IDR Core Property Index Fund Ltd.
09/05/2024 | Press release | Distributed by Public on 09/05/2024 11:51
Annual Report by Investment Company Form N CSR
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT
OF REGISTERED MANAGEMENT
INVESTMENT COMPANY
Investment Company Act File Number 811-23460
Accordant ODCE Index Fund
(Exact name of registrant as specified in charter)
6710 E. Camelback Rd.
Suite 100
Scottsdale, AZ 85251
(Address of Principal Executive Offices)
Greg Stark
Accordant Investments LLC
6710 E. Camelback Rd.
Suite 100
Scottsdale, AZ 85251
(Name and address of agent for service)
Registrant's Telephone Number, including Area Code: (216) 622-0004
Date of fiscal year end: June 30
Date of reporting period: July 1, 2023 - June 30, 2024
Item 1. Report to Shareholders
| (a) |
Accordant ODCE Index Fund
888.778.7781 | www.accordantinvestments.com
| Table of Contents | ||
| Shareholder Letter | 2 |
| Company Performance | 6 |
| Schedule of Investments | 8 |
| Statement of Assets and Liabilities | 9 |
| Statement of Operations | 10 |
| Statements of Changes in Net Assets | 11 |
| Statement of Cash Flows | 12 |
| Financial Highlights | 13 |
| Notes to Financial Statements | 16 |
| Report of Independent Registered Public Accounting Firm | 24 |
| Renewal of Investment Advisory Agreement and Sub-Advisory Agreements | 25 |
| Additional Information | 27 |
| Service Providers | 28 |
| Privacy Notice | 29 |
| Accordant ODCE Index Fund | Shareholder Letter |
June 30, 2024 (Unaudited)
June 30, 2024 (Unaudited)
Dear Shareholder,
We are pleased to present this annual report for the Accordant ODCE Index Fund ("Fund") for the year ended June 30, 2024 (the "Reporting Period"). This report includes a discussion of the Fund's investment strategy, macroeconomic perspective, real estate outlook, and return performance.
Fund Strategy
The Fund seeks to provide shareholders with a non-correlated allocation to core real estate that offers reliable income, portfolio diversification, attractive risk-adjusted returns, and an inflation hedge. To achieve this goal, the Fund utilizes an indexing investment approach that seeks to track the NFI-ODCE Index Fund - Open End Diversified Core Equity ("NFI-ODCE Index" or "Index"). The NFI-ODCE Index is recognized as the premier "core" institutional real estate index in the U.S., and institutional investors widely use it as the benchmark for private real estate performance. The Index has a 45-year track record, and its inclusion criteria are tightly defined, requiring managers to adhere to strict reporting standards and invest within conservative guidelines. This approach helps guard against high-risk investment tactics, such as overleveraging. Therefore, the Fund seeks to have attributes comparable to the NFI-ODCE Index, given that it exclusively invests in private real estate funds that are constituents of the Index.
Fund Performance
Despite real estate values declining in recent quarters, the sector has produced non-correlated portfolio outcomes. Since its launch in April 2021, the Fund and the NFI-ODCE Index have outperformed the traditional bond and REIT indices, while providing lower volatility and non-correlated returns to traditional equities. Furthermore, the Fund continues to be an accretive addition to a multi-asset portfolio primarily due to the attributes mentioned earlier (i.e., reliable income, portfolio diversification, attractive risk-adjusted returns, and an inflation hedge). The following chart shows the Fund's performance since inception versus other major asset classes:
Exhibit 1: Growth of $100,000 (Since Inception Total Return 4/1/2021 - 6/30/2024: 6.72%)
All 2Q 2024 return data referenced in this document is preliminary and reflective of I-shares performance
www.accordantinvestments.com
The Fund also seeks to make quarterly distributions to shareholders. During the Reporting Period, the Fund distributed dividends totaling $0.09 per share, which equates to an annualized distribution rate of approximately 4.0%. While future distributions are not guaranteed, the Fund has made 13 consecutive quarterly distributions since its inception on April 1, 2021.
