, 2021) (Order); Calamos-Avenue Opportunities Fund and Calamos Avenue Management, LLC, Inv. Co. Rel. No. 34300 (Jun. 14, 2021) (Notice) and 34327 (Jul. 12, 2021) (Order); NB Crossroads Private Markets Access Fund LLC and Neuberger Berman Investment Advisers LLC, Inv. Co. Rel. No. 34094 (Nov. 13, 2020) (Notice) and 34132 (Dec. 8, 2020) (Order); First Eagle Credit Opportunities Fund, et al., Inv. Co. Rel. No. 34080 (Oct. 30, 2020) (Notice) and 34216 (Dec. 1, 2020) (Order); Primark Private Equity Investments Fund and Primark Advisors LLC, Inv. Co. Rel. No. 34054 (Oct. 20, 2020) (Notice) and 34098 (Nov. 17, 2020) (Order); 361 Social Infrastructure Fund and 361 Infrastructure Partners, LLC, Inv. Co. Rel. No. 34051 (Oct. 15, 2020) (Notice) and 34091 (Nov. 10, 2020) (Order); GSO Asset Management LLC and Blackstone Private Credit Fund, Inv. Co. Rel. No. 34011 (Sept. 14, 2020) (Notice) and 34044 (Oct. 6, 2020) (Order); Resource Credit Income Fund and Sierra Crest Investment Management LLC, Inv. Co. Rel. No. 34001 (Sept. 2, 2020) (Notice) and 34033 (Sept. 29, 2020) (Order); Owl Rock Capital Corporation II, et al., Inv. Co. Rel. No. 33972 (Aug. 17, 2020) (Notice) and 34012 (Sept. 15, 2020) (Order); Keystone Private Income Fund and Keystone National Group, LLC, Inv. Co. Rel. No. 33917 (Jul. 1, 2020) (Notice) and Inv. Co. Rel. No. 33957 (Jul. 28, 2020) (Order); Hamilton Lane Private Assets Fund and Hamilton Lane Advisors, L.L.C., Inv. Co. Rel. No. 33896 (Jun. 17, 2020) (Notice) and Inv. Co. Rel. No. 33926 (Jul. 14, 2020) (Order); KKR Credit Opportunities Portfolio and KKR Credit Advisors (US) LLC, Inv. Co. Rel. No. 33840 (Apr. 16, 2020) (Notice) and Inv. Co. Rel. No. 33863 (May 12, 2020) (Order); Conversus StepStone Private Markets and StepStone Conversus LLC, Inv. Co. Rel. No. 33815 (Mar. 12, 2020) (Notice) and Inv. Co. Rel. No. 33851 (Apr. 23, 2020) (Order); Prospect Capital Management L.P., et al., Inv. Co. Rel. No. 33800 (Feb. 19, 2020) (Notice) and Inv. Co. Rel. No. 33822 (Mar. 24, 2020) (Order); Goldman Sachs Real Estate Diversified Income Fund, et al, Inv. Co. Rel. No. 33743 (Jan. 9, 2020) (Notice) and Inv. Co. Rel. No. 33797 (Feb. 4, 2020) (Order); CIM Real Assets & Credit Fund, et al., Inv. Co. Rel. No. 33630 (Sept. 23, 2019) (Notice) and Inv. Co. Rel. No. 33659 (Oct. 22, 2019) (Order); Hartford Schroders Opportunistic Income Fund and Hartford Funds Management Company, LLC, Inv. Co. Rel. No.33610 (Aug. 27, 2019) (Notice) and Inv. Co. Rel. No. 33632 (Sept. 24, 2019) (Order); Axonic Alternative Income Fund and Axonic Capital LLC, Inv. Co. Rel. No. 33508 (Jun. 13, 2019) (Notice) and Inv. Co. Rel. No. 33553 (Jul. 15, 2019) (Order); Principal Diversified Select Income Fund, et al., Inv. Co. Rel. No. 33441 (Apr. 8, 2019) (Notice) and Inv. Co. Rel. No. 33466 (May 6, 2019) (Order); American Beacon Sound Point Enhanced Income Fund, et al., Inv. Co. Rel. No. 33393 (Mar. 8, 2019) (Notice) and Inv. Co. Rel. No. 33439 (Apr. 3, 2019) (Order); BlackRock Credit Strategies Fund, et al., Inv. Co. Rel. No. 33388 (Mar. 5, 2019) (Notice) and Inv. Co. Rel. No. 33437 (Apr. 2, 2019) (Order).
Exhibit C-2 (Pender) - 34
| B. | Multiple Classes of Shares - Exemptions from Sections 18(a)(2), 18(c) and 18(i) of the Act |
The
Applicants request exemptive relief to the extent that athe
Initial Fund’s issuance and sale of multiple classes of sharesShares
of beneficial interest might be deemed to result in the issuance of a class of “senior security”92
within the meaning of Section 18(g) of the Act that would violate the provisions of Section 18(a)(2) of the Act, violate the equal voting
provisions of Section 18(i) of the Act, and if more than one class of senior security were issued, violate Section 18(c) of the Act.
A registered closed-end investment
company may have only one class of senior security representing indebtedness and only one class of stock that is a senior security. With
respect to the class of stock that is a senior security, i.e., preferred stock, the preferred stock must have certain rights as described
in Section 18(a)(2). Section 18(a)(2)(A) and (B) makes it unlawful for a registered closed-end investment company to issue a senior security
that is a stock unless (a) immediately after such issuance it will have an asset coverage of at least 200% and (b) provision is made to
prohibit the declaration of any distribution, upon its common stock, or the purchase of any such common stock, unless in every such case
such senior security has at the time of the declaration of any such distribution, or at the time of any such purchase, an asset coverage
of at least 200% after deducting the amount of such distribution or purchase price, as the case may be. Section 18(a)(2)(C) and (D) makes
it unlawful for a registered closed-end investment company to issue a senior security that is a stock unless,
stockholders have the right, voting separately as a class, to: (i) elect at least two directors at all times; (ii) elect
a majority of the directors if at any time dividends on such class of securities have been unpaid in an amount equal to two full years'’
dividends on such securities; and (iii) approve any plan of reorganization adversely affecting their securities or any action requiring
a vote of security holders as set forth in section 13(a).1393
Section 18(a)(2)(E) requires that such class of stock will have “complete priority over any other class as to distribution of assets
and payment of dividends, which dividends shall be cumulative.”
