Harrison Street and LODAS open second interval fund auction for $2 billion Harrison Street Real Assets Fund

Harrison Street Private Wealth, LODAS Markets and Nasdaq Fund Secondaries opened a second interval fund auction on Oct. 2 for shares of the $2 billion Harrison Street Real Assets Fund (VCRRX), after a three-week sale in Harrison Street Real Estate Fund (VCMIX) completed Sept. 23 with 91% of the shares offered sold. The test this publication covered in August was whether interval fund investors could find liquidity between scheduled repurchase windows, and the first auction answered with buyers for most of what was put up.

What the first auction did not do matters nearly as much: every purchase came from a non-affiliated secondary buyer, and shares moved directly from sellers to those buyers, so the fund sold no assets and spent none of its own liquidity to complete the trades. In a wrapper whose liquidity runs through the sponsor rather than the market, that separation is the point. A repurchase window turns a shareholder’s exit into a portfolio decision made by the manager; the auction turns it into a price agreed between two private parties while the fund stands outside the trade.

The mechanics were built for that outcome: buyers and sellers selected from preset discounts to net asset value, and every completed trade executed at a single clearing price. Across the three-week auction, buyer bids exceeded seller asks, according to LODAS, which recorded that 99% of shares offered at or below the clearing price sold at the seller’s asking price or better and that about 41% of the shares that sold received price improvement. Chief executive Brian King said the firms were pleased with the auction on technical and price-discovery grounds, and that the infrastructure matched and settled nearly every eligible sell order.

On the settlement side, all trades completed, cash proceeds returned to sellers’ original custodial accounts, and tax reporting will be provided to participating sellers as required. Announced in August, the platform uses LODAS as broker and supplier of the trading, clearing and settlement technology, while Nasdaq Fund Secondaries provides the auction venue. Because interval fund share transfers run through the manager’s authorization, the venue needed a sponsor to go first, and Harrison Street became the first investment manager to authorize transfers through it.

A 91% fill still leaves the clearing discount unstated, and that missing figure matters more than the fill rate. Nine percent of the shares offered in the first auction did not sell, and the coverage does not say whether those asks sat outside the clearing price or were withdrawn. Nor does it report the discount to net asset value at which the auction cleared. A strong first fill tells the wealth channel only that sellers found a bid; the size of that discount is what separates a convenience for sellers from a repricing of the wrapper.

The second auction runs on a different book: Harrison Street Real Assets Fund provides exposure to private infrastructure, farmland, timberland and public real assets, through private funds and through institutional real assets securities managers. That is the strongest corner of the semi-liquid fund market at the moment, and therefore the more useful test of whether secondary buyers will bid near net asset value for a portfolio they cannot inspect.

The repurchase program stays where it was, and the auction gives holders another exit between scheduled windows without changing the fund’s own liquidity terms; loosening repurchase rules would formalize discretion that sponsors already exercise rather than empty the line. What the venue offers holders is different in kind: a sale priced by another investor’s bid and accepted voluntarily at a discount the seller chooses, rather than a redemption rationed by the sponsor and delivered whenever the window opens.

For a sponsor, the structure creates a distribution argument independent of the repurchase calendar: an adviser can describe a path out between windows without promising a redemption the fund must ration. One auction of one fund is thin evidence that such a path exists at scale, and the coverage of the first auction gives no read on who the buyers were beyond their non-affiliation.

Whether the venue can price more than one book now turns on the second clearing print. If the Real Assets Fund fills at a similar rate and a comparable discount, the firms will have shown the venue can price more than one book. The faster question is who else signs on. Harrison Street was the first manager to authorize share transfers through the platform, and the coverage names no second, leaving the venue’s usefulness tied to a single sponsor until that changes. The number to watch is the clearing discount on the second book.