Overall, we believe the Fund continued to deliver on its objective - offering investors diversification within a multi-asset portfolio while providing a stable quarterly dividend. Furthermore, while real estate managers tend to use varying degrees of leverage to enhance returns, NFI-ODCE managers generally invest at low leverage levels (approximately 27% on average), and most of their borrowings consist of fixed (as opposed to floating) rate debt, which can mitigate the risk of default. Therefore, even in the current high-interest rate environment, core real estate investors can rest easy knowing the sector is performing as expected.
| 2 | www.accordantinvestments.com |
| Accordant ODCE Index Fund | Shareholder Letter |
June 30, 2024 (Unaudited)
Exhibit 2: Return Attributes by Asset Class (Since Fund Inception 4/1/2021 - 6/30/2024)
| 2Q 2021 - 2Q 2024 | Drawdown | Annualized Return | Volatility | Correlation to S&P 500 |
| Accordant ODCE Index Fund (ODCEX) TR | -19.8% | 2.0% | 9.3% | -0.39 |
| NFI-ODCE Index TR | -19.9% | 2.1% | 9.4% | -0.39 |
| NAREIT U.S. Real Estate Index TR | -29.2% | 2.0% | 19.8% | 0.84 |
| S&P 500 TR | -23.9% | 12.0% | 16.6% | 1.00 |
| Bloomberg Intermediate Aggregate Bond Index | -14.6% | -2.3% | 6.4% | 0.80 |
Macro-Economic Perspective
Heading into the Reporting Period, concerns over persistent inflation and how the Federal Reserve's (Fed's) interest rate policy would change in response remained top of mind for market participants. Signs indicate, an interest rate cut may be on the horizon. While we are not in the business of predicting the direction or velocity of interest rate moves, we certainly monitor the major forecasts and survey data to understand how borrowing costs will ultimately impact the broader private real estate market. As discussed, low-levered core real estate generally has the staying power to last through a complete cycle, and while many higher-leveraged buyers may need relief, that relief now may be at least partially in sight. Based on current forward rate curves, the market is anticipating one or potentially two rate cuts by the end of 2024. Likewise, the Federal Reserve's dot plot (a chart showing where each Fed member thinks short-term rates will be at the end of each year) suggests a median expectation of one rate cut as well. This dynamic is notable because, over the last few years, there has often been a disconnect between the Fed's forecast and market participants' expectations. But, at least for now, the two appear to be aligned. A large part of the optimism around rate cuts is due to the persistent progress on the inflation front as price increases continue to show signs of slowing down. As of July 2024, the annual inflation rate came in at 2.9%, down from the December 2023 rate of 3.4%, as measured by the Consumer Price Index (CPI).
Real Estate Market Update
When Benjamin Graham, the renowned investor often referred to as the "father of value investing," penned the quote about the market being a pendulum, he was primarily referring to the stock market. However, the analogy is equally applicable to other asset classes, including today's real estate market. The prevailing narrative in the media often emphasizes pessimism, and while there are legitimate concerns about the weaknesses that are apparent in certain sectors and submarkets, fixating solely on these challenges can overshadow other, more positive indicators that are emerging. In fact, we believe that the pendulum has started to swing back in favor of core real estate, especially given the nearly 25% decline in value from peak pricing. Today certainly seems to be the time for a value buy for investors that are underweight in core real estate and looking to build a diversified, non-correlated portfolio.