Section 18(i) provides:
“Except as provided in subsection (a) of this section, or as otherwise required by law, every share of stock hereafter issued by a registered management company ... shall be voting stock and have equal voting rights with every other outstanding voting stock: Provided, That this subsection shall not apply ... to shares issued in accordance with any rules, regulations, or orders which the Commission may make permitting such issue.”
Finally, Section 18(c) of
the Act provides that “it shall be unlawful for any registered closed-end investment company ... to issue or sell any senior security
which is a stock if immediately thereafter such company will have outstanding more than one class of senior security which is a stock,”
except that “any such class of ... stock may be issued in one or more series:,
provided, that no such series shall have a preference or priority over any other series upon the distribution of the assets of such registered
closed-end company or in respect of the payment of interest or dividends…...”
The multi-class system proposed
herein may result in sharesShares
of a class having priority over another class as to payment of dividends and having unequal voting rights, because under the proposed
system (i) shareholders of different classes would pay different distribution and/or service fees (and related costs as described above),
different administrative fees and any other incremental expenses that should be properly allocated to a particular class, and (ii) each
class would be entitled to exclusive voting rights with respect to matters solely related to that class.
92 See note 7.
1393
Section 13(a) requires, among other things, that a majority of thea
fund’s outstanding voting securities must approve converting to a mutual fund format.
Exhibit C-2 (Pender) - 35
Applicants believe that the
implementation of the proposed multi-class system will enhance shareholder options. Under a multi-classmulti-class
system, an investor can choose the method of purchasing sharesShares
that is most beneficial given the amount of his or hertheir
purchase, the length of time the investor expects to hold his or her sharestheir
Shares, and other relevant circumstances. The proposed arrangements would permit a Fund to facilitate
both facilitate the distribution of its securities and provide investors with
a broader choice of shareholder services.
By contrast, if a Fund were
required to organize separate investment portfolios for each class of sharesShares,
the success of the new portfolios might be limited. Unless each new portfolio grew at a sufficient rate and to a sufficient size, it could
be faced with liquidity and diversification problems that would prevent the portfolio from producing a favorable return.
Under the proposal, owners
of each class of sharesShares
may be relieved under the multi-class system of a portion of the fixed costs normally associated with investing in investment companies
because these costs potentially would be spread over a greater number of sharesShares
than they would be otherwiseif the classes
were separate funds or portfolios. As a Fund grows in volume of assets, the investors will derive benefits from economies of
scale that would not be available at smaller volumes.
The Commission has long recognized
that multiple class arrangements can be structured so that the concerns underlying the Act’s “senior security” provisions
are satisfied. After having granted numerous exemptive orders (“multiple class exemptive orders”) to open-end
investment companies permitting those funds to issue two or more classes of shares representing interests in the same portfolio,1494
the Commission adopted Rule 18f-3 under the Act in 1995, which now permits open-end funds to maintain or create multiple classes without
seeking individual exemptive orders, as long as certain conditions are met.1595
Applicants believe that the
proposed closed-end investment company multiple class structure does not raise concerns underlying Section 18 of the Act to any greater
degree than open-end investment companies’ multiple class structures. The proposed multiple class structure does not relate to borrowings
and will not adversely affect a Fund’s assets. In addition, the proposed structure will not increase the speculative character of
each Fund’s sharesShares.
Applicants also believe that the proposed allocation of expenses relating to distribution and/or services
and voting rights is equitable and will not discriminate against any group or class of shareholders.
Applicants believe that the
rationale for, and conditions contained in, Rule 18f-3 are as applicable to a closed-end investment company seeking to offer multiple
classes of common shares with varying distribution and/or service arrangements in a single portfolio
as they are to open-end funds. Each Fund will comply with the provisions of Rule 18f-3 as if it were an open-end investment company, including,
among others, its provisions relating to differences in expenses, special allocations of other expenses, voting rights, conversions and
exchanges and disclosures. In fact, each Fund in many ways resembles an open-end fund in its manner of operation and in the distribution
of its sharescommon Shares.
1494
See, e.g., Sierra Trust Funds, et al., InvestmentInv.
Co. Act Rel. No. 20093 (FebruaryFeb. 23, 1994)
(noticeNotice) and InvestmentInv.
Co. Act Rel. No. 20153 (MarchMar. 22, 1994)
(orderOrder); see also Exemption for
Open-End Management Investment Companies Issuing Multiple Classes of Shares; Disclosure by Multiple Class and Master-Feeder Funds, InvestmentInv.
Co. Act Rel. No. 19955 (DecemberDec.
15, 1993).
1595 See InvestmentInv.
Co. Act Rel. No. 20915 (FebruaryFeb. 23,
1995). As adopted, Rule 18f-3 creates an exemption for mutual funds that issue multiple classes of shares with varying arrangements
for the distribution of securities and the provision of services to shareholders. In connection with the adoption of Rule 18f-3, the
Commission also amended Rule 12b-1 under the Act to clarify that each class of shares must have separate 12b-1 plan provisions.
Moreover, any action on the 12b-1 plan (i.e., trusteedirector
or shareholder approval) must take place separately for each class. The Commission has adopted amendments to Rule 18f-3 that expand
and clarify the methods by which a multiple class fund may allocate income, gains, losses and expenses and that clarify the
shareholder voting provisions of the rule.
Exhibit C-2 (Pender) - 36
In particular, the Funds will
offer their sharesShares continuously
at a price based on net asset value, plus any applicable front-end sales chargeload.
