May 8, 2023
CIM Real Assets & Credit Fund Marks 3-Year Anniversary
CIM Real Assets & Credit Fund Marks 3-Year Anniversary
May 4, 2023 | CIM Real Assets & Credit Fund
CIM Real Assets & Credit Fund (CIM RACR) today reached a three-year performance milestone. CIM RACR is a closed-end interval fund that invests in real assets and corporate credit. The fund, which announced a 16.7% dividend increase on March 22, 2023, aims to generate income and capital appreciation with lower volatility.
Since inception, the CIM RACR I Share (IRACX) has posted a standard deviation of 2.63 and an annualized performance of 7.03% with a 3.07% one-year return.1 The I Share has outperformed widely followed income alternatives such as the Bloomberg US Aggregate Bond Index, the Morningstar LSTA US Leveraged Loan Index, The Markit iBoxx USD Liquid Investment Grade Index and the Bloomberg US Corporate High Yield Bond Index.2
Based on net asset value as of March 17, 2023, and the dividend declaration on March 22, 2023, the fund’s annualized distribution rate is 7%.3 In 2022, approximately 45% of CIM RACR’s dividend was tax efficient, making the 7% distribution equivalent to an approximately 9.2% fully taxable dividend.4
CIM RACR, which invests alongside CIM Group’s institutional funds, targets an allocation of 70% credit (consisting of both real asset debt and corporate credit) and 30% real estate equity. The credit investments provide primarily floating rate income while the real estate equity allocation may provide appreciation, reduce volatility and correlation to other income alternatives and provide a more tax efficient distribution. As of April 30, 2023, CIM RACR’s portfolio includes over 200 investments totaling more than $300 million of net asset value.
Performance quoted represents past performance. Past performance is not a guarantee or indicator of future results. Investment return and the principal value of an investment will fluctuate. Shares may be worth more or less than original cost when redeemed. Current performance may be lower or higher than performance shown. For performance current to the most recent month end, visit cimgroup.com or call 866.341.2653. Not all investors can invest in the Fund’s Class I share class; different share classes would have different returns.
For additional information about CIM RACR, visit www.cimgroup.com/cim-racr.
1) As of 4/30/23. Since inception date: 5/4/20.
2) Source: Morningstar. From 6/1/20 through 4/30/23.
3) As of 3/21/23. Distribution rate based on daily NAV on a day close to the dividend declaration date. A portion of the distribution includes a return of capital. Please refer to the Fund’s most recent section 19(a) notice, available at www.cimgroup.com. There is no guarantee that investors will receive a distribution and the distribution rate should not be confused with yield or performance.”
4) As of 3/21/23. Assumes 45% of RACR’s dividend is characterized as return of capital due lower taxable income resulting from non-cash depreciation expense and 0.14% of dividend is characterized as long-term capital gains. Analysis assumes tax rate of 40.8% on ordinary dividends, which represents the highest federal tax rate and Medicare surtax and a tax rate of 23.8% on capital gains dividends, which represents the federal long term capital gains rate and Medicare surtax. The characterization of RACR’s dividend will vary based on portfolio construction.
ALPS Distributors, Inc. is the distributor of the CIM Real Assets & Credit Fund. CIM Group, LLC and ALPS Distributors, Inc. are not affiliated. ALPS Distributors, Inc., 1290 Broadway, Suite 1000, Denver, CO 80203, Member FINRA.
This is neither an offer to sell nor a solicitation to purchase any security. Investors should consider the investment objectives, risks, charges and expenses of the CIM Real Assets & Credit Fund (“Fund”) carefully before investing. This and other information are contained in the Fund’s prospectus, which may be obtained by contacting your financial professional or visiting www.cimgroup.com. Please read the prospectus carefully before you invest.
All investing includes risk including the loss of principal. Interval funds are generally suitable only for investors who can bear the risks associated with the limited liquidity of the fund and should be viewed as a long-term investment. There can be no assurance that any fund will meet its objectives.