Exhibit 3: U.S. Private Real Estate vs Other Asset Class Relative Valuation
Percentile Rank, Last 10 Years
Source: Morgan Stanley Research
Capital is beginning to return to the sector. This statement is certainly counterintuitive to the mainstream narrative; however, to find the signs of a recovery, you need to know where to look. For example, we've seen a significant number of Requests for Proposal (RFPs) from institutional investors looking to acquire core real estate after minimal activity over the prior 18 months. The fact that large institutional investors are refocusing on private real estate is particularly noteworthy, as this group has historically been known as an early mover, looking to capitalize on market recoveries. In our view, a natural rebalancing of portfolios is occurring due to record-high equity markets. We will talk more about asset allocation later, but for now, it's worth noting that early data suggests an uptick in transaction activity over the past three months and into the third quarter, suggesting the bid/ask gap between buyers and sellers has begun to narrow. Lastly, in August of this year, we have started to see a decline in Index fund redemption queues, a reassuring sign of improving liquidity. The reason for this progress is primarily twofold: first, managers are transacting more, as noted earlier, which creates liquidity. Second, some investors have rescinded redemption requests, in part because they recognize that selling at current values deprives them of the upside they can expect when a recovery eventually takes hold.
| Annual Report | June 30, 2024 | 3 |
| Accordant ODCE Index Fund | Shareholder Letter |
June 30, 2024 (Unaudited)
A key driver of the real estate market is rental income growth, which reflects the balance between supply and demand across property types and submarkets. Over the last few years, we have witnessed a divergence in rent growth trends across markets, especially in the multifamily sector. On one hand, the Sunbelt region, which includes states such as Texas, Florida, Arizona, and Georgia, has experienced a surge in population and job growth, leading to higher demand for apartments. On the other hand, the high-rise markets in major cities such as New York, San Francisco, Chicago, and Boston have faced headwinds from the pandemic, social unrest, and remote work, resulting in lower occupancy and rent levels. However, as pandemic-driven trends continue to wane, we are seeing a reversion back to the mean. In particular, we anticipate that the Sunbelt markets will face more supply pressure as new construction catches up with demand, while the major city high-rise markets will benefit from renewed urban appeal and limited new deliveries. Therefore, we believe that apartment rent growth will moderate in the Sunbelt and accelerate in major cities, creating more opportunity for value recovery in the latter. Additionally, higher interest rates have caused new developments to pause or stop all together. This bodes well for those that own high quality assets in the mid-term.
The forward-looking return of private real estate may be attractive, especially compared to other asset classes. Just as we are reticent to forecast interest rates, we're also cautious about predicting market direction. However, we stay attuned to indicators suggesting that market dynamics are shifting, and we've recently noticed a few interesting developments. But first, putting the current environment in its proper historical context might be helpful. For the last seven consecutive quarters, core real estate values have declined, the first such period of negative returns since the Global Financial Crisis in 2008-09, where returns also slid for six quarters. Thus, down periods in the NFI-ODCE Index are exceedingly rare, occurring on average every 14 years. These periods also tend to be fairly limited in scope. So, if history is any guide, we're already through the worst of the decline. Returning to today; as many of you know, we track daily NFI-ODCE Index values at the ticker symbol ODCEX, which provides a truly unique perspective into the daily price action of the underlying managers in the index. Recently, we've seen positive daily values across several funds for the first time since the rate hiking cycle began in 2022, and six funds had positive total returns in the second quarter. To be clear, this cannot be taken to mean that there is no downside risk remaining. However, we believe it indicates that market dynamics are shifting, and we would not be surprised if the market bottomed out in the near term, if it hasn't already.
