March 22, 2019
BY EMAIL
Cynthia M. Krus, Esq.
Eversheds Sutherland LLP
700 Sixth Street NW Suite 700
Washington, DC 20001
Re: CIM Real Assets & Credit Fund
File Nos. 333-229782 and 811-23425
Dear Ms. Krus:
On February 22, 2019, you filed a registration statement on Form N-2 on behalf
of CIM Real
Assets & Credit Fund (the "Fund"). We have reviewed the registration statement
and have
provided our comments below. Where a comment is made with regard to disclosure
in one
location, it is applicable to all similar disclosure appearing elsewhere in the
registration
statement. All capitalized terms not otherwise defined herein have the meaning
given to them in
the registration statement.
GENERAL COMMENTS
1. We note you submitted an application for exemptive relief on February 7,
2019
("Application") in connection with the registration statement in order to issue
multiple classes of
share and to impose early withdrawal charges ("EWCs") and asset-based
distribution and/or
service fees with respect to certain classes. We also note that the Fund is
seeking exemptive
relief to allow it to co-invest with certain of its affiliates. Please advise
us if you expect to
submit any no-action requests or additional exemptive applications in
connection with your
registration statement.
2. Before using abbreviate terms, acronyms, et cetera, please define them at
their place of first
appearance. For example, prior to being defined, the acronym "DRP" appears in
the fee table's
first footnote.
PROSPECTUS
Cover Page
3. Please confirm to us that the pricing table, as well as all of the
information appearing
thereunder up to, and including, the date of the Prospectus, will be included
as part of the
information presented on the Outside Front Cover Page of the Prospectus. See
Item 1 of Form
N-2.
Cynthia M. Krus, Esq.
Eversheds Sutherland LLP
CIM Real Assets & Credit Fund
March 22, 2019
Page 2 of 16
Securities Offered
4. Please make more prominent the second and third sentences of the first
paragraph under this
heading that discuss the Fund's Application and the fact that until the Fund
receives the related
exemptive relief, the Fund will only offer Class A Shares.
5. Please revise the fourth and fifth sentences to explain in a clearer manner
that the sales loads
for Class A Shares and Class L Shares will be imposed starting with any initial
share purchases
(e.g., Class A Shares will initially be offered at $26.525 per share plus a
maximum sales load of
5.75% of the offering price and thereafter will be offered on a continuous
basis at NAV per share
plus that maximum sales load of 5.75%). Make conforming changes throughout the
registration
statement.
Investment Objective
6. Please ensure the discussion of the Fund's primary investment objective
reflects that the
Fund's distributions may consist significantly of "return of capital."
7. On page 33, the Prospectus states the Fund "anticipates that substantially
all of the loans in
which it makes investments will be instruments that are rated below investment
grade or are
unrated. Below investment grade instruments are commonly referred to as `junk'
or high-yield
instruments and are regarded as predominantly speculative with respect to the
issuer's capacity
to pay interest and repay principal." To the extent investing in junk
securities is considered to be
part of the Fund's principal investment strategy, the disclosures on the Cover
Page and in the
Summary Prospectus should indicate this fact and highlight the speculative
nature of such
investments, including by explicitly stating that the Fund's investments are
commonly referred to
as "junk securities."
8. The Prospectus states the Fund may invest in derivatives. If the Fund may
invest in such
instruments, directly or indirectly, as part of its principal strategies,
please state so. Also,
disclose in the Summary Prospectus the specific derivatives in which the Fund
may invest,
directly or indirectly, for purposes of its principal strategies and indicate
why the Fund will do so
(e.g., hedging purposes and/or speculative purposes) and include any attendant
risks. In this
regard, consider the Division of Investment Management's observations on
derivatives-related
disclosure in the letter from Barry D. Miller, Associate Director, Office of
Legal and Disclosure,
to Karrie McMillan, General Counsel, Investment Company Institute dated July
30, 2010
(http://www.sec.gov/divisions/investment/guidance/ici073010.pdf).
9. In the fourth sentence, please indicate the types of issuers (i.e., U.S.
and/or foreign) that will
issue the Fund's "credit and credit related securities" specified in (2)-(4).
Please describe
"commercial net-lease properties." Also, in the Prospectus, specifically
identify all of these
Cynthia M. Krus, Esq.
Eversheds Sutherland LLP
CIM Real Assets & Credit Fund
March 22, 2019
Page 3 of 16
"other credit-related instruments" that are mentioned in (5) and include their
risks (e.g., disclose
that equity tranches are in first loss position).