Differences among classes will, as detailed above, relate largely to differences in distribution and/or service arrangements. Applicants
note that open-end and closed-end funds are subject to different technical provisions governing the issuance of senior securities. However,
those technical differences do not appear relevant here. Although closed-end funds may not issue multiple classes of common
shares without exemptive relief, the Commission has granted specific exemptive relief to similarly-situatedsimilarly
situated closed-end funds.1696
Provisions regulating the issuance by closed-end funds of debt or preferred stock should have no bearing on an application by a closed-end
fund for an exemptive order permitting the issuance of multiple classes of sharescommon
stock. Therefore, Applicants propose to base the conditions under which the Funds would issue multiple classes of shares of
beneficial interest on those contained in Rule 18f-3.
Applicants believe that the
proposed allocation of expenses and voting rights relating to the asset-based distribution and/or service fees applicable to the different
classes of sharesShares of each
Fund in the manner described above is equitable and would not discriminate against any group of shareholders. Each Applicant is aware
of the need for full disclosure of the proposed multi-class system in each Fund'sFund’s
prospectus and of the differences among the various classes and the different expenses of each class of sharesShares
offered. Each Fund will include in its prospectus disclosure of the fees, expenses and other characteristics of each class of sharesShares
offered for sale by the prospectus, as is required for open-end multi-class funds under Form N-1A.1797
Applicants also note that the Commission has adopted rule and form amendments to require registered open-end management investment companies
to disclose fund expenses borne by shareholders during the reporting period in shareholder reports1898
and to describe in their prospectuses any arrangements that result in breakpoints in, or elimination of, sales loads.1999
Each Fund will include these disclosures in its shareholder reports and prospectus.
Each Fund will comply with
any requirements that the Commission or FINRA may adopt regarding disclosure at the point of sale and in transaction confirmations about
the costs and conflicts of interest arising out of the distribution of open-end investment company shares, and regarding prospectus disclosure
of sales loads and revenue sharing arrangements, as if those requirements applied to each Fund. In addition, each Fund will contractually
require that any distributor of the Fund’s sharesShares
comply with such requirements in connection with the distribution of such Fund’s sharesShares.
1696
See Alpha Alternative Assets Fund et al., supra note 15; John Hancock Asset-Based
Lending Fund et al., supra note 15; Oaktree Fund Advisors, LLC et al., supra note 15; PGIM Private Real Estate Fund, Inc.
et al., supra note 15; Bow River Capital Evergreen Fund, et al., supra note 1215;
AFA Multi-Manager Credit Fund et al., supra note 12;15;
BNY Mellon Alcentra Opportunistic Global Credit Income Fund et al., supra
note 1215; Calamos-Avenue Opportunities
Fund et al., supra note 12; KKR Credit Opportunities
Portfolio15; NB Crossroads Private Markets Access Fund LLC et al., supra
note 1215; First Eagle Credit Opportunities
Fund et al., supra note 15; Primark Private Equity Investments Fund et al., supra note 15; 361 Social Infrastructure
Fund et al., supra note 12; and15;
GSO Asset Management LLC et al., supra note 15; Resource Credit Income Fund et al., supra note 15; Keystone Private Income
Fund et al., supra note 15; Hamilton Lane Private Assets Fund et al., supra note 15; KKR Credit Opportunities Portfolio
et al., supra note 15; Conversus StepStone Private Markets et al., supra note 15; Prospect Capital Management L.P. et al.,
supra note 15; Goldman Sachs Real Estate Diversified Income Fund et al., supra note 15; CIM Real Assets &
Credit Fund et al., supra note 1215;
Hartford Schroders Opportunistic Income Fund et al., supra note 15; Axonic Alternative Income Fund et al., supra note 15;
Principal Diversified Select Income Fund et al., supra note 15; American Beacon Sound Point Enhanced Income Fund et al., supra
note 15; and BlackRock Credit Strategies Fund et al., supra note 15.
1797
In all respects other than class-by-class disclosure, each Fund will comply with the requirements of Form N-2.
1898
Shareholder Reports and Quarterly Portfolio Disclosure of Registered Management Investment Companies, Investment
CompanyInv. Co. Act Rel. No. 26372 (Feb. 27, 2004) (adopting release).
1999
Disclosure of Breakpoint Discounts by Mutual Funds, Investment CompanyInv.
Co. Act Rel. No. 26464 (JuneJun.
7, 2004) (adopting release).
Exhibit C-2 (Pender) - 37
In June 2006, the Commission
adopted enhanced fee disclosure requirements for fund of funds including registered funds of hedge funds.20100
Applicants will comply with all such applicable disclosure requirements.
The requested relief is similar
to the exemptions discussed above granted by the Commission to, among others, iDirect Private Markets Fund,
SEG Partners Long/Short Equity Fund, Coatue CTEK Fund, Capital Group KKR Multi-Sector+, Global X Venture Fund, HarbourVest Private Investments
Fund, Privacore PCAAM Alternative Income Fund, TCW Private Asset Income Fund, Callodine Specialty Income Fund, Diamond Hill Securitized
Credit Fund, Redwood Real Estate Income Fund, Wellington Global Multi-Strategy Fund, Aether Infrastructure & Natural Resources Fund,
Alpha Alternative Assets Fund, John Hancock Asset-Based Lending Fund, Oaktree Diversified Income Fund Inc., PGIM Private Real Estate Fund,
Inc., Bow River Capital Evergreen Fund, AFA Multi-Manager Credit Fund, BNY Mellon Alcentra Opportunistic Global Credit Income
Fund, Calamos-Avenue Opportunities Fund, KKRNB
Crossroads Private Markets Access Fund LLC, First Eagle Credit Opportunities Portfolio,Fund,
Primark Private Equity Investments Fund, 361 Social Infrastructure Fund, andGSO
Asset Management LLC, Resource Credit Income Fund, Keystone Private Income Fund, Hamilton Lane Private Assets Fund, KKR Credit Opportunities
Portfolio, Conversus StepStone Private Markets, Prospect Capital Management L.P., Goldman Sachs Real Estate Diversified Income Fund,
CIM Real Assets & Credit Fund.21,
Hartford Schroders Opportunistic Income Fund, Axonic Alternative Income Fund, Principal Diversified Select Income Fund, American Beacon
Sound Point Enhanced Income Fund, and BlackRock Credit Strategies Fund.101
Accordingly, the Applicants believe there is ample precedent for the implementation of a multi-class
system.