Exhibit 4: NFI - ODCE Index Historical Returns (1978 - 2Q 2024)8
| 4 | www.accordantinvestments.com |
| Accordant ODCE Index Fund | Shareholder Letter |
June 30, 2024 (Unaudited)
Below is a brief synopsis of the four major property types in the NFI-ODCE Index:
| ● | Industrial: The industrial sector primarily consists of warehouses and distribution facilities. These assets continued to see above-average rent growth due to robust tenant demand. The NFI-ODCE Index industrial occupancy levels remained strong at approximately 98% as of 2Q 2024 and have been above 95% for over nine consecutive years. At over 34%, industrial assets represent the largest property type in the Index. Going forward, pockets of oversupply may impact certain markets, but demand for high-quality Class A warehouses shows little sign of abating. |
| ● | Residential: Similarly to industrial, the residential sector has seen outsized capital flows in recent years. Much of this investor optimism is due to the chronic supply and demand imbalance in the U.S. housing stock. According to one estimate, the U.S. housing shortage may be as high as 5.5 million units. This dynamic has spurred investor interest in recent years, evidenced by the residential sector now representing over 29% of the overall NFI-ODCE Index, trailing only the industrial sector. While occupancy levels remain stable at approximately 95%, the delivery of the new supply currently in the construction pipeline will likely weigh on rent growth over the next 12-24 months. Nevertheless, market participants widely view the residential sector as a defensive holding in the current environment and will likely continue to be net buyers going forward. |
| ● | Retail: Retail properties will likely experience muted rent growth over the near term; however, the sector has stabilized after a multi-year downward revaluation. Once constituting over 20% of the Index at its peak in 2017 (third only to the office and residential sectors, respectively), retail now makes up 11%. Many traditional retail establishments fell out of favor and were ultimately pruned from the Index as consumer behavior shifted toward e-commerce. The upshot, however, is that retail properties (particularly grocery-anchored and community/neighborhood centers) that have weathered the sector's downturn are somewhat insulated as new supply has been slow to come online. Thus, the NFI-ODCE Index retail occupancy levels remain steady at approximately 93%. Yet, the near-term concern for the sector continues to be whether consumers' robust spending will be derailed by a potential recession in late 2024. |
| ● | Office: The office sector faces headwinds centered mainly around the pandemic-era remote/hybrid work policies that have persisted in some markets. Still, it is essential to note that many NFI-ODCE Index managers have already significantly written down or pruned their office portfolios. Therefore, the Index's exposure to the sector has decreased significantly, from an all-time high of 39% in 2014 to only 17% as of 2Q 2024. Thus, while the office sector remains a cause for concern, the highest quality properties (newer amenity-rich office projects, life science, and medical office properties) should continue to outperform and capture a larger share of tenant demand. |
Again, core real estate fundamentals, excluding office, are generally stable despite the volatility in capital markets. As we round the corner into the final months of 2024, in our view interest rates seem poised to moderate, which could benefit NFI-ODCE Index managers, most of whom have taken a responsible investing approach (staying well-capitalized and using reasonable, long-term fixed-rate debt). As a result, they have been able to hold assets through what has been a less-than-favorable selling period and have suffered neither income erosion nor a rash of foreclosures despite the historically high interest rate environment. Ultimately, core real estate seems poised to recover as interest rates and market conditions normalize.
Concluding Thoughts
As we have consistently discussed, those of you who are already fully allocated to real estate know the sector has performed as expected and has exceptionally strong operating fundamentals. For others who may have experienced the portfolio effects of a strong recovery in public equities and are now under-allocated to private real estate, we would encourage you to seize the moment based on your targeted risk/return outcome because market conditions can change quickly.
On behalf of the team at Accordant Investments, we look forward to engaging with you as the real estate market continues to evolve.
