486APOS: Harrison Street Real Assets Fund Updates Offering

Harrison Street Real Assets Fund LLC filed a post-effective amendment to its N-2 registration statement, detailing its continuous offering of shares, investment strategies in real assets, and quarterly repurchase policy.

Summary

• Harrison Street Real Assets Fund LLC (the Fund) is a Delaware limited liability company registered as a non-diversified, closed-end investment management company operating as an interval fund.
• Shares are continuously offered at Net Asset Value (NAV) per Share, with no sales load or early withdrawal charge.
• The Fund will offer to repurchase not less than 5% nor more than 25% of outstanding shares quarterly at NAV.
• The investment objective is to achieve long-term Real Returns (total returns adjusted for inflation) through current income and long-term capital appreciation with low correlation to broader public equity and debt markets.
• At least 80% of net assets, plus borrowings, will be allocated to U.S. and non-U.S. public and private investments in infrastructure, timberland, and agriculture/farmland.
• Exposure is gained through third-party private funds, wholly-owned subsidiaries (VCRRX Subsidiary, Sub-REIT), publicly traded Real Asset Securities, other registered investment companies (including ETFs), and direct private debt investments.
• The Fund has elected to be treated as a Regulated Investment Company (RIC) for U.S. federal income tax purposes.
• The Adviser, Harrison Street Private Wealth LLC, manages approximately $4.1 billion in assets as of March 31, 2026.
• Brookfield Public Securities Group LLC serves as a sub-adviser for a portion of the Fund's assets, specializing in publicly traded real asset securities.
• The Investment Management Fee is 1.15% annually of the average daily NAV, with contractual waivers to avoid double-counting fees from subsidiaries.
• The Fund's total return based on NAV was 5.13% for the year ended March 31, 2025, and 10.91% for March 31, 2022.
• Net assets at the end of March 31, 2025, were $2,595,792,000, a decrease from $2,947,328,000 in 2024 and $3,029,389,000 in 2023.

Sentiment

Score: 5

Explanation: StockSavvy.ai views this as a routine regulatory update for an existing interval fund. While it details a robust investment strategy in real assets and provides transparency on risks and fees, it does not contain new performance data or significant strategic shifts that would alter the fundamental investment thesis. The decline in net assets over the past two years, despite positive returns, warrants monitoring.

Positives

• The Fund's investment objective targets 'Real Returns' (inflation-adjusted) with low correlation to public markets, potentially offering diversification benefits.
• Diversified exposure across real asset classes, including infrastructure, timberland, and agriculture/farmland, through various investment vehicles.
• Quarterly repurchase offers provide limited liquidity for an otherwise illiquid investment, which is a key feature for interval funds.
• The Adviser, Harrison Street Private Wealth LLC, specializes in real asset investing with substantial assets under management ($4.1 billion as of March 31, 2026).
• The Sub-Adviser, Brookfield Public Securities Group LLC, brings 36 years of experience in real asset securities management.
• Contractual fee waivers are in place to prevent double-counting of management fees from the VCRRX Subsidiary and Sub-REIT.
• The Fund aims to qualify as a Regulated Investment Company (RIC), which generally avoids corporate-level taxation on distributed income and gains.

Negatives

• The Fund is a non-diversified management investment company, allowing for greater concentration in a limited number of issuers, which increases risk and volatility.
• Shares are not listed on any securities exchange, and no secondary market is expected to develop, making it an illiquid investment.
• Shareholders should not expect to sell shares other than through quarterly repurchase offers, and there is no guarantee that all tendered shares will be repurchased due to proration risk.
• The auction process for transfers is only available if two consecutive quarterly repurchase offers are pro-rated, and shares sold at auction will likely receive a price below the Fund's Net Asset Value (NAV).
• Investing in Private Funds involves two layers of fees and expenses (Fund level and Private Fund level), which can be substantial and adversely affect returns.
• Private Funds are not subject to Investment Company Act protections and have limited transparency into their underlying investments, potentially leading to valuation and regulatory risks.
• Net assets have declined from $3,029,389,000 in March 2023 to $2,595,792,000 in March 2025, suggesting potential outflows or valuation challenges.
• The Fund may use leverage, a speculative technique that increases volatility, costs, and potential losses, especially in declining markets or rising interest rate environments.
• Investments in debt securities, particularly high-yield/junk bonds, carry higher credit risk and interest rate risk.
• The Fund may be forced to liquidate portfolio securities at disadvantageous times or prices to meet repurchase requests or distribution requirements, potentially realizing losses.