10. The fourth sentence states the "credit and credit related securities" will
consist of, "to a
lesser extent warrants and other equity securities of U.S. middle-market
companies." (Emphasis
added.) Given this description, please confirm the Fund will invest in
"warrants and other equity
securities" as part of its principal strategies. See Item 8.2.b (1) of Form
N-2. Also, please explain
to us why equity securities are considered "credit and credit related
securities." Finally, confirm
these instruments and their risks are specified in the Prospectus Summary and
are described in a
consistent manner or revise the disclosure accordingly. We note page 2 of the
Summary
Prospectus states the "Fund may also opportunistically invest in warrants and
other equity
securities." Please clarify what is meant by "opportunistically invest."
11. The Prospectus disclosure indicates the Fund may invest in private equity
funds. Please tell
us what percentage of the Fund's assets are expected to be invested in hedge
funds and private
equity funds that rely on sections 3(c)(1) or 3(c)(7) of the Investment Company
Act of 1940 (the
"Investment Company Act," "1940 Act," or the "ICA"). We may have additional
comments
after reviewing your response.
12. We note on page 33 under "Duration and Maturity Risk" the disclosure
indicates the "Fund
has no fixed policy regarding portfolio maturity or duration. Holding long
duration and long
maturity investments will expose the Fund to certain magnified risks." State as
much in the
Summary Prospectus and clarify these "certain magnified risks."
Pricing Table
13. Please revise footnote (1) of the pricing table to explain that currently,
only Class A shares
of the Fund are offered and the Fund expects to offer the other share classes
in the future, subject
to obtaining an exemptive order from the Securities and Exchange Commission
("SEC").
14. Expand footnote (2) to the pricing table to disclose [per share class] the
net per common
share and total proceeds to the Fund, after the payment of expenses of issuance
and distribution,
offering costs and expenses, and sales load. In this regard, see Instruction 6
to Item 1.1.g of
Form N-2.
15. Disclose by footnote to the pricing table that both the sales load, which
is directly borne by
investors in the common shares of the offering, and the organization and
offering expenses paid
by the Fund, which are indirectly borne by investors in the common shares of
this offering, will
immediately reduce the value of each investor's common shares.
Cynthia M. Krus, Esq.
Eversheds Sutherland LLP
CIM Real Assets & Credit Fund
March 22, 2019
Page 4 of 16
16. As the Prospectus states that securities are to be offered on a best
efforts basis, please
disclose on the Cover Page any arrangements to place the funds received in an
escrow, trust, or
similar arrangement. If no such arrangements have been made, please disclose
that fact. See
Instruction 5 to Item 1.1.g. of Form N-2. Also, revise the table's column
reading "Offering
Price" to "Offering Price to Public." Id.
Interval Fund/Repurchase Offers
17. Please enhance the disclosure under this heading to:
a. Indicate the intervals between deadlines for repurchase requests, pricing,
and repayment and,
if applicable, the timing of the initial repurchase offer. In doing so, please
also include a cross
reference to the Prospectus sections that discuss repurchase policies and their
attendant risks.
See Guide 10 to Form N-2.
b. Explain that share repurchases in excess of five percent are entirely within
the discretion of
the Fund and investors should not rely on repurchase offers being made in
amounts in excess of
five percent of Fund assets.
18. Disclosure references a "repurchase fee" (e.g., the second sentence of the
first paragraph of
this section) while others indicate the "Fund has elected not to impose any
repurchase fee on
repurchases of Common Shares" (e.g., see Periodic Repurchase Offers" on page
3). If the Fund
imposes a repurchase fee, please describe it and ensure it is presented in the
fee table.
Cover Page-Risk Bullets
19. Please confirm to us that the risk bullets will appear on the Outside Front
Cover Page. Also,
in the third bullet:
a. Explain that a return of capital is a return of a portion of a shareholder's
original investment in
the Fund. Also, confirm to us that the Prospectus discloses the short term and
long term tax
implications for a shareholder with respect to a return of capital. If not,
revise the Prospectus
accordingly.
b. Expand the examples of sources for distributions to include offering
proceeds, borrowings,
and amounts paid by the Fund's affiliates that are subject to repayment by
investors.
c. State that any capital returned to shareholders through distributions will
be distributed after
payment of fees and expenses, as well as the sales load.