Garrett Zdolshek
Chief Investment Officer
| Annual Report | June 30, 2024 | 5 |
| Accordant ODCE Index Fund | Company Performance |
June 30, 2024 (Unaudited)
Net Total Returns(as of June 30, 2024)*
| 6 Month | 1 Year |
Average Annual Since Inception |
Inception Date | |
| Accordant ODCE Index Fund - A - NAV | -3.33% | -10.05% | 1.98% | November 1, 2023 |
| Accordant ODCE Index Fund - A - LOAD** | -8.89% | -15.05% | 0.14% | November 1, 2023 |
| Accordant ODCE Index Fund - I - NAV | -3.23% | -9.73% | 2.03% | September 11, 2023 |
| Accordant ODCE Index Fund - Y - NAV | -3.23% | -9.77% | 2.01% | November 1, 2023 |
| NFI-ODCE Net Total Return Index(a) | -3.22% | -10.00% | 2.07% | December 31, 1977 |
| FTSE NAREIT All Equity REITs TR Index(b) | -2.19% | 5.78% | 1.41% | December 31, 1971 |
The performance data quoted above represents past performance. Past performance is not a guarantee of future results. Investment return and value of the Fund shares will fluctuate so that an investor's shares, when sold or redeemed, may be worth more or less than their original cost. Performance may be lower or higher than performance data quoted. Fund performance current to the most recent month-end is available by calling 888.778.7781 or by visiting www.accordantinvestments.com.
| * | The Accordant ODCE Index Fund (the "Fund") was previously registered as the IDR Core Property Index Fund, Ltd. (the "Predecessor Fund"). The Predecessor Fund previously charged a management fee of 40 bps while the Fund now charges 60 bps. Fund returns shown in this report is net of fees and for prior to September 11, 2023, reflects a 40 bps management fee and for performance on and after September 11, 2023, reflects a 60 bps management fee. The performance shown reflects a continuation of performance from the Predecessor Fund to the Fund. While the Fund has a different investment advisor than the Predecessor Fund, the Fund's portfolio management is substantially similar to the Predecessor Fund. Inception date of the I shares is September 11, 2023. Class A shares and Class Y shares are available as of November 1, 2023. |
| ** | Adjusted for maximum sales charge of 5.75%. |
| (a) | The NFI-ODCE is a capitalization-weighted, gross and net of fee, time-weighted return index with an inception date of December 31, 1977. |
| (b) | The FTSE Nareit All Equity REITs Index is a free-float adjusted, market capitalization-weighted index of U.S. equity REITs. Constituents of the index include all tax-qualified REITs with more than 50 percent of total assets in qualifying real estate assets other than mortgages secured by real property. |
Performance of $10,000 Initial Investment(as of June 30, 2024)
The graph shown above represents historical performance of a hypothetical investment of $10,000 in the Fund since inception. Past performance does not guarantee future results. All returns reflect reinvested dividends, but do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
| 6 | www.accordantinvestments.com |
| Accordant ODCE Index Fund | Company Performance |
June 30, 2024 (Unaudited)
| Top Ten Holdings(as a % of Net Assets)* | |
| Prime Property Fund, LLC | 15.18% |
| SPF FIV 2 (US) LP | 10.34% |
| CBRE U.S. Core Partners, LP | 7.51% |
| RREEF America REIT II, Inc. | 6.50% |
| Invesco Core Real Estate - U.S.A., L.P. | 6.44% |
| Clarion Lion Properties Fund, LP | 5.89% |