Risks

• Infrastructure-Related Companies Risk: Includes burdens of ownership, economic conditions, supply/demand, financial condition of users/suppliers, interest rate changes, environmental laws, disruptive weather, energy prices, fiscal/monetary policies, uninsured casualties, competition, technological disruptions, force majeure, regulatory risks, operating/technical risks, government contract risk, capital expenditures, demand/user risk, and lack of liquidity.
• Timberland-Related Companies Risk: Involves volatility of forest product prices, changes in trade/tariff policies, general market forces, competition from alternative building materials, forestry regulations, illiquidity of timber-related assets, losses from fire/other causes, uninsured casualties, and natural disasters.
• Agriculture/Farmland-Related Companies Risk: Subject to adverse changes in economic/natural conditions (storms, floods, drought, infestations), irrigation system failures, financial conditions of tenants, marketability of crops, casualty/condemnation losses, government subsidy programs, debt financing availability, interest rate/tax changes, environmental laws, zoning laws, energy prices, dependence on cash flow, and uninsured losses.
• Liquidity Risk: A substantial portion of assets are in restricted/illiquid securities, with no established market for many investments and significant restrictions on transferability of Private Fund interests. Repurchase process can involve complications and delays, and Private Funds may impose lock-up periods or suspend repurchase rights.
• Auction Risk: No guarantee of auction functionality or sufficient investor demand, limited availability, and likely sale price below the Fund's most recently calculated NAV.
• Interval Fund Risk: Limited liquidity through quarterly repurchase offers (5-25%), no secondary market, illiquid investment, no guarantee of selling shares at any given time or quantity, and potential for proration or suspension of repurchase offers.
• Valuation Risk: The value of investments is difficult to ascertain, relying on subjective estimates from appraisers and pricing agents, which may be inaccurate and subject to later adjustment. Conflicts of interest exist for the Adviser in valuation.
• Leverage Risk: Increases volatility of NAV and returns, fluctuations in interest rates reduce returns, magnifies declines in NAV in adverse markets, increases operating costs, and may force asset sales at a loss. Lenders' rights are senior to shareholders.
• Debt Securities and Related Investments Risk: Includes credit risk, interest rate risk, investments in unrated or below investment grade (high yield/junk bonds), illiquidity of private debt, reliance on arrangers for sourcing, and substantial due diligence requirements.
• Loans and Loan-Related Investments Risk: Collateral may decline in value or become illiquid, legal/contractual resale restrictions, less reliable information, increased defaults with rising interest rates, lower priority of junior loans, unsecured loans lack collateral, and extended trade settlement periods.
• Loan Assignment and Participation Risk: May not unilaterally enforce rights, partial ownership interest in collateral, subject to credit risk of both borrower and selling lender, and treated as a general creditor of the lender in insolvency.
• Credit Risk: Rapid changes in credit quality, default of a single holding can cause significant NAV deterioration, and issuer/guarantor inability to make payments.
• High Yield Securities Risk: Predominantly speculative, greater risks of loss and price fluctuations, more susceptible to economic downturns, and less liquid secondary market.
• Market Disruption, Health Crises, Terrorism and Geopolitical Risks: Investments negatively affected by broad market environment, war, terrorism, international political developments, sanctions, tariffs, trade wars, diplomatic events, global health crises (e.g., COVID-19, U.S. banking system concerns), and interconnectedness of markets.
• Active Management Risk: Performance depends on Adviser's/Managers' skills, limited market opportunities in private assets, potential for conflicting investment decisions among Managers, limited control over Private Fund investments, and risks of fraud or malfeasance.
• Equity Securities Risk: Prices fluctuate based on company financial condition, market/economic conditions, industry-specific factors, and general market sentiment. Preferred securities have additional risks like deferred distributions and limited voting rights.
• Private Funds Risk: Not subject to Investment Company Act protections, limited transparency into underlying investments, risk of loss due to fraud/deviations, material changes in Private Funds, unfunded commitments, and two layers of fees.