20100
Fund of Funds Investments, Investment CompanyInv.
Co. Act Rel. Nos. 26198 (Oct. 1, 2003) (proposing release) and 27399 (Jun.
20, 2006) (adopting release). See also Rules 12d1-1, et seq. of the Act.
21
See Bow River Capital Evergreen Fund, supra note 12; AFA Multi-Manager Credit Fund supra note
12; BNY Mellon Alcentra Opportunistic Global Credit Income Fund, supra note 12; Calamos-Avenue Opportunities Fund, supra note
12; KKR Credit Opportunities Portfolio, supra note 12; 361 Social Infrastructure Fund, supra note 12;
and CIM Real Assets & Credit Fund, supra note 12.
101 See iDirect Private Markets Fund, supra note 15; SEG Partners Long/Short Equity Fund, supra note 15; Coatue CTEK Fund, supra note 15; Capital Group KKR Multi-Sector+, supra note 15; Global X Venture Fund, supra note 15; HarbourVest Private Investments Fund, supra note 15; Privacore PCAAM Alternative Income Fund, supra note 15; TCW Private Asset Income Fund, supra note 15; Callodine Specialty Income Fund, supra note 15; Diamond Hill Securitized Credit Fund, supra note 15; Redwood Real Estate Income Fund, supra note 15; Wellington Global Multi-Strategy Fund, supra note 15; Aether Infrastructure & Natural Resources Fund, supra note 15; Alpha Alternative Assets Fund et al., supra note 15; John Hancock Asset-Based Lending Fund et al., supra note 15; Oaktree Fund Advisors, LLC et al., supra note 15; PGIM Private Real Estate Fund, Inc. et al., supra note 15; Bow River Capital Evergreen Fund, et al., supra note 15; AFA Multi-Manager Credit Fund et al., supra note 15; BNY Mellon Alcentra Opportunistic Global Credit Income Fund et al., supra note 15; Calamos-Avenue Opportunities Fund et al., supra note 15; NB Crossroads Private Markets Access Fund LLC et al., supra note 15; First Eagle Credit Opportunities Fund et al., supra note 15; Primark Private Equity Investments Fund et al., supra note 15; 361 Social Infrastructure Fund et al., supra note 15; GSO Asset Management LLC et al., supra note 15; Resource Credit Income Fund et al., supra note 15; Keystone Private Income Fund et al., supra note 15; Hamilton Lane Private Assets Fund et al., supra note 15; KKR Credit Opportunities Portfolio et al., supra note 15; Conversus StepStone Private Markets et al., supra note 15; Prospect Capital Management L.P. et al., supra note 15; Goldman Sachs Real Estate Diversified Income Fund et al., supra note 15; CIM Real Assets & Credit Fund et al., supra note 15; Hartford Schroders Opportunistic Income Fund et al., supra note 15; Axonic Alternative Income Fund et al., supra note 15; Principal Diversified Select Income Fund et al., supra note 15; American Beacon Sound Point Enhanced Income Fund et al., supra note 15; and BlackRock Credit Strategies Fund et al., supra note 15.
Exhibit C-2 (Pender) - 38
| C. | Early Withdrawal Charge |
Rule 23c-3 under the Act permits
an interval fund to make repurchase offers of between five5
and twenty-five25 percent of
its outstanding shares at net asset value at periodic intervals pursuant to a fundamental policy of the interval fund. Rule 23c-3(b)(1)
requires an interval fund to repurchase shares at net asset value and expressly permits the interval fund to deduct from repurchase proceeds
only a repurchase fee, not to exceed two percent of proceeds, that is paid to the interval fund and is reasonably intended to compensate
the fund for expenses directly related to the repurchase.
The
Applicants seek relief from this requirement of Rule 23c-3(b)(1) to the extent necessary for the Funds to impose EWCs,
which are distribution-related fees payable to a distributor, on Shares submitted for repurchase that have been held for less
than a specified period. The Funds may seekare
seeking to impose EWCs that are the functional equivalent of the CDSLs that open-end investment companies may charge under
Rule 6c-10 under the Act. The Funds mayintend
to assess EWCs in much the same way non-interval funds currently assess EWCs. As more fully described below, these charges
will be paid to the distributor and are functionally similar to CDSLs imposed by open-end funds. Relief to permit the imposition of EWCs
would be consistent with the approach the Commission has taken with respect to CDSLs imposed by open-end funds which offer their securities
continuously, as the Initial Fund intends
to do for its common shares. Any EWCdoes for its Shares of beneficial interest. Any EWCs
imposed by the Funds will comply with Rule 6c-10 under the Act as if the rule were applicable to closed-end funds.
In the Adopting Release, the
Commission stated that “the requirement [of Rule 23c-3(b)(1)] that repurchases take place at net asset value and the limitation
of repurchase fees to no greater than two percent implicitly preclude
the imposition” of CDSLs.22102
The Commission stated, however, that even though it was not proposing any provisions regarding the use of CDSLs by interval funds, such“Such
consideration may be appropriate after the Commission considers whether to adopt proposed Rule 6c-10, which would permit the imposition
of CDSLs by open-end companies, and has the opportunity to monitor the effects of the FINRA
Sales Charge RuleNASD sales charge rule upon distribution charges of open-end
companies, which goes into effect in July of [1993].23”103
Since adopting Rule
23c-3, the Commission has adopted Rule 6c-10. That rule adopts a flexible approach, and permits open-endopen-end
funds to charge CDSLs as long as (i) the amount of the CDSL does not exceed a specified percentage of net asset value or offering
price at the time of the purchase, (ii) the terms of the sales load comply with the provisions of the FINRA Sales Charge Rule,
governing sales charges for open-end funds and (iii) deferred sales loads are imposed in a non-discriminatory fashion (scheduled
variations or elimination of sales loads in accordance with Rule 22d-1 are permitted). Rule 6c-10 is grounded in policy
considerations supporting the employment of CDSLs where there are adequate safeguards for the investor. These same policy
considerations support imposition of EWCs in the interval fund context and are a solid basis for the Commission to grant exemptive
relief to permit interval funds to impose EWCs.