| PRISA LP | 5.74% |
| Smart Markets Fund, L.P. | 4.67% |
| BGO Diversified US Property Fund LP | 4.12% |
| U.S. Real Estate Investment Fund, LLC | 3.59% |
| Top Ten Holdings | 69.98% |
| * | Holdings are subject to change, and may not reflect the current or future position of the portfolio. Tables present indicative values only. |
Asset Allocation(as a % of Net Assets)*
| Annual Report | June 30, 2024 | 7 |
| Accordant ODCE Index Fund | Schedule of Investments |
June 30, 2024
|
Original Acquisition Date |
Shares/ Units |
Percent of Net Assets |
Cost | Fair Value | ||||||||||||||
| PRIVATE REAL ESTATE INVESTMENT FUNDS (78.10%) | ||||||||||||||||||
| United States (78.10%)(a)(b) | ||||||||||||||||||
| ARA Core Property Fund, LP | 10/3/2022 | 6 | 2.36 | % | $ | 1,000,000 | $ | 746,323 | ||||||||||
| ASB Allegiance Real Estate Fund, LP | 12/31/2021 | 699 | 2.79 | % | 1,222,500 | 884,616 | ||||||||||||
| BGO Diversified US Property Fund LP | 10/1/2021 | 543 | 4.12 | % | 1,392,358 | 1,306,713 | ||||||||||||
| BlackRock US Core Property Fund, L.P | 1/1/2022 | N/A | 2.97 | % | 1,222,500 | 940,652 | ||||||||||||
| CBRE U.S. Core Partners, LP | 12/31/2021 | 1,489,378 | 7.51 | % | 2,880,122 | 2,378,609 | ||||||||||||
| Clarion Lion Properties Fund, LP | 4/1/2021 | 1,265 | 5.89 | % | 1,893,026 | 1,867,823 | ||||||||||||
| Invesco Core Real Estate - U.S.A., L.P | 4/1/2021 | 11 | 6.44 | % | 2,103,319 | 2,039,959 | ||||||||||||
| SPF FIV 2 (US) LP | 10/1/2021 | 304,886 | 10.34 | % | 3,804,268 | 3,277,372 | ||||||||||||
| Prime Property Fund, LLC | 6/30/2021 | 246 | 15.18 | % | 4,957,409 | 4,809,641 | ||||||||||||
| PRISA LP | 4/1/2021 | 928 | 5.74 | % | 1,761,064 | 1,820,536 | ||||||||||||
| RREEF America REIT II, Inc. | 1/1/2022 | 16,203 | 6.50 | % | 2,450,000 | 2,060,470 | ||||||||||||
| Smart Markets Fund, L.P | 9/1/2021 | 868 | 4.67 | % | 1,533,115 | 1,478,537 | ||||||||||||
| U.S. Real Estate Investment Fund, LLC | 7/1/2022 | N/A | 3.59 | % | 1,540,125 | 1,136,628 | ||||||||||||
| TOTAL United States | $ | 27,759,806 | $ | 24,747,879 | ||||||||||||||
| TOTAL Private Real Estate Investment Funds | $ | 27,759,806 | $ | 24,747,879 |
| Yield | Shares |
Percent of Net Assets |
Cost | Fair Value | ||||||||||||||
| Short Term Security (21.75%) | ||||||||||||||||||
| MONEY MARKET FUND (21.75%) | ||||||||||||||||||
| Fidelity Investments Money Market Government Portfolio | 5.207 | % | 6,892,371 | 21.75 | % | $ | 6,892,371 | $ | 6,892,371 | |||||||||
| TOTAL Short Term Security | $ | 6,892,371 | $ | 6,892,371 | ||||||||||||||
| TOTAL INVESTMENTS (99.85%) | $ | 34,652,177 | $ | 31,640,250 | ||||||||||||||
| Other Assets In Excess Of Liabilities (0.15%) | 48,977 | |||||||||||||||||
| NET ASSETS (100.00%) | $ | 31,689,227 |
| (a) | In accordance with ASC 820-10, Private Real Estate Investment Funds are valued using the practical expedient methodology. |
| (b) | Restricted security. The total cost and fair value of these restricted investments as of June 30, 2024 was $27,759,806 and $24,747,879, respectively, which represents 78.10% of total net assets of the Fund. |
| (c) | Redemptions permitted quarterly and redemption notices for the private real estate investment funds is 90 days or less. |
| (d) | The rate shown is the 7-day effective yield as of June 30, 2024. |
See Notes to Financial Statements.