• Investment Company and ETF Risk: Indirectly bear proportionate share of fees/expenses of underlying investment companies, potential for Adviser conflicts of interest, and ETFs may trade at a premium or discount to NAV.
• Foreign Investing Risk: Subject to economic, political, regulatory, and social risks, liquidity issues, restrictions on foreign ownership, local taxes, adverse political developments, exchange controls, and less information/regulation.
• Currency and Exchange Rate Risks: Exposure to fluctuations in foreign exchange rates, particularly high in emerging markets, and hedging strategies may not be successful.
• Interest Rate Risk: Rising interest rates can cause a decline in the value of fixed income investments, leading to a decline in NAV and potential forced liquidation of assets.
• Environmental and Unforeseen Liabilities Risk: Substantial risk of loss from environmental problems (e.g., global climate change, hazardous substances), changes in environmental laws, and undisclosed matters affecting property value.
• Business and Regulatory Risks: Legal, tax, and regulatory changes, economic/market conditions, and the evolving regulatory environment for Private Funds and Subsidiaries may adversely affect the Fund. Risks related to AI Technologies are also noted.
• Fees and Expenses Risk: Shareholders bear two layers of fees and expenses (Fund and underlying investment vehicles), which can be substantial.
• Emerging Markets Risk: Greater political/economic risks, expropriation, confiscatory taxation, limitations on fund removal, small/illiquid markets, currency fluctuations, and less developed regulatory environments.
• Issuer Risk: Value of a security may decline due to issuer-specific reasons, including investments in distressed debt.
• Underlying Investment Risk: Exposed to risks of Sub-REIT/Subsidiaries/other investment companies, which are not registered under the Investment Company Act.
• Tax Risks Fund: Must satisfy RIC requirements, difficulty obtaining Private Fund portfolio information, potential for non-qualifying income, and risk of losing RIC status.
• Tax Risks Subsidiaries: Investment limits in Sub-REIT and VCRRX Subsidiary, VCRRX Subsidiary is subject to entity-level tax, and changes in tax laws.
• Tax Risks Sub-REIT: Must satisfy REIT requirements, risk of IRS interpretation, 50% ownership test, 100-shareholder test, potential for entity-level tax, and forced borrowing/asset sales to fund distributions.
• Mezzanine Loan Risk: Higher degree of risk than first mortgage loans, potential for investment to become unsecured upon senior lender foreclosure.
• Preferred Securities Risk: Susceptible to equity risks, deferred distributions, liquidity risks, and limited voting rights.
• Joint Venture Risk: Potential for disputes with third-party partners, increased expenses, and unfunded commitments.
• Property Manager Risk: Dependence on property managers and leasing agents, limited Fund control over day-to-day management, and adverse impact from problems with managers.
• Loan Origination Risk: Loans to unrated/below investment grade borrowers, bridge loan risk, inability to sell/assign originated loans, significant legal/due diligence expenses, competition, and litigation risk.
• Access Risk: Reliance on arrangers for suitable investment opportunities, difficulty in locating sufficient opportunities, and inability to achieve anticipated investment pace.
• Investments in Third-Party Managed REITs Risk: Risks associated with the real estate industry, limited financial resources, volatility, leverage, two layers of fees, and failure to qualify as a REIT.
• Privately Placed Securities Risk: Subject to liquidity and valuation risks, limited market, less information available, and time-consuming/expensive disposition.
• Market Capitalization Risk: Investments in medium/smaller/micro-cap companies involve higher risks of loss, price fluctuations, and illiquidity.
• Reliance on Key Persons Risk: Loss of executive officers/portfolio managers could materially adversely impact the Fund.
• Focused Investment Risk: Substantial portion of assets in a particular asset type/industry/sector/geographic location/securities instrument, leading to greater risk and volatility.
• Hedging Transactions Risk: May limit opportunity for gain, no assurance of success, imperfect correlation, counterparty risk, and liquidity risk.
• Fund Capitalization Risk: Inability to raise capital sufficient to maintain profitability and meet investment objective.
• Diversification Risk: Non-diversified status means greater risk with respect to a limited number of issuers.
• Cybersecurity and AI Technologies Risk: Susceptible to operational and information security risks, disruptions, financial losses, privacy violations, and risks from AI Technologies (e.g., unexpected results, inaccuracies, competitive harm).