Cynthia M. Krus, Esq.
Eversheds Sutherland LLP
CIM Real Assets & Credit Fund
March 22, 2019
Page 5 of 16
20. In the fifth bullet, please expand the penultimate sentence to explain an
investor should be
able to bear a complete loss of investment. Also, please make the last sentence
in the fifth bullet
into a separate bullet.
21. Please add bullet points to summarize:
a. That because investors may be unable to sell their shares, they may be
unable to reduce their
exposure to the Fund in any market downturn.
b. That purchasers of common shares are subject to immediate dilution as a
result of selling
commissions and dealer manager fees paid by such purchasers and offering
expenses of the Fund
that will incur in connection with this offering.
c. Although the Fund may seek a liquidity event, there is no guarantee that a
liquidity event will
take place.
Leverage
22. The disclosure indicates the Fund "intends to (i) use borrowings, including
loans from
certain financial institutions and the issuance of commercial paper and notes
(collectively,
`Borrowings'), in an aggregate amount of up to 33 1/3% of the Fund's total
assets (including the
assets subject to, and obtained with the proceeds of, such Borrowings)
immediately after such
Borrowings or (ii) issue preferred stock in an aggregate amount of up to 50% of
the Fund's total
assets (including the assets subject to, and obtained with the proceeds of,
such issuance)
immediately after such issuance."
a. In a footnote to the pricing table, please include the estimated offering
expenses of any
preferred stock and/or debt offering that is expected to occur during the next
12 months. Also,
indicate in that footnote that preferred stock and debt offering expenses will
be borne by the
holders of the Fund's common shares and result in a reduction of the net asset
value of the
common shares. Also, if the Fund intends to offer preferred stock and/or debt
during the next 12
months, please include the dividend and/or interest expense is the Summary of
Expenses. Based
on your response, we may have additional comments.
b. In the disclosure, explain that all of the leverage expenses of the Fund are
borne solely by the
Fund's common shareholders.
Investment Adviser
23. Please define the following terms: (a) "vertically-integrated owner and
operator" that
appears in the penultimate sentence of the first paragraph; and (b) "ramp-up
period" shown in the
last sentence of the third paragraph.
Cynthia M. Krus, Esq.
Eversheds Sutherland LLP
CIM Real Assets & Credit Fund
March 22, 2019
Page 6 of 16
Prospectus Summary
Investment Strategies (Page 2)
24. Based on the disclosure, it is unclear if the Fund intends to invest in
foreign investments
and/or foreign real estate as part of its principal strategies. If this is so,
please clarify those facts
in the disclosure and include attendant risk disclosure in the Prospectus
Summary and Risks
section of the prospectus.
25. Please add disclosure explaining the Fund's fundamental policy to
concentrate in the real
estate industry along with attendant concentration risk disclosure.
26. Specify the "other equity securities" referenced in the fifth paragraph.
27. If the Fund intends to include derivatives as part of its 80% policy,
please add disclosure
stating the Fund will value those derivatives for purposes of rule 35d-1 under
the ICA on a mark
to-market basis (i.e., using the current market price of the derivative, or if
it is an OTC
derivative, its fair value).
28. Based on the disclosure on page 42, it appears the Fund will engage in
reverse repurchase
agreements as part of its principal strategies. Please disclose this fact in
the Prospectus Summary
and include attendant risks, including the fact that the use of these
instruments involves many of
the same risks involved in the Fund's use of leverage. Also, indicate the
maximum limit,
expressed as a percentage of net assets, the Fund may engage in these
instruments.
29. The disclosure states that the Fund's investments may include equity
tranches of CLOs.
Please confirm the Fund will follow Accounting Standards Codification 32540
(Beneficial
Interests in Securitized Assets) for these investments.
Leverage (Page 3)
30. The disclosure defines "Borrowings" as "loans from certain financial
institutions and the
issuance of preferred stock (collectively, "Borrowings"), in an aggregate
amount of up to 33
1/3% of the Fund's total assets (including the assets subject to, and obtained
with the proceeds
of, such Borrowings) immediately after such Borrowings." (Emphasis added.)
Please reconcile
this definition of Borrowings with the one on the Cover Page.
31. In the second paragraph, the first sentence suggests the Fund has
subsidiaries beyond its
REIT Subsidiaries and the Fund may invest in those other subsidiaries. If so,
please clarify the
Fund's investments in other subsidiaries in plain English. To the extent
investing in any such
subsidiary is considered to be part of the Fund's principal investment
strategy, the disclosures
should, where appropriate, indicate this fact.
