Bluerock High Income Institutional Credit Fund Announces Q4 Regular Quarterly Distribution Plus Special Distribution at a 14.5% Annualized Rate
New York (January 3, 2024) – Bluerock High Income Institutional Credit Fund (the “Fund” or the “High Income Fund” tickers: IIMAX, IIMCX, IIMWX) announced its sixth regular quarterly distribution at a rate of 2.75%, or an 11.0% annualized.* The amount will be based on the average daily NAV/share over the quarter. Additionally, the Fund announced it will pay its third special distribution of $0.85 per share. Combined, the two Q4 distributions represent an equivalent 14.5% annual distribution rate. Shareholders invested for the entire quarter will receive a total distribution amount of $1.53 per share. The Fund has paid a total of $4.27 in distributions in since inception 6.21.2022.
The Fund’s special distribution is a result of the strong performance of the underlying portfolio which has generated substantial income due to the floating rate nature of the assets, higher interest rate environment, and active portfolio management. The Fund has strategically diversified the portfolio year-to-date investing in more senior positions within CLO capital stacks effectively reducing potential risk while simultaneously maintaining double-digit yield generation, thus increasing the risk-adjusted return profile of the Fund.
“Given high stock market valuations and the prospect of reduced income from falling bond yields, we believe the High Income Fund presents investors an opportunity to generate high income and total returns from a portfolio with underlying exposure to nearly $13 billion of senior secured loans, which historically have the highest position within corporate capital stacks,” said Jeffrey Schwaber, CEO of Bluerock Capital Markets. The Fund capitalizes on the floating rate nature of senior secured loans to generate income growth in uncertain interest rate environments, while also insulating investors from potential losses traditional fixed income investments may experience if rates rise.
The Fund currently maintains underlying positions in 26 collateralized loan obligations representing approximately $13 Billion of loans with exposure to approximately 1,600 underlying senior secured loans across multiple industries (holdings as of 9.30.2023 and are subject to change at any time and should not be considered investment advice). Net assets under management for the High Income Fund are approximately $109 million as of December 29, 2023.
High Income Fund I-Share Net Performance
|High Income Fund Class I
Returns presented are total net return: Expressed in percentage terms, the calculation of total return is determined by taking the change in price, reinvesting, if applicable, all income and capital gains distributions during the period, and dividing by the starting price. Returns greater than one year are annualized.
1 Inception date of the Fund is June 21, 2022.
The performance data quoted here represents past performance. Current performance may be lower or higher than the performance data quoted above. Investment return and principal value will fluctuate, so that shares, when redeemed, may be worth more or less than their original cost. For performance information current to the most recent month end, please call toll-free 1-888-459-1059. Past performance is no guarantee of future results.
The total annual fund operating expense ratio, gross of any fee waivers or expense reimbursements is 3.75% for Class A share, 4.50% for C share and 3.50% for the I share. The performance data quoted here represents past performance. Current performance may be lower or higher than the performance data quoted. Past performance is no guarantee of future results. Investment return and principal value will fluctuate, so that shares, when redeemed, may be worth more or less than their original cost. The Fund’s investment adviser has contractually agreed to reduce its fees and/or absorb expenses of the fund, at least until January 31, 2024, to ensure that the net annual fund operating expenses will not exceed 2.60% for A share, 3.35% for C share and 2.35% for the I share, subject to possible recoupment from the Fund in future years. In addition to the contractual obligations under its expense limitation agreement, the Adviser, on a purely voluntary basis, has borne all of the operating expenses of the Fund and waived its entire management fee since inception. Such operating expenses and management fees voluntarily paid or waived during this period are not subject to recoupment from the Fund in future years. Without such waiver of fees and payment of expenses by the Adviser, expenses of the Fund would have been higher and the Fund’s returns would have been lower.
* The Fund’s distribution policy is to make quarterly distributions to shareholders. The level of quarterly distributions (including any return of capital) is not fixed. The Fund currently expects to pay distribution at an annual rate of approximately 11.0% of the Fund’s current net asset value per share, effective October 1, 2023. Such distributions are accrued daily and paid quarterly. This distribution policy is subject to change. The level of quarterly distributions (including any return of capital) is not fixed and all or a portion of a distribution may consist of a return of capital. Shareholders should not assume that the source of a distribution from the Fund is net profit. The final determination of the source and tax characteristics of all distributions will be made after the end of the year. Shareholders should note that return of capital will reduce the tax basis of their shares and potentially increase the taxable gain, if any, upon disposition of their shares. There is no assurance that the Company will continue to declare distributions or that they will continue at these rates.
About Bluerock High Income Institutional Credit Fund
The Bluerock High Income Institutional Credit Fund (the “Fund”) is a public, closed-end interval fund that provides individual investors access to a rapidly growing institutional asset class. The Fund’s primary investment objective is to generate high current income, while secondarily seeking attractive, long-term risk-adjusted returns, with low correlation to the broader markets. The Fund seeks to accomplish its objectives by investing, directly and indirectly, in private credit through actively managed pools of diversified Senior Secured Loans known as Collateralized Loan Obligations (CLOs). The Fund has partnered with WhiteStar Asset Management, LLC, whose management team has overseen the issuance of $40 billion in CLOs since 2001, to serve as sub-advisor to the Fund. An investment in the Fund seeks to provide investors with the following potential benefits across various market cycles. The minimum investment in the Fund is $2,500 ($1,000 for retirement plans) for Class A and C shares. For copies of HI Credit public company filings, please visit the U.S. Securities and Exchange Commission’s website at sec.gov or the Company’s website at bluerockfunds.com.