Future Outlook

The Fund intends to continue its continuous offering of shares and make quarterly repurchase offers, aiming to achieve long-term Real Returns with low correlation to public markets. The Adviser will maintain flexibility in asset allocation to adapt to prevailing economic and market conditions. The Fund expects to invest all or substantially all net proceeds within approximately three months, but acknowledges that delays could lead to distributions from return of capital.

Management Comments

• The Fund is intended for long-term investors and the liquidity risk may be greater for investors expecting to sell their Shares in a relatively short period after purchase.
• You should invest in the Fund only if you can sustain a substantial or complete loss of your investment.
• The Fund should be considered a complex investment and entails substantial risk.
• The Adviser does not believe that its overall cost and expense will differ materially between selecting and monitoring direct investments on the one hand, or in compensating sub-advisers, on the other.

Industry Context

StockSavvy.ai notes that the Fund's focus on real assets (infrastructure, timberland, agriculture/farmland) aligns with a growing investor demand for inflation-hedged and diversified portfolios, especially given recent global economic volatility and inflation concerns. The use of an interval fund structure provides limited liquidity for these typically illiquid asset classes, catering to long-term investors seeking exposure outside traditional public equity and debt markets. The involvement of specialized asset managers like Harrison Street and Brookfield underscores the complexity and expertise required in this niche. The decline in net assets from 2023 to 2025, despite a positive total return in 2025, suggests potential outflows or market valuation challenges within the real assets sector, possibly reflecting broader market sentiment or specific fund performance issues.

Comparison to Industry Standards

• The Fund's investment objective of 'Real Returns' (inflation-adjusted) with low correlation to public markets is a common goal for real asset funds, aiming to provide a hedge against inflation and diversification benefits.
• The 1.15% annual investment management fee is within the typical range for actively managed alternative investment funds, especially those investing in private real assets, which often have higher operational complexities and due diligence costs than traditional equity or bond funds.
• The quarterly repurchase offer of 5% to 25% of outstanding shares is standard for interval funds, balancing investor liquidity needs with the illiquid nature of underlying real asset investments. For example, other interval funds like Starwood Property Trust's non-traded REIT or Blackstone Real Estate Income Trust (BREIT) also offer limited redemption programs, often with similar percentage limits, reflecting the inherent illiquidity of their real estate portfolios.
• The decline in net assets from $3.03 billion in March 2023 to $2.60 billion in March 2025, while total return was positive (5.13% in 2025), could indicate net outflows or significant share repurchases, which is a trend observed in some non-traded REITs and interval funds during periods of market uncertainty or rising interest rates, as investors seek more liquid alternatives or re-evaluate illiquid holdings.