22102
Adopting Release. Rule 23c-3(b)(1l)
provides in pertinent part: “The company shall repurchase the stock for cash at net asset value determined on the repurchase pricing
date... . The company may deduct from the repurchase proceeds only a repurchase fee
not to exceed two percent of the proceeds, that is paid to the company for expenses directly related to the repurchase.”
23Id.
103 Id.
Exhibit C-2 (Pender) - 39
With respect to the policy
considerations supporting imposition of EWCs, as the Commission recognized when it promulgated Rule 23c-3, several non-interval funds
that had been making periodic repurchase offers to their shareholders imposed early
withdrawal chargesEWCs comparable to CDSLs.24104
Traditional closed-end funds, which do not regularly offer to repurchase shares, do not generally impose EWCs although nothing in the
Act would preclude them from doing so. Section 23(c)(2) of the Act does not regulate the price at which shares may be purchased in a tender
offer. When a closed-end fund continuously offers its shares at net asset value and provides its shareholders with periodic opportunities
to tender their shares, however, the fund'sfund’s
distributor (like the distributor of an open-end fund) may need to recover distribution costs from shareholders who exit their investments
early. Moreover, like open-end funds, interval funds need to discourage investors from moving their money quickly in and out of the fund,
a practice that imposes costs on all shareholders.
Neither the Proposing Release
nor the Adopting Release suggests that the purpose underlying Rule 23c-3(b)(1l)’s
requirements that repurchases take place at net asset value is to preclude interval funds from imposing EWCs. Rather, its purpose is to
prohibit funds from discriminating among shareholders in prices paid for shares tendered in a repurchase offer.25105
The best price rules under Rule 23c-123c-l(a)(9)
ofunder the Act and Rule 13e-4(f)(8)(ii)
ofunder the Exchange Act address
this same concern. The Commission staff does not construe those rules to forbid closed-end funds making repurchase offers under Section
23(c)(2) from imposing EWCs.26106
There is, in the Applicants’ view, no rational basis to apply Rule 23c-3(b)(1l)’s
requirements differently. Moreover, each Fund will be treating all similarly situated shareholders the same. Each Fund will disclose to
all shareholders the applicability of the EWCs (and any scheduled waivers of the EWCEWCs)
to each category of shareholders and, as a result, no inequitable treatment of shareholders with respect to the price paid in a repurchase
offer will result. Each Fund also will disclose EWCs in accordance with the requirements of Form N-1A concerning CDSLs as
if the Fund were an open-end investment company.
As required by Rule 6c-10
for open-end funds, each Fund relying on the Order will comply with shareholder service and distribution fee limits imposed by the FINRA
Sales Charge Rule on the same basis as if it were an open-end investment company. In this regard, a Fund will pay service and/or
distribution fees pursuant to plans that are designed to meet the requirements of the FINRA Sales Charge Rule on the
same basis as if it were an open-end investment company subject to that rule.
24104
Adopting Release, Section II.A.7.c. Section 23(c)(2) does not require that repurchases be made at net asset value.
25105
See Proposing Release, Section II.A.7; Adopting Release, Section II.A.7.
26106
See Adopting Release, Section II.A.7.c. (recognizing that several closed-end funds making periodic repurchases pursuant to Section 23(c)(2)
impose early withdrawal charges).
Exhibit C-2 (Pender) - 40
The Commission has previously
granted the same type of exemptive relief requested herein.27107
In each case, the Commission granted relief from Rule 23c-3(b)(1l)
to an interval fund to charge EWCs to certain shareholders who tender for repurchase shares that have been held for less than a specified
period.
| D. | Waivers of EWCs |
Each Fund may grant waivers
of the EWCs on repurchases in connection with certain categories of shareholders or transactions established from time to time. Each Fund
will apply the EWCEWCs (and
any waivers, scheduled variations, or eliminations of the EWCEWCs)
uniformly to all shareholders in a given class and consistently with the requirements of Rule 22d-1 under the Act as if the Funds were
open-end investment companies. It is anticipated that a Fund will grantThe
Shares that benefit from such waivers of the EWC only under circumstances
where the granting of such waiver is unlikely toare less likely to be the cause
of rapid turnover in sharesShares
of thea Fund, particularly where
there are also important policy reasons to waive the EWCEWCs,
such as when sharesShares are
tendered for repurchase due to the death, disability or retirement of the shareholder. Events such as death, disability or retirement
are not likely to cause high turnover in sharesShares
of a Fund, and financial needs on the part of the shareholder or the shareholder’s family are often precipitated by such events.
The EWCEWCs may also be waived
in connection with a number of additional circumstances, including the following repurchases of sharesShares
held by employer sponsored benefit plans: (i) repurchases to satisfy participant loan advances; (ii) repurchases in connection with distributions
qualifying under the hardship provisions of the Internal Revenue Code of 1986, as amended; and (iii) repurchases representing returns
of excess contributions to such plans. Furthermore, if a distributor has not incurred significant promotional expenses (by making up-front
payments to selling dealers) in connection with attracting shareholders in a particular category to the
Fundsa Fund, the waiver of the EWCEWCs
works to shareholders’ advantage while not harming the distributor economically.