The Fund’s distributions may be funded from offering proceeds or borrowings, which may constitute a return of capital and reduce the amount of capital available to the Fund for investment. Although a return of capital will generally not be taxable to a shareholder, it would reduce the shareholder’s cost basis in the Common Shares and may result in higher capital gains taxes, or a lower capital loss, when Common Shares are sold. Any capital returned to shareholders through distributions will be distributed after payment of fees and expenses, as well as the sales load.
Explanation of Certain Statistical Terms
Standard deviation: a statistical measure of the extent to which returns vary from the expected returns.
Distribution rate: calculated by annualizing the most recent amount paid to investors and dividing the resulting amount by the fund’s NAV.
Consider These Risk Factors Before Investing
Investing in CIM Real Assets & Credit Fund (the “Fund”) involves risks, including the risk that shareholders may receive little or no return on their investment or that shareholders may lose part or all of their investment. Below is a summary of some of the principal risks of investing in the Fund. For a more complete discussion of the risks of investing in the Fund, see “Risks” in the Fund’s prospectus.
Shareholders should consider carefully the following principal risks before investing in the Fund:
» The current worldwide financial markets situation, as well as various social and political tensions in the United States and around the world (including wars and other forms of conflict, terrorist acts, security operations and catastrophic events such as fires, floods, earthquakes, tornadoes, hurricanes and global health epidemics), may contribute to increased market volatility, may have long term effects on the United States and worldwide financial markets, and may cause economic uncertainties or deterioration in the United States and worldwide. For example, the Fund has observed and continues to observe supply chain interruptions, significant labor and resource shortages, commodity inflation, rapidly rising interest rates, a risk of recession, economic sanctions as a result of the ongoing war between Russia and Ukraine and elements of geopolitical, economic and financial market instability in the United States, the United Kingdom, the European Union and China. Any of the above factors could have a material adverse effect on the Fund’s business, financial condition, cash flows and results of operations and could cause the market value of the Common Shares to decline.
» Unlike shares of most closed-end funds, the Common Shares are not listed on any securities exchange;
» Although the Fund has a quarterly share repurchase program, there is no guarantee that an investor will be able to sell all of the Common Shares that the investor desires to sell. The Fund should therefore be considered to offer only limited liquidity;
» The capital markets may experience periods of disruption and instability. Such market conditions may materially and adversely affect debt and equity capital markets, which may have a negative impact on the Fund’s business and operations;
» If a shareholder is able to sell its Common Shares, the shareholder may receive less than its purchase price and the then current NAV per Common Share;
» The Fund’s distributions may be funded from offering proceeds or borrowings, which may constitute a return of capital and reduce the amount of capital available to the Fund for investment. Although a return of capital will generally not be taxable to a shareholder, it would reduce the shareholder’s cost basis in the Common Shares and may result in higher capital gains taxes, or a lower capital loss, when Common Shares are sold. Any capital returned to shareholders through distributions will be distributed after payment of fees and expenses, as well as the sales load;
» The Fund is exposed to the risks related to investments in real estate, including risks related to the performance of the real estate market;
» Because the Fund has significant investments in the Real Estate industry, the Fund may experience more volatility and be exposed to greater risk than it would be if it held a more diversified portfolio;
» The Fund’s investments in CMBS are subject to all of the risks of the underlying mortgage loans, including interest rate risk;
» Certain of the Fund’s real estate investments are made through its REIT Subsidiaries, which are subject to regulatory requirements to qualify as a REIT. The failure of the Fund’s REIT Subsidiaries to qualify as REITs could have a negative impact on the Fund’s investment returns;
» The Fund’s investments in second lien loans and unsecured loans are lower in priority of payment to Senior Secured Loans, they are subject to the additional risk;
» The Fund’s investments in Broadly Syndicated Loans involve a number of significant risks;
» The Fund’s investments in distressed credit investments have significant risk of loss, and the Fund’s efforts to protect its
distressed credit investments may involve large costs and may not be successful;
» The Fund’s credit and credit related investments will generally be in below investment grade instruments commonly referred to as “junk” or high-yield instruments and are regarded as predominantly speculative with respect to the issuer’s capacity to pay interest and repay principal;
» The Fund’s credit and credit-related investments are subject to risk of covenant breach, which could jeopardize the borrower’s ability to meet its obligations under the debt or equity securities that the Fund holds.