| 8 | www.accordantinvestments.com |
| Accordant ODCE Index Fund | Statement of Assets and Liabilities |
June 30, 2024
ASSETS
| Investments, at value (Cost $34,652,177) | $ | 31,640,250 | ||
| Cash | 28,982 | |||
| Receivable for investments sold | 16,946 | |||
| Distributions from investments and interest receivable | 116,850 | |||
| Receivable due from advisor | 791,164 | |||
| Prepaid expenses and Other assets | 7,241 | |||
| Total assets | 32,601,433 | |||
| LIABILITIES | ||||
| Payable for administration fees | 149,831 | |||
| Payable for transfer agency fees | 375,029 | |||
| Payable to trustees | 150,815 | |||
| Payable to Chief Compliance Officer | 22,404 | |||
| Accrued expenses and other liabilities | 214,127 | |||
| Total liabilities | 912,206 | |||
| NET ASSETS | $ | 31,689,227 | ||
| NET ASSETS CONSIST OF | ||||
| Paid-in capital (Note 5) | $ | 34,156,099 | ||
| Accumulated deficit | (2,466,872 | ) | ||
| NET ASSETS | $ | 31,689,227 | ||
| PRICING OF SHARES | ||||
| Class A: | ||||
| Net Asset Value, offering and redemption price per share | $ | 9.35 | ||
| Net Assets | $ | 9,189 | ||
| Shares of beneficial interest outstanding | 983 | |||
| Maximum offering price per share ((NAV/0.9425), based on maximum sales charge of 5.75% of the offering price) | $ | 9.92 | ||
| Class I: | ||||
| Net Asset Value, offering and redemption price per share | $ | 9.36 | ||
| Net Assets | $ | 31,508,506 | ||
| Shares of beneficial interest outstanding | 3,365,107 | |||
| Class Y: | ||||
| Net Asset Value, offering and redemption price per share | $ | 9.36 | ||
| Net Assets | $ | 171,532 | ||
| Shares of beneficial interest outstanding | 18,318 |
See Notes to Financial Statements.
| Annual Report | June 30, 2024 | 9 |
| Accordant ODCE Index Fund | Statement of Operations |
For the Year Ended June 30, 2024
INVESTMENT INCOME
| Distributions from investments | $ | 331,447 | ||
| Interest | 109,180 | |||
| Total investment income | 440,627 | |||
| EXPENSES | ||||
| Investment advisory fees (Note 3) | 164,871 | |||
| Administrative fees | 223,176 | |||
| Transfer agency fees | 495,510 | |||
| Professional fees | 133,648 | |||
| Legal Expense | 651,895 | |||
| Custodian fees | 40,140 | |||
| Trustees' fees and expenses | 300,815 | |||
| Interest expense | 2,375 | |||
| Other | 187,018 | |||
| Total expenses before waiver | 2,199,448 | |||
| Less fees waived/reimbursed by Adviser | (1,930,087 | ) | ||
| Total expenses | 269,361 | |||
| NET INVESTMENT INCOME | 171,266 | |||
| REALIZED AND UNREALIZED GAIN/LOSS ON INVESTMENTS | ||||
| Distributions of capital gains from investments | 270,253 | |||
| Net change in unrealized depreciation on investments | (3,515,335 | ) | ||
| NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS | (3,245,082 | ) | ||
| NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS | $ | (3,073,816 | ) |
See Notes to Financial Statements.