Cynthia M. Krus, Esq.
Eversheds Sutherland LLP
CIM Real Assets & Credit Fund
March 22, 2019
Page 7 of 16
Distributions (Page 4)
32. If investors' funds will be forwarded to an escrow account, please identify
the escrow agent,
and briefly describe the conditions for release of the funds, whether such
funds will accrue
interest while in escrow, and the manner in which the monies in such account
will be distributed
if such conditions are not satisfied, including how accrued interest, if any,
will be distributed to
investors. See Item 5.8 of Form N-2.
Investment Adviser (Page 4)
33. The last paragraph states, "[t]o the extent advisory fees are paid to the
Adviser by a REIT
Subsidiary, such fees will be offset against fees otherwise payable by the Fund
to the Adviser,
such that shareholders of the Fund will only be subject to one layer of fees to
the Adviser."
Please file the agreement as an exhibit to the registration statement. Confirm
to us the Adviser
may not recoup any offset fees for managing any REIT subsidiary. Based on your
response, we
may have additional comments.
34. As noted above, the Leverage section on page 3 suggests the Fund has
subsidiaries beyond
its REIT Subsidiaries and the Fund invest in those other subsidiaries. To the
extent the Fund
invests in such other subsidiaries or affiliated investment companies, does the
Fund have similar
"fee offset" arrangements with any of those entities such that Fund
shareholders would pay only
one layer of fees? Based on your response, we may have additional comments.
35. Please clarify the "non-advisory fees (if any)" that would be paid by each
REIT Subsidiary as
described in the last sentence and file any governing document as an exhibit to
the registration
statement. Based on your response, we may have additional comments.
Co-Administrator and Accounting Agent (Page 5)
36. The disclosure indicates the Fund will "reimburse the Adviser [(in its
capacity as co-
administrator)] for certain expenses incurred by it or its affiliates in
connection with the
administration of the Fund's business and affairs." At an appropriate location
in the Prospectus,
expand the disclosure to provide more specifics on the expenses for which the
Fund will be
required to reimburse the Adviser and also disclose the specific methodology
used to allocate
costs and expenses under the Administration Agreement.
37. The third paragraph states the Fund will pay to the "[ ] Administrator the
greater of a
minimum fee or fees based on the annual net assets of the Fund plus out of
pocket expenses (the
"Administration Fee") in connection with providing services to the Fund. Please
disclose this
"minimum fee."
Cynthia M. Krus, Esq.
Eversheds Sutherland LLP
CIM Real Assets & Credit Fund
March 22, 2019
Page 8 of 16
Unlisted Closed-End Fund Structure; Limited Liquidity (Page 7)
38. Please define the term "liquidity event" which appears in the second
paragraph, clarify the
significance of this disclosure, and indicate what entity may declare such an
event and any
related conflicts (e.g., how the decision to seek a liquidity event could
impact the Adviser's
compensation).
Risks (Page 8)
39. Please expand the fifth bullet to explain that although a return of capital
will generally not be
taxable, it would reduce the shareholder's cost basis in shares and may result
in higher capital
gains taxes, or a lower capital loss, when shares are sold.
Shareholder Transaction Expenses (Page 10)
40. Please add a caption reflecting the organizational and offering costs borne
by the common
shareholders expressed in terms of dollars per share.
41. The table's first footnote states, "[n]o selling commissions or dealer
manager fees will be
paid in connection with sales under the DRP." Please confirm to us there are no
DRP fees
charges that should be disclosed in the Shareholder Transaction Expenses
section in a separate
"Dividend Reinvestment and Cash Purchase Plan Fees" caption. See Instruction 4
to Item 3 of
Form N-2. We note additional text on page 65 under "Distribution Reinvestment
Plan" that
states "[t]here is no direct service charge to participants in the DRP." Is
there any indirect
service charge to participants in the DRP? If so, clarify that charge on page
65 and advise us
how such charge is disclosed in the fee table. Please ensure that disclosure in
the Prospectus
about fees in connection to the DRP is stated in a consistent manner.
Annual Expenses . . . Common Shares (Page 10)
42. We suggest adding a footnote explaining that the indirect costs the Fund
incurs from its
investments in certain investment vehicle do not appear in the fee table and
specifying those
vehicles in the footnote (e.g., REITs). Also, explain to us the basis for any
such exclusion from
the fee table.
