Reflective of a consistent economic backdrop and the strength of the fund’s underlying portfolio holdings, the Bluerock High Income Institutional Credit Fund announced a trailing-year annualized return of 11.08%, as of Jan. 31, 2024.
The income-focused interval fund, which has been paying an 11% annualized dividend since Oct. 1, 2023, per The DI Wire, indirectly invests in senior secured loans which are top of the capital stack floating rate loans to large corporations and have a first lien claim on all company assets. Bluerock says that as a result of its active fund management, the fund has been able to generate outsized current cash flow, as well as an approximate 1% net asset value increase since the third quarter of 2023.
“The private credit market is providing a tremendous window of opportunity to generate outsized current cash flow from senior secured loans where yields have moved in lockstep with the rise in interest rates. The fund invests in senior secured loans generally held in highly institutional collateralized loan obligation pools which comprise hundreds of underlying senior secured loans diversified across a variety of companies and industries,” said Jeffrey Schwaber, chief executive officer of Bluerock Capital Markets.
“By strategically investing in various positions across the [collateralized loan obligation] capital stack, the fund’s investments have a lower risk profile while simultaneously generating double-digit yields, thus effectively increasing the risk-adjusted return profile of the fund. Further, unlike some of our competitors, the fund is not utilizing leverage to enhance returns, which adds additional risk and is still generating an attractive 11% dividend,” added Schwaber.
Additionally, the fund paid its third special distribution of $0.85 per share in December 2023 due to high cash flow generated from the underlying portfolio and combined with the regular fourth quarter distribution, represents an equivalent 14.5% annual distribution rate, as of Dec. 31, 2023.
“The fund’s portfolio is generating significant income and as a result, in addition to regular quarterly distributions at a current 11% annualized rate the fund has paid a total of $1.15 in three special distributions to our shareholders to maintain compliance with its regulatory distribution requirements,” added Schwaber.
Bluerock High Income Institutional Credit Fund currently maintains underlying positions in 31 collateralized loan obligations representing more than $27 billion of underlying loan value with exposure to approximately 1,660 underlying senior secured loans across multiple industries. Net assets under management for the fund are approximately $114 million as of Jan. 31, 2024.