27107
See iDirect Private Markets Fund, supra note 15; SEG Partners Long/Short Equity Fund, supra
note 15; Coatue CTEK Fund, supra note 15; Capital Group KKR Multi-Sector+, supra note 15; Global X Venture Fund, supra
note 15; HarbourVest Private Investments Fund, supra note 15; Privacore PCAAM Alternative Income Fund, supra note 15; TCW
Private Asset Income Fund, supra note 15; Callodine Specialty Income Fund, supra note 15; Diamond Hill Securitized Credit
Fund, supra note 15; Redwood Real Estate Income Fund, supra note 15; Wellington Global Multi-Strategy Fund, supra
note 15; Aether Infrastructure & Natural Resources Fund, supra note 15; Alpha Alternative Assets Fund et al., supra note
15; John Hancock Asset-Based Lending Fund et al., supra note 15; Oaktree Fund Advisors, LLC et al., supra note 15; PGIM
Private Real Estate Fund, Inc. et al., supra note 15; Bow River Capital Evergreen Fund, et
al., supra note 1215;
AFA Multi-Manager Credit Fund et al., supra note 1215;
BNY Mellon Alcentra Opportunistic Global Credit Income Fund et al., supra note 1215;
Calamos-Avenue Opportunities Fund et al., supra note 12;
KKR Credit Opportunities Portfolio15; NB Crossroads Private Markets Access Fund LLC et al.,
supra note 1215; First Eagle Credit Opportunities
Fund et al., supra note 15; Primark Private Equity Investments Fund et al., supra note 15; 361 Social Infrastructure
Fund et al., supra note 12; and15;
GSO Asset Management LLC et al., supra note 15; Resource Credit Income Fund et al., supra note 15; Keystone Private Income
Fund et al., supra note 15; Hamilton Lane Private Assets Fund et al., supra note 15; KKR Credit Opportunities Portfolio
et al., supra note 15; Conversus StepStone Private Markets et al., supra note 15; Prospect Capital Management L.P. et al.,
supra note 15; Goldman Sachs Real Estate Diversified Income Fund et al., supra note 15; CIM Real Assets &
Credit Fund et al., supra note 1215;
Hartford Schroders Opportunistic Income Fund et al., supra note 15; Axonic Alternative Income Fund et al., supra note 15;
Principal Diversified Select Income Fund et al., supra note 15; American Beacon Sound Point Enhanced Income Fund et al., supra
note 15; and BlackRock Credit Strategies Fund et al., supra note 15.
Exhibit C-2 (Pender) - 41
In adopting amended Rule
22d-1 in February 1985, the Commission recognized that the adoption of Rule 22c-1 to “require forward pricing of fund shares largely
dispelled concerns about share dilution.” Furthermore, “the sales load variations that have been instituted [through Rules
22d-1 through 22d-5 and exemptive orders prior to February 1985] have improved the competitive environment for the sale of fund shares
without disrupting the distribution system for the sale of those shares.”28108
In light of these circumstances, the Commission believed that “it is appropriate to permit a broader range of scheduled variation”
as permitted in amended Rule 22d-1.29109
Rule 22d-1 permits open-end funds to sell their shares at prices that reflect scheduled “variations in, or elimination of, the
sales load to particular classes of investors or transactions” provided that the conditions of the rule are met. When Rule 22d-1
was adopted, the status of CDSLs for open-end funds and waivers of those charges were not covered by any rule and were the subject of
exemptive orders. Rule 6c-10 permitting CDSLs for open-end funds, adopted in April 1995, permits scheduled variations in, or elimination
of, CDSLs for a particular class of shareholders or transactions, provided that the conditions of Rule 22d-1 are satisfied.30110
The same policy concerns and competitive benefits applicable to scheduled variations in or elimination of sales loads for open-end funds
are applicable to interval funds and the same safeguards built into Rules 22d- 1-1
and 6c-10 that protect the shareholders of open-end funds will protect the shareholders of interval funds so long as interval funds comply
with those rules as though applicable to interval funds.
The Applicants submit that it would be impracticable and contrary to the purpose of Rule 23c-3 to preclude interval funds from providing for scheduled variations in, or elimination of, EWCs, subject to appropriate safeguards. For the reasons stated above, Applicants submit that the exemptions requested under Section 6(c) are necessary and appropriate in the public interest and are consistent with the protection of investors and the purposes fairly intended by the policy and provision of the Act.
| E. | Asset-Based Distribution and/or Service Fees |
Applicants request relief
from the provisions of Section 17(d) of the Act and Rule 17d-1 thereunder, to the extent necessary to permit the Funds to impose asset-
basedasset-based distribution and/or service fees (in a manner analogous to Rule
12b-1 fees for an open-end investment company). Section 12(b) of the Act and Rule 12b-1 thereunder do not apply to closed-end investment
companies. Accordingly, no provisions of the Act or the rules thereunder explicitly limits the ability of a closed-end fund to impose
a distribution and/or service fee.3131111
Section 17(d) of the Act prohibits an affiliated person of a registered investment company or an affiliated person of such person, acting as principal, from effecting any transaction in which such registered company is a joint, or a joint and several, participant, in contravention of Commission regulations. Rule 17d-1 provides that no joint transaction covered by the rule may be consummated unless the Commission issues an order upon application.
In reviewing applications pursuant to Section 17(d) and Rule 17d-1, the Commission considers whether an investment company’s participation in a joint enterprise or joint arrangement is consistent with the provisions, policies and purposes of the Act, and the extent to which the participation is on a basis different from or less advantageous than that of other participants. Section 17(d) of the Act is intended to prevent or limit abuses arising from conflicts of interest; however, Section 17(d) itself does not prohibit any specific activities, but instead, authorizes the Commission to approve rules to limit or prevent an investment company from being a joint participant on a different or less advantageous basis than other participants. Under Rule 17d-1, it is unlawful for an affiliated person, acting as principal, to participate in or effect any transaction in connection with a joint enterprise or other joint arrangement in which the investment company is a participant, without prior Commission approval. The protections provided for in Section 17(d) essentially allow the Commission to set standards for all transactions concerning an investment company and an affiliate which could be construed as self-dealing or involve overreaching by the affiliate to the detriment of the investment company.