43. On page 40 under "Potential Conflicts of Interest Risk -- Allocation of
Investment
Opportunities," the third paragraph discusses how the Fund may engage in short
sales. Please
confirm to us the fee table includes, as an expense, an estimate of the
interest and dividend
expenses to be paid on the Fund's short sale transactions. See AICPA Audit and
Accounting
Guide: Investment Companies 7.101.j (May 2012). Alternatively, please
disclose the Fund has
no current intent to engage in short sales.
Cynthia M. Krus, Esq.
Eversheds Sutherland LLP
CIM Real Assets & Credit Fund
March 22, 2019
Page 9 of 16
44. Please disclose in footnote (8) to the fee table that Acquired Fund Fees
and Expenses are
based on estimated amounts for the current fiscal year. See Item 3.10.f of Form
N-2.
45. Please disclose in footnote (9) the expiration date of the waiver and the
parties that may
terminate the agreement. The Staff notes this disclosure is included on Page 53
of the Prospectus,
but should also be included in this footnote.
Use of Proceeds (Page 12)
46. Please disclose how long it is expected to take to invest all or
substantially all of the
proceeds from the offering in accordance with the Fund's investment objective.
If the Fund
expects the investment period to exceed three months, also disclose the reasons
for the expected
delay. See Item 7.2 of Form N-2 and Guide 1 to Form N-2. Also, please be aware
the Division
does not consider assets invested in money market instruments or cash
equivalents to be invested
in accordance with a registrant's stated investment objectives and policies,
unless they are
invested in accordance with a temporary defensive policy or the Registrant's
investment policy
requires such investments. See Guide 1 to Form N-2.
The Fund's Investments (Pages 13-24)
47. As the disclosure on page 33 states the Fund anticipates that substantially
all of the loans in
which it makes investments will be below investment grade instruments, i.e.,
`junk' or high-yield
instruments, please prominently disclose the Fund's intention to invest
substantially all of its
assets in "junk" bonds and reduce the prominence of the discussion of triple A
rated securities
and other investment grade securities.
Infrastructure (Page 14)
48. Please define the terms "`brownfield' infrastructure assets" and
"`greenfield' infrastructure
projects" which appear in the last sentence of the first paragraph.
49. For purposes of the real estate and real estate-related securities
component of the Fund's
80% policy pursuant to rule 35d-1 under the ICA, the disclosure indicates the
Fund will include
the "infrastructure sectors and types" listed on page 15. Please add disclosure
to specify the
criteria the Fund will use to determine that a company within these
"infrastructure sectors and
types" has economic fortunes that are significantly tied to the real estate
industry, and, therefore,
is appropriate to include in the Fund's 80% basket for purposes of rule 35d-1.
For example, the
Fund could specify that any such company will either: (1) receive 50% of their
revenue or profits
from real estate; or (2) devote 50% of their assets to real estate. Absent the
addition of such a
50% assets/revenues test, or some other reasonable standard or test, the basket
of "infrastructure
sectors and types" is overly broad for purposes of compliance with rule 35d-1.
Cynthia M. Krus, Esq.
Eversheds Sutherland LLP
CIM Real Assets & Credit Fund
March 22, 2019
Page 10 of 16
REIT Subsidiaries (Page 15)
50. Concerning the Fund's REIT Subsidiaries, please provide details regarding
any such
subsidiary's jurisdiction of organization and corporate form. For any REIT
Subsidiary of the
Fund, please confirm the following:
a. That the Fund complies with the provisions of the Investment Company Act
governing
investment policies (Section 8) and capital structure and leverage (Section 18)
on an aggregate
basis with the REIT Subsidiary.
b. That each investment adviser to the REIT Subsidiary complies with provisions
of the
Investment Company Act relating to investment advisory contracts (Section 15)
as an investment
adviser to the fund under Section 2(a)(20) of the Investment Company Act. The
investment
advisory agreement between the REIT Subsidiary and its investment adviser is a
material
contract that should be included as an exhibit to the registration statement.
