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New Fund Looks To Bring Liquidity to Non-Traded REIT Investors

April 17, 2013
A new closed-end investment fund has filed registration papers for a unique offering that will exchange its to-be publicly traded shares for non-traded shares in 33 private REITS.

Miami Beach-based REIT Exchange Fund Inc. (RXF) is a newly-organized, non-diversified, closed-end management investment company that intends to invest in a select group of non-traded, Securities and Exchange Commission registered real estate investment trusts.

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It is offering to exchange the common shares of RXF for shares currently held by investors in the selected REITs.

RXF is offering to exchange its common shares for shares of each selected REIT at a value of the greater of the selected REIT's latest redemption price or latest estimated price (as reported in its most recent SEC filings). The nominal value of RXF's common shares in the exchange offer is $25.

In order to preserve the current income typically earned by investors in the selected REITs, RXF has authorized cash distributions to holders of RXF Common Shares equal to $1.75 per share on an annualized basis during the twelve-month period beginning with the closing of the exchange offers.

"Our goal, by aggregating shareholdings of registered non-traded REITs, is to create a portfolio of the most attractive and diversified American real estate available as a publicly traded closed-end fund," said Nathan Leight, CEO of RXF and founder of Spring Asset Management LLC, RXF's investment adviser. "Furthermore, we believe RXF offers a unique opportunity to simultaneously provide liquidity for investors in non-traded REITs while supporting issuers' business model."

"At first, our portfolio will consist primarily of shares in the selected REITs, creating a portfolio that offers diversification by region and asset type, managed by up to 21 different, sophisticated real estate management teams," Leight said.

Leight said that if RXF is able to accept shares from investors in all 33 selected REITs, it would hold an equity interest in more than 3,300 properties with locations in 49 U.S. states.

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