28
Investment108
Inv. Co. Act Rel. No. 14390 (FebruaryFeb.
2, 1985).
29109
Id.
30110
Rule 22d-1 requires that the scheduled variations in or elimination of the sales load must apply uniformly to all offerees in the class
specified and the company must disclose to existing shareholders and prospective investors adequate information concerning any scheduled
variation, revise its prospectus and statement of additional information to describe any new variation before making it available to
purchasers, and advise existing shareholders of any new variation within one year of when first made available.
31
Applicants do not concede that Section 17(d) applies to the asset-based distribution and/or service fees discussed
herein, but requests this exemption to eliminate any uncertainty.
111 Applicants do not concede that Section 17(d) applies to the asset-based distribution and/or service fees discussed herein, but requests this exemption to eliminate any uncertainty.
Exhibit C-2 (Pender) - 42
The protections developed
and approved by the Commission for open-end investment companies in Rule 12b-1 will be complied with by each Fund in connection with its
plan with respect to each class of sharesShares
as if the Fund were an open-end management investment company.
Therefore, the Funds will participate in substantially the same way and under substantially the same conditions as would be the case with an open-end investment company imposing asset-based distribution and/or service fees under Rule 12b-1.
Applicants note that, at the
same time the Commission adopted Rule 12b-1,32112
it also adopted Rule 17d-3 to provide an exemption from Section 17(d) and Rule 17d-l to the extent necessary for arrangements between
open-end funds and their affiliated persons or principal underwriters (or affiliated persons of such persons or principal underwriters)
whereby payments are made by the open-end fund with respect to distribution, if such agreements are entered into in compliance with Rule
12b-l. In its adopting release, the Commission stated as follows:
The Commission wishes to emphasize that it
has no intention of categorizing certain transactions as raising the applicability of Section 17(d) and Rule 17d-3 of the Act. The Commission’s
only comment is that to the extent that arrangements in which a fund pays for its distribution costs could involve the fund in a ‘joint
enterprise’ with an affiliated person, and if such arrangements were entered into in compliance with Rule 12b-1, the Commission
sees no need for prior Commission review and approval of the arrangements.33113
As closed-end management investment
companies, the Funds may not rely on Rule 17d-3. However, in light of the foregoing, Applicants believe any Section 17(d) concerns the
Commission might have in connection with a Fund’s financing the distribution of its sharesShares
should be resolved by suchthe
Fund’s undertaking to comply with the provisions of Rules 12b-1 and 17d-3 as if those rules applied to closed-end investment companies.
Accordingly, the Funds will comply with Rules 12b-1 and 17d-3 as if those rules applied to closed-endclosed-end
investment companies. The Funds represent that the Funds’ imposition of asset-based distribution and/or service fees is consistent
with factors considered by the Commission in reviewing applications for relief from Section 17(d) of the Act and Rule 17d-1 thereunder
(i.e., that the imposition of such fees as described is consistent with the provisions, policies and purposes of the Act and does not
involve participation on a basis different from or less advantageous than that of other participants).
VI. APPLICANTS’ CONDITION
Applicants agree that any order granting the requested relief will be subject to the following condition:
Each Fund relying on the Order will comply with the provisions of Rules 6c-10, 12b-1, 17d-3, 18f-3, 22d-1, and, where applicable, 11a-3 under the Act, as amended from time to time, as if those rules applied to closed-end management investment companies, and will comply with the FINRA Sales Charge Rule, as amended from time to time, as if that rule applied to all closed-end management investment companies.
VII.
CONCLUSION CORPORATE
ACTION
The Initial Fund’s Declaration of Trust empowers the Board of the Initial Fund to establish different classes of Shares and to take any other action necessary to accomplish the establishment and creation of such classes of Shares. The Board has adopted resolutions, attached as Exhibit A, authorizing the Initial Fund’s officers to file the Application with the Commission.
32112
See Bearing of Distribution Expenses by Mutual Funds, InvestmentInv.
Co. Act Rel. No. 11414 (OctoberOct. 28, 1980).
33113
Id.
Exhibit C-2 (Pender) - 43
VIII. CONCLUSION
For the reasons stated above,
Applicants submit that the exemptions requested are necessary and appropriate in the public interest and are consistent with the protection
of investors and the purposes fairly intended by the policy and provisions of the Act. Applicants further submit that the relief requested
pursuant to Section 23(c)(3) will be consistent with the protection of investors and will insureensure
that Applicants do not unfairly discriminate against any holders of the class of securities to be purchased. Applicants desire that the
Commission issue the requested Order pursuant to Rule 0-5 under the Act without conducting a hearing.
Applicants submit that the
exemptions requested conform substantially to the precedent cited herein.34114
As required by Rule 0-2(c)(1)
under the Act, each Applicant hereby states that all of the requirements for execution and filing of this Application on
behalf of the Applicants have been complied with in accordance with the operating
agreementsorganizational documents of the Applicants, as applicable, and the undersigned
officers of the Applicants are fully authorized to execute this Application. The resolutions of the Initial
Fund’s Board are attached as Exhibit A to this Application in accordance with the requirements of Rule 0-2(c)(1) under
the Act and the verifications required by Rule 0-2(d) under the Act are attached as Exhibit B to this Application.
Pursuant to Rule 0-2(f) under
the Act, the Applicants state that their address is c/o UMB Fund Services, Inc., 235
West Galena Street, Milwaukee, WI 53212 and 11766 Wilshire Boulevard, Suite 1460, Los Angeles, CA 900254600
S. Syracuse Street, 9th Floor, Denver, Colorado 80237 and that all written communications regarding this Application should
be directed to the individuals and addresses indicated on the first page of this Application.