If the same person is
the adviser to both the Fund and the REIT Subsidiary, (we note the disclosure
currently indicates
this to be so) then, for purposes of complying with Section 15(c), the reviews
of the Fund's and
the REIT Subsidiary's investment advisory agreements may combined.
c. That the REIT Subsidiary complies with provisions relating to affiliated
transactions and
custody (Section 17). Identify the custodian of the REIT Subsidiary.
d. That the financial statements of the REIT Subsidiary will be consolidated
with those of the
Fund.
e. Any management fee (including any incentive fee or performance fee) payable
to the advisor
of the REIT Subsidiary will be included in "Management Fees" and the expenses
of the REIT
Subsidiary will be included in "Other Expenses" in the Fund's Prospectus fee
table.
We may have additional comments. Also, to the extent the Fund has any other
type of wholly
owned subsidiary in which it invests, please apply comment number 50 to those
entities.
51. The disclosure states that REIT Subsidiaries may also utilize leverage
including by
mortgaging properties held by special purpose vehicles or by acquiring property
with existing
debt and that any such borrowings will generally be the sole obligation of each
respective special
purpose vehicle, without any recourse to a REIT Subsidiary, the Fund or its
assets, and the Fund
will not treat such non-recourse borrowings as senior securities (as defined in
the 1940 Act) for
purposes of complying with the 1940 Act's limitations on leverage unless the
financial
statements of the special purpose vehicle, or the subsidiary of the Fund that
owns such special
purpose vehicle, will be consolidated in accordance with Regulation S-X and
other accounting
rules. Please:
Cynthia M. Krus, Esq.
Eversheds Sutherland LLP
CIM Real Assets & Credit Fund
March 22, 2019
Page 11 of 16
a. Provide the legal analysis supporting the conclusion that such borrowings
should not be
consolidated for purposes of Section 18 of the Investment Company Act.
Risks (Page 24)
52. Please disclose the risks presented by investments in Payable-in-kind
("PIK") interests; and
(2) Original Issue Discount ("OID") Securities including:
a. The interest payments deferred on a PIK loan are subject to the risk that
the borrower may
default when the deferred payments are due in cash at the maturity of the loan;
b. The interest rates on PIK loans are higher to reflect the time-value of
money on deferred
interest payments and the higher credit risk of borrowers who may need to defer
interest
payments;
c. Market prices of OID instruments are more volatile because they are affected
to a greater
extent by interest rate changes than instruments that pay interest periodically
in cash;
d. PIK instruments may have unreliable valuations because the accruals require
judgments about
ultimate collectability of the deferred payments and the value of the
associated collateral;
e. Use of PIK and OID securities may provide certain benefits to the Fund's
Adviser including
increasing management fees and incentive compensation;
f. The Fund may be required under the tax laws to make distributions of OID
income to
shareholders without receiving any cash. Such required cash distributions may
have to be paid
from offering proceeds or the sale of fund assets; and
g. The required recognition of OID, including PIK, interest for U.S. federal
income tax purposes
may have a negative impact on liquidity, because it represents a non-cash
component of the
Fund's taxable income that must, nevertheless, be distributed in cash to
investors to avoid it
being subject to corporate level taxation.
LIBOR Risk (Page 38)
53. Please tailor the disclosure on how the transition from LIBOR could affect
the Fund's
investments. For example, will the Fund invest in instruments that pay interest
at floating rates
based on LIBOR that do not include "fall back provisions" that address how
interest rates will be
determined if LIBOR stops being published? If so, how will it affect the
liquidity of those
investments? Also, disclose how the transition to a successor rate could impact
the value of
investments that reference LIBOR. Based on your response, we may have
additional comments.
Cynthia M. Krus, Esq.
Eversheds Sutherland LLP
CIM Real Assets & Credit Fund
March 22, 2019
Page 12 of 16
About Our Adviser (Page 48)
54. Please state the Adviser's principal business address and add a description
of the Adviser's
experience as an investment adviser. See Item 9.1.b(1) of Form N-2. Also, if
the Adviser is
controlled by another person, disclose the name of that person and the general
nature of its
business. Id.
55. Please disclose the information required by Instruction 1 to Item 9.1.b(2)
of Form N-2 or
confirm to us that is not applicable.
About our Sub-Adviser (48)
56. Please state the Sub-Adviser's principal business address and add a
description of the Sub-
Adviser's experience as an investment adviser.
Experienced, vertically integrated team with credit expertise (Page 49)
57. The disclosure states, "[a]s of September 30, 2018, CIM Group has aggregate
assets under
management of approximately $29.4 billion of assets across multiple
strategies." Clarify in the
text whether the related management activities include management of registered
investment
companies.