Not FDIC Insured | No Bank Guarantee | May Lose Value
Investing in the Fund involves risks, including the risk that you may receive little or no return on your investment, and that you may lose part or all of your investment. This is neither an offer to sell nor a solicitation to purchase any security.
Investors should carefully consider the investment objectives, risks, sales charges and expenses of the Bluerock High Income Institutional Credit Fund (the “Fund”). This and other important information about the Fund is contained in the prospectus, which can be obtained by visiting bluerock.com/hi-fund/documents. The prospectus should be read carefully before investing.
Past performance is not a guarantee of future results. The ability of the Fund to achieve its investment objective depends, in part, on the ability of the Advisor and Sub-Advisor to allocate effectively the assets of the Fund among the various available investment opportunities. There can be no assurance that the actual allocations will be effective in achieving the Fund’s investment objective or delivering positive returns. There is no guarantee that the Fund’s investment strategies will work under all market conditions. Statements relating to the performance of the Fund contained herein are historical and the Fund’s performance subsequent to the date as of which such statements were made may differ materially. Updated performance data for the Fund is available at bluerock.com/hi-fund/performance.
Please note that the performance data relating to various indices included herein is for informational purposes only. You cannot invest directly in an index. Index performance does not represent actual fund or portfolio performance. Performance of a fund or portfolio may differ significantly from the performance of index holding the same securities. Index performance assumes reinvestment of dividends but does not reflect any management fees, transaction costs or other expenses that would be incurred by a fund or portfolio, or brokerage commissions on transactions in fund shares. Such fees, expenses, and commissions would likely reduce returns.
The Fund is a closed-end interval fund, the shares have no history of public trading, nor is it intended that the shares will be listed on a public exchange at this time. No secondary market is expected to develop for the Fund’s shares. Limited liquidity is provided to shareholders only through the Fund’s quarterly repurchase offers for no less than 5% of the Fund’s shares outstanding at net asset value. There is no guarantee that shareholders will be able to sell all of the shares they desire in a quarterly repurchase offer. Quarterly repurchases by the Fund of its shares typically will be funded from available cash or sales of portfolio securities. The sale of securities to fund repurchases could reduce the market price of those securities, which in turn would reduce the Fund’s net asset value. The Fund is 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.
Investors in the Fund should understand that the net asset value (“NAV”) of the Fund will fluctuate, which means the value of your shares at any point in time may be worth less than the value of your original investment, even after taking into account any reinvestment of dividends and distributions. An investment in shares represents an indirect investment in the securities owned by the Fund. The value of these securities, like other market investments, may move up or down, sometimes rapidly and unpredictably. The Fund is “non-diversified” under the Investment Company Act of 1940 and therefore may invest more than 5% of its total assets in the securities of one or more issuers. As such, changes in the financial condition or market value of a single issuer may cause a greater fluctuation in the Fund’s net asset value than in a “diversified” fund. The Fund is not intended to be a complete investment program.
Because the Fund invests primarily in debt-anchored instruments and securities, the value of your investment in the Fund may fluctuate with changes in interest rates. The Fund may invest in senior secured debt and CLOs. Substantial increases in interest rates may cause an increase in loan defaults and the value of the Fund’s assets may also be affected by other uncertainties such as economic developments affecting the market for senior secured term loans or uncertainties affecting borrowers generally. There is a risk that the borrowers under the Senior Secured Loans may not make scheduled interest and/or principal payments on their loans and/or debt securities, which may result in losses or reduced cash flow to the Fund, either or both of which may cause the NAV of, or the distributions by, the Fund to decrease. CLOs carry additional risks, including but not limited to (i) the possibility that the Fund’s investments in CLOs are subordinate to other classes or tranches thereof; and (iv) the complex structure of the CLO investment may not be fully understood at the time of investment and may produce disputes with the issuer, holders of senior tranches or other unexpected investment results. In addition, the nature of the Fund’s investment strategy also subjects it to various risks, including credit risk (the debtor may default), liquidity risk (the investment may not be able to be sold at an advantageous time or price) and prepayment risk (the debtor may pay its obligation early, reducing the amount of interest payments). All potential investors should read the Risk Factors section of the prospectus for additional information related to the risks associated with an investment in the Fund.
The Bluerock High Income Institutional Credit Fund is distributed by ALPS Distributors, Inc (ALPS). Bluerock Credit Fund Advisor, LLC is not affiliated with ALPS, or WhiteStar Asset Management. This material is provided for informational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product or be relied upon for any other purpose. Certain information contained herein has been obtained from sources deemed to be reliable, but has not been independently verified. This material represents views as of its date and is subject to change without notice of any kind.
For more information, contact Bluerock Capital Markets at 877.826.BLUE (2583).
Collateralized Loan Obligations (CLOs): A form of securitization where payments from multiple business loans (most typically senior secured corporate loans) are pooled together and passed on to different classes of owners in various tranches.
Correlation: This indicates the strength and direction of a linear relationship between two random variables. The value will range between -1 and 1.
Senior Secured Loans (SSLs): Debt obligations issued by corporations that are typically backed (“secured”) by a company’s assets. SSLs sit at the top of the company’s capital structure and have the highest priority claim on the borrower’s assets.