34114
See iDirect Private Markets Fund, supra note 15; SEG Partners Long/Short Equity Fund, supra
note 15; Coatue CTEK Fund, supra note 15; Capital Group KKR Multi-Sector+, supra note 15; Global X Venture Fund, supra
note 15; HarbourVest Private Investments Fund, supra note 15; Privacore PCAAM Alternative Income Fund, supra note 15; TCW
Private Asset Income Fund, supra note 15; Callodine Specialty Income Fund, supra note 15; Diamond Hill Securitized Credit
Fund, supra note 15; Redwood Real Estate Income Fund, supra note 15; Wellington Global Multi-Strategy Fund, supra
note 15; Aether Infrastructure & Natural Resources Fund, supra note 15; Alpha Alternative Assets Fund et al., supra note
15; John Hancock Asset-Based Lending Fund et al., supra note 15; Oaktree Fund Advisors, LLC et al., supra note 15; PGIM
Private Real Estate Fund, Inc. et al., supra note 15; Bow River Capital Evergreen Fund, et
al., supra note 1215; AFA Multi-Manager
Credit Fund et al., supra note 1215;
BNY Mellon Alcentra Opportunistic Global Credit Income Fund et al., supra note 1215;
Calamos-Avenue Opportunities Fund et al., supra note 12;
KKR Credit Opportunities Portfolio15; NB Crossroads Private Markets Access Fund LLC et al.,
supra note 1215; First Eagle Credit Opportunities
Fund et al., supra note 15; Primark Private Equity Investments Fund et al., supra note 15; 361 Social Infrastructure
Fund et al., supra note 12; and15;
GSO Asset Management LLC et al., supra note 15; Resource Credit Income Fund et al., supra note 15; Keystone Private Income
Fund et al., supra note 15; Hamilton Lane Private Assets Fund et al., supra note 15; KKR Credit Opportunities Portfolio
et al., supra note 15; Conversus StepStone Private Markets et al., supra note 15; Prospect Capital Management L.P. et al.,
supra note 15; Goldman Sachs Real Estate Diversified Income Fund et al., supra note 15; CIM Real Assets &
Credit Fund et al., supra note 1215;
Hartford Schroders Opportunistic Income Fund et al., supra note 15; Axonic Alternative Income Fund et al., supra note 15;
Principal Diversified Select Income Fund et al., supra note 15; American Beacon Sound Point Enhanced Income Fund et al., supra
note 15; and BlackRock Credit Strategies Fund et al., supra note 15.
* * * * *
[Signature page follows]
Signature Page Follows
Exhibit C-2 (Pender) - 44
Applicants have caused this Application to be duly signed on their behalf on the 27th day of August, 2025.
| (formerly, Origin Real Estate Credit Interval Fund) | ||
| By: | /s/ Michael McVickar | |
| Name: Michael McVickar | ||
| Title: Chief Legal Officer | ||
| By: | /s/ Thomas Briney | |
| Name: Thomas Briney | ||
| Title: President and Chief Investment Officer | ||
11
Exhibit C-2 (Pender) - 45
EXHIBIT A
Resolutions of the Board of Trustees of PenderOrigin
Real Estate Credit Fund
RESOLVED, that Origin Real Estate Credit Fund (formerly, Origin Real Estate Credit Interval Fund) (the “Fund”) is authorized to prepare and file with the U.S. Securities and Exchange Commission an application for an exemptive order and any and all amendments thereto, pursuant to Section 6(c) of the Investment Company Act of 1940, as amended (the “1940 Act”), granting an exemption from the provisions of Sections 18(a)(2), 18(c) and 18(i) thereunder and pursuant to Sections 6(c) and 23(c) of the 1940 Act for an order granting certain exemptions from Rule 23c-3 thereunder and pursuant to Section 17(d) of the 1940 Act and Rule 17d-1 thereunder for an order permitting certain arrangements; and it is
FURTHER RESOLVED, that the appropriate officers of the Fund are authorized and directed to take or cause to be taken any and all such actions as may be necessary or desirable to carry out the purpose of the foregoing resolutions, including the filing of any authorizations, documents or approvals as required under the 1940 Act, and the taking of any and all such action shall constitute conclusive evidence of the authority of such officer(s).
Exhibit C-2 (Pender) - 46
12
Exhibit C-2 (Pender) - 47
[Link-to-previous
setting changed from off in original to on in modified.].
EXHIBIT B
Verifications of PenderOrigin
Real Estate Credit Fund and Pender Capital ManagementOrigin
Credit Advisers, LLC
The undersigned states that
he has duly executed the attached application dated January 30, 2023August
27, 2025 for and on behalf of PenderOrigin
Real Estate Credit Fund (formerly, Origin Real Estate Credit Interval Fund) in his capacity as
PresidentChief Legal Officer
of such entity and that all actions by the holders and other bodies necessary to authorize the undersigned to execute and file such instrument
have been taken. The undersigned further states that he is familiar with such instrument, and the contents thereof, and that the facts
therein set forth are true to the best of his knowledge, information and belief.
Origin Real Estate Credit Fund
| By: | /s/ Michael McVickar | |
| Name: | Michael McVickar | |
| Title: | Chief Legal Officer |
The undersigned states that
the undersignedhe has duly executed
the attached application dated January 30, 2023August
27, 2025 for and on behalf of Pender Capital ManagementOrigin
Credit Advisers, LLC, in his or her capacity as President
and Chief ExecutiveInvestment
Officer of such entity and that all actions by the holders and other bodies necessary to authorize the undersigned to execute and file
such instrument have been taken. The undersigned further states that the undersignedhe
is familiar with such instrument, and the contents thereof, and that the facts therein set forth are true to the best of his or
her knowledge, information and belief.
Origin Credit Advisers, LLC
| By: | /s/ Thomas Briney | |
| Name: | Thomas Briney | |
| Title: | President and Chief Investment Officer |
13
Exhibit C-2 (Pender) - 48
EXHIBIT C
[Exhibit C (Marked copies of the Application showing changes from the final versions of the two applications identified as substantially identical under Rule 0-5(e)(3)) of Second Precedent (Pender) Application Excluded]
Exhibit C-2 (Pender) - 49
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