Incentive Fee (51)
58. Disclose how derivatives will be treated for purposes of calculating the
"Pre-Incentive Fee
Net Investment Income" on which the Incentive Fee is payable.
59. Enhance the disclosure to explain, using plain English principles, that
under the Fund's
compensation structure, it is possible that a shareholder may be charged an
incentive fee even
though the net asset value of its shares has decreased.
60. If the Incentive Fee arrangement will use clawbacks, please add attendant
disclosure.
61. Concerning the graphical representation of the calculation of the Incentive
Fee, please add
disclosure indicating that any returns shown are for illustrative purposes
only, and that actual
returns may vary from those shown.
Purchasing Shares (Page 56)
62. The second and third sentences states, "[i]nvestors may buy and sell shares
of the Fund
through Selling Agents and their representatives that have made arrangements
with the Fund
and are authorized to buy and sell shares of the Fund. Orders will be priced at
the appropriate
price next computed after it is received by a Selling Agent and accepted by the
Fund."
Cynthia M. Krus, Esq.
Eversheds Sutherland LLP
CIM Real Assets & Credit Fund
March 22, 2019
Page 13 of 16
(Emphasis added.) Please delete the phrase "and accepted by the Fund." See Rule
23c-
3(b)(7)(iii) under the ICA.
Periodic Repurchase Offers (Page 61)
63. In the first paragraph, the last sentence references shareholders being
able "to liquidate their
investment . . . in limited circumstances, as a result of transfers of the
Common Shares to other
investors." Please explain these "limited circumstances" in plain English,
including any transfer
restrictions imposed on shareholders by the Fund.
Notice to Shareholders (Page 62)
64. Please add disclosure explaining to shareholders how they may withdraw or
modify their
repurchase requests. See Rule 23c-3(b)(6) under the ICA.
65. Please clarify whether the 21 to 42 day notification period prior to the
Repurchase Request
Deadline is measured based on calendar days or business days.
Suspension or Postponement of Repurchase Offer (Page 62)
65. Please clarify whether the 21 to 42 day notification period prior to the
Repurchase Request
Deadline is measured based on calendar days or business days.
Suspension or Postponement of Repurchase Offer (Page 62)
66. Please expand the disclosure under this heading to explain all of the
requirements under rule
23c-3(b)(3) (i.e., the board of directors voting requirements).
Liquidity Requirements (Page 62)
67. In light of the illiquid nature of the Fund's investments, enhance the
disclosure in this
section to discuss in greater detail how the Fund will meet the requirements of
Rule 23c-3(b)(10)
under the Act.
Distribution Reinvestment Plan (65)
68. As shareholders must elect to not receive distributions in the form of
common stock (i.e.,
opt-out), please enhance the disclosure to explain that common stockholders who
receive
distributions in the form of additional shares of common stock will nonetheless
be required to
pay applicable federal, state or local taxes on the reinvested dividends, but
will not receive a
corresponding cash distribution with which to pay any applicable tax. Also
disclose that
reinvested dividends increase the Fund's gross assets on which a management fee
and an
incentive fee are payable to the Adviser and Sub-Adviser.
Cynthia M. Krus, Esq.
Eversheds Sutherland LLP
CIM Real Assets & Credit Fund
March 22, 2019
Page 14 of 16
STATEMENT OF ADDITIONAL INFORMATION
Fundamental Policies (Page 2)
69. Please revise the Fund's concentration policy to clarify that the Fund will
concentrate in the
real estate industry. See Item 17.2.e. of Form N-2. Also, make a similar
revision to the
fundamental policy stated immediately after enumerated policy (4).
Additionally, please state
the Fund's policy concerning its ability to purchase or sell real estate and
real estate mortgage
loans. See Item 17.2.f of Form N-2.
70. The penultimate paragraph states "as a fundamental policy, the Fund may
make loans to the
fullest extent permitted by applicable law, including the 1940 Act." At an
appropriate location in
the SAI, please clarify the Fund's policy to engage in lending. Based on the
Prospectus
disclosure, the Fund will do so through purchasing debt securities and entering
into repurchase
agreements. May the Fund also lend its portfolio securities? If so, please
disclosure that fact at
an appropriate location in the registration statement and state the maximum
limitation, expressed
as a percentage of total assets, in which the Fund may engage is such
activities.
Non-Diversification Status (Page 10)
71. In the first sentence, please delete the phrases "intend to" and "from time
to time."