Management Changes

Corporate Governance

Legal Proceedings

• The Fund is not currently involved in any material legal proceedings.
• To the Fund's knowledge, no material legal proceedings are threatened against the Fund.

Related Party Transactions

• The Adviser receives an Investment Management Fee of 1.15% annually of the Fund's average daily NAV.
• The Adviser contractually agrees to reduce the Investment Management Fee by any management fees it receives from the VCRRX Subsidiary and affiliated investment companies, and waives management fees from the Sub-REIT, to avoid double-counting assets.
• The Adviser pays the Sub-Adviser (Brookfield) a management fee on a sliding scale from 0.60% down to 0.45% from its own Investment Management Fee.
• The Fund may invest in registered investment companies managed by the Adviser or affiliated with the Fund (affiliated investment companies).
• Colliers International Group Inc. has an indirect controlling interest in the Adviser, and its affiliates (Affiliated Entities) engage in real estate and investment activities, potentially creating conflicts of interest with the Fund.
• The Fund Complex pays each Independent Director a per annum fee of $165,000, allocated among the funds in the complex. The Chairman of the Audit Committee receives an additional $30,000 retainer.
• The Fund reimburses the Adviser for certain expenses it pays on behalf of the Fund.
• The Adviser and/or Distributor may compensate financial intermediaries for distribution-related activities and ongoing services, paid from the Adviser's own resources, which may create conflicts of interest for intermediaries by incentivizing them to recommend the Fund.

Stakeholder Impact

• Shareholders face illiquidity risk due to shares not being publicly traded and limited quarterly repurchase offers, with potential for proration and risk of selling below NAV in auctions.
• Shareholders bear two layers of fees (Fund and Private Fund level), which can be substantial, and are subject to taxation on distributions.
• Employees of the Adviser and Sub-Adviser receive compensation packages that include base salary, discretionary bonuses, and, for Brookfield, incentive-oriented compensation tied to client-generated performance fees and deferred compensation.
• Financial Intermediaries may receive compensation from the Adviser for distribution and servicing activities, potentially creating an incentive to recommend the Fund.
• Regulatory Authorities oversee the Fund's compliance with SEC and Investment Company Act regulations, including RIC qualification, asset diversification, and distribution requirements.

Next Steps

• The Fund will continue its continuous offering of shares.
• The Fund will continue to make quarterly repurchase offers for 5% to 25% of outstanding shares.
• The Board may authorize transfers of shares through an auction process if two consecutive quarterly repurchase offers are pro-rated.
• The Adviser will continue to monitor and reallocate assets among Private Funds and sub-advisers.
• The Fund intends to distribute at least 90% of its investment company taxable income annually to qualify as a RIC.
• The Board will continue to evaluate the compensation of Board members on an ongoing basis.

Key Dates

Recommendation

The filing is a standard regulatory update for an interval fund, providing detailed information on its investment strategy, risks, and operational structure. It does not contain new, material financial performance data or strategic announcements that would warrant a change in investment stance. The fund's focus on real assets offers potential diversification and inflation hedging benefits, but its illiquid nature, multi-layered fee structure, and inherent risks associated with private investments and leverage suggest it is suitable only for long-term investors with a high-risk tolerance. The decline in net assets over the past two fiscal years, despite positive total returns, indicates potential outflows or valuation adjustments that warrant continued monitoring rather than a strong buy or sell signal based solely on this filing.

Keywords

Harrison Street Real Assets Fund, Interval Fund, Real Assets, Infrastructure, Timberland, Agriculture, Farmland, SEC Filing, N-2 Amendment, Investment Company Act, Regulated Investment Company, RIC, Private Funds, Sub-REIT, VCRRX Subsidiary, Public Securities, Private Debt, Alternative Investments, Illiquid Investments, Quarterly Repurchase, Asset Management, Brookfield Public Securities Group, Financial Reporting, Risk Factors, Corporate Governance, Investment Strategy