» The Fund is exposed to risks associated with changes in interest rates through its credit and credit-related investments. If interest rates fall, the Fund may not be able to generate income, and if interest rates rise, the Fund may incur more costs in connection with its use of leverage;
» To qualify and remain eligible for the special tax treatment accorded to RICs and their shareholders under the Internal
Revenue Code of 1986, as amended (the “Code”), the Fund must meet certain source-of-income, asset-diversification and annual distribution requirements, and failure to do so could result in the loss of RIC status.
» Certain investments may be exposed to the credit risk of the counterparties with whom the Fund deals;
» The valuation of securities or instruments that lack a central trading place (such as fixed-income securities or instruments) may carry greater risk than those that trade on an exchange;
» The Fund has no fixed policy regarding portfolio maturity or duration. Holding long duration and long maturity investments will increase the Fund’s exposure to the credit and interest rate risks described above, including with respect to changes in interest rates through the Fund’s credit and credit-related investments as well as increased exposure to risk of loss;
» The Fund has made and may continue to make investments internationally, including in emerging markets. Therefore, the Fund has risks relating to international and emerging markets investing. Such risks include, but are not limited to, currency risks, greater volatility, less liquidity, greater custodial risks, less developed legal, tax, regulatory, financial reporting, accounting, and recordkeeping systems and greater political, social, and economic instability.
About CIM Real Assets & Credit Fund (CIM RACR)
CIM RACR is a non-diversified, closed-end management investment company, registered under the Investment Company Act of 1940, as amended, that continuously offers its common shares and is operated as an “interval fund.” The Fund invests across real assets and corporate credit, providing an opportunity to invest alongside CIM Group’s income-oriented strategies. CIM RACR’s investment objective is to generate current income through cash distributions and preserve and protect shareholders’ capital across various market cycles, with a secondary objective of capital appreciation. The Fund is advised by CIM Capital IC Management, LLC and sub-advised by CIM Capital SA Management, LLC and OFS Capital Management, LLC, each of which is an investment adviser registered under the Investment Advisers Act of 1940, as amended, and affiliates of CIM Group, LLC. For additional information, please visit www.cimgroup.com.
Statements in this press release regarding management’s future expectations, beliefs, intentions, goals, strategies, plans or prospects, including statements relating management’s belief that CIM RACR will benefit from CIM Group’s combined real assets, credit and transaction experience and deal-sourcing capabilities; the composition of CIM RACR’s portfolio of real assets and corporate credit assets and the potential benefits to investors, which may not be realized; opportunities for individuals to invest alongside institutional partners, and whether those opportunities will align the interests among sponsors, partners and shareholders; and other factors may constitute forward-looking statements for purposes of the safe harbor protection under applicable securities laws. Forward-looking statements can be identified by terminology such as “anticipate,” “believe,” “could,” “could increase the likelihood,” “estimate,” “expect,” “intend,” “is planned,” “may,” “should,” “will,” “will enable,” “would be expected,” “look forward,” “may provide,” “would” or similar terms, variations of such terms or the negative of those terms. Such forward-looking statements involve known and unknown risks, uncertainties and other factors including those risks, uncertainties and factors referred to in CIM RACR’s Prospectus filed with the Securities and Exchange Commission (the “SEC”) on January 30, 2023, under the section “Risks,” Supplement No 1 dated March 22, 2023 as well as other documents that may be filed by CIM RACR from time to time with the SEC. As a result of such risks, uncertainties and factors, actual results may differ materially from any future results, performance or achievements discussed in or implied by the forward-looking statements contained herein. CIM RACR is providing the information in this press release as of this date and assumes no obligations to update the information included in this press release or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
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