Management of the Fund (Page 10)
72. In the tables disclosed in response to Item 18.1 of Form N-2, please
conform the disclosure
to follow the format specified in that Item and ensure each heading require by
the Item is
included in the tables (we do not object, however, to the current location of
the required address
information).
Nominating and Corporate Governance Committee (Page 13)
73. As the Nominating and Corporate Governance Committee will consider nominees
recommend by security holders, please disclose the procedures to be followed by
security
holders in submitting such recommendations. See Item 18.5.b.4 of Form N-2.
Code of Ethics (Page 18)
74. Please add disclosure about the Fund's principal underwriter as required by
Item 18.15 of
Form N-2. Also, disclose whether the personnel of the Fund, the Adviser or the
Sub-Adviser
may invest in securities that may be held by the Fund. See Item 18.1 of Form
N-2.
Cynthia M. Krus, Esq.
Eversheds Sutherland LLP
CIM Real Assets & Credit Fund
March 22, 2019
Page 15 of 16
Part C
Exhibits
75. Confirm the Fund, prior to seeking effectiveness, will file as an exhibit
to the registration
statement, a copy of any applicable document required by Item 25 of Form N-2.
While no
exhibits were included with the registration statement, disclosure made in
response to Item 25
incorrectly states certain exhibits were filed. Additionally, Item 25
references many exhibits
without providing any clarification about their filing status (e.g., notations
stating "to be filed by
amendment" are not shown). Also, several required exhibits are not listed at
all (e.g., copies of
existing bylaws or instruments corresponding thereto as required by Item
25.2.b).
76. Please confirm the Fund has received an opinion of counsel regarding the
Fund's ability to
qualify as a regulated investment company under Subchapter M of the Internal
Revenue Code.
Please file the opinion of counsel as an exhibit to the registration statement.
For guidance, please
see Staff Legal Bulletin No. 19, Legality and Tax Opinions in Registered
Offerings (Oct. 14,
2011). If the Fund will not receive such an opinion, please explain to us,
given the Fund's
proposed investment strategies, why such an opinion is not warranted.
77. Please file the following agreements as exhibits to the Registration
Statement: (a)
Investment advisory agreement between any subsidiary of the Fund in which the
Fund will invest
(e.g., a REIT Subsidiary) and its investment adviser; and (b)
Co-administration, Bookkeeping
and Pricing Services Agreement. See Item 25.2.k of Form N-2.
78. Please confirm whether the terms of the offering of Class I shares, Class C
Shares, and Class
L Shares have been approved and authorized by the Fund's Board. It may be
necessary for the
Fund to undertake to file an unqualified legality opinion and related consent
of counsel with the
offering of any of these share classes.
SIGNATURES
79. Please note, the signature page of the filing must contain the signatures
required by Section
6(a) of the Securities Act.
CLOSING
We note that portions of the filing are incomplete. We may have additional
comments on such
portions when you complete them in a pre-effective amendment, on disclosures
made in response
to this letter, on information supplied in your response letter, or on exhibits
added in any pre-
effective amendments.
Response to this letter should be in the form of a pre-effective amendment
filed pursuant to Rule
472 under the Securities Act. Where no change will be made in the filing in
response to a
Cynthia M. Krus, Esq.
Eversheds Sutherland LLP
CIM Real Assets & Credit Fund
March 22, 2019
Page 16 of 16
comment, please indicate this fact in a supplemental letter and briefly state
the basis for your
position.
If you intend to omit certain information from the form of Prospectus included
with the
registration statement that is declared effective in reliance on Rule 430A
under the Securities
Act, please identify the omitted information to us, preferably before filing
the pre-effective
amendment.
A response to this letter should be in the form of a pre-effective amendment
filed pursuant to
Rule 472 under the Securities Act. The pre-effective amendment filing should be
accompanied
by a supplemental letter that includes your responses to each of these
comments. Where no
change will be made in the filing in response to a comment, please indicate
this fact in your
supplemental letter and briefly state the basis for your position.
We remind you that the company and its management are responsible for the
accuracy and
adequacy of their disclosures, notwithstanding any review, comments, action, or
absence of
action by the staff.
Should you have any questions regarding this letter, please contact me at (202)
551-6352.
Sincerely,
/s/ Kimberly A.
Browning
Kimberly A.
Browning
Senior Counsel
cc: Michael Shaffer, Branch Chief
Michael Spratt, Assistant Director