What is a redemption?

Unlike publicly traded stocks, which can be sold instantly on open markets, redemptions of private fund shares are governed by the fund's repurchase or redemption program. Most private real estate funds process redemption requests quarterly, with pricing based on the fund's Net Asset Value (NAV) per share as calculated on the redemption date. The timeline typically involves investor submission of a redemption request, a processing period (often 30-90 days) and distribution of proceeds, net of any applicable fees or tax withholding.

An important characteristic of private fund redemptions is that they are not guaranteed or instantaneous like stock sales. If multiple investors request redemptions simultaneously and the fund has insufficient liquid capital, redemption requests may be subject to pro-rata, where each investor receives a percentage of their requested redemption amount proportional to available liquidity. The fund may also establish limits on redemptions in any given period to preserve operational stability.

Redemption proceeds are priced at NAV, which is an estimate based on independent property appraisals and may differ from the price at which an investor entered the fund.

For long-term investors, redemptions provide an exit mechanism but should not be relied upon for short-term liquidity needs. Investors considering redemption should review the specific fund's redemption terms, timelines, and any applicable restrictions before investing.