| 10 | www.accordantinvestments.com |
| Accordant ODCE Index Fund | Statements of Changes in Net Assets |
| For the | For the | |||||||
| Year Ended | Year Ended | |||||||
| June 30, 2024 | June 30, 2023 | |||||||
| OPERATIONS | ||||||||
| Net investment income | $ | 171,266 | $ | 293,313 | ||||
| Net realized gain | 270,253 | 91,254 | ||||||
| Net change in unrealized depreciation | (3,515,335 | ) | (4,116,737 | ) | ||||
| Net decrease in net assets resulting from operations | (3,073,816 | ) | (3,732,170 | ) | ||||
| DISTRIBUTIONS TO SHAREHOLDERS: | ||||||||
| Class A | (30 | ) | - | |||||
| Class I | (163,235 | ) | (339,480 | ) | ||||
| Class Y | (509 | ) | - | |||||
| Return of capital: | ||||||||
| Class A | (251 | ) | - | |||||
| Class I | (1,355,573 | ) | (881,055 | ) | ||||
| Class Y | (4,225 | ) | - | |||||
| Net decrease in net assets from distributions | (1,523,823 | ) | (1,220,535 | ) | ||||
| CAPITAL SHARE TRANSACTIONS | ||||||||
| Proceeds from sales of shares | ||||||||
| Class A | 9,861 | - | ||||||
| Class I | 8,155,110 | 9,510,000 | ||||||
| Class Y | 181,279 | - | ||||||
| Issued to shareholders in reinvestment of distributions | ||||||||
| Class A | 281 | - | ||||||
| Class I | 339,390 | 303,798 | ||||||
| Class Y | 4,734 | - | ||||||
| Cost of shares redeemed | ||||||||
| Class A | - | - | ||||||
| Class I | (3,036,128 | ) | (2,432,031 | ) | ||||
| Class Y | - | - | ||||||
| Net increase from capital share transactions | 5,654,527 | 7,381,767 | ||||||
| Net increase in net assets | 1,056,888 | 2,429,062 | ||||||
| NET ASSETS | ||||||||
| Beginning of period | 30,632,339 | 28,203,277 | ||||||
| End of period | $ | 31,689,227 | $ | 30,632,339 | ||||
| Capital Share Transactions: | ||||||||
| Shares Sold: | ||||||||
| Class A | 954 | - | ||||||
| Class I | 842,247 | 778,183 | ||||||
| Class Y | 17,825 | - | ||||||
| Shares reinvested: | ||||||||
| Class A | 29 | - | ||||||
| Class I | 34,458 | 25,341 | ||||||
| Class Y | 494 | - | ||||||
| Shares repurchased: | ||||||||
| Class A | - | - | ||||||
| Class I | (313,967 | ) | (205,952 | ) | ||||
| Class Y | - | - | ||||||
| Net increase in capital share transactions | 582,040 | 597,572 |
See Notes to Financial Statements.
| Annual Report | June 30, 2024 | 11 |
| Accordant ODCE Index Fund | Statement of Cash Flows |
For the Year Ended June 30, 2024
| For the | ||||
| Year Ended | ||||
| June 30, 2024 | ||||
| Cash Flows from Operating Activities: | ||||
| Net decrease in net assets resulting from operations | $ | (3,073,816 | ) | |
| Adjustments to reconcile net increase in net assets resulting from operations to net cash used in operating activities: | ||||
| Purchase of investment securities | (675,000 | ) | ||
| Proceeds from disposition of investment securities | 1,689,881 | |||
| Net purchases of short-term investment securities | (6,892,372 | ) | ||
| Net realized gain on investments | (270,253 | ) | ||
| Net change in unrealized (appreciation)/depreciation on investments | 3,515,335 | |||
| (Increase)/Decrease in Assets: | ||||
| Distributions and interest receivable | 113,355 | |||
| Prepaid expenses and other assets | (4,591 | ) | ||
| Receivable due from Adviser | (246,126 | ) | ||
| Increase/(Decrease) in Liabilities: | ||||
| Professional fees payable | (446,854 | ) | ||
| Payable for administration fees | 149,831 | |||
| Payable for transfer agency fees | 375,029 | |||
| Payable to Chief Compliance Officer | 15,758 | |||
| Payable to trustees | (152,935 | ) | ||
| Accrued expenses and other liabilities | 131,798 | |||
| Net Cash Used in Operating Activities | (5,770,960 | ) | ||
| Cash Flows from Financing Activities: | ||||
| Proceeds from shares sold, net of change in proceeds from sale of shares received in advance | 8,346,250 | |||
| Payments for shares repurchased, net of change in capital withdrawals payable | (3,483,707 | ) | ||
| Distributions paid to shareholders, net of reinvestments and change in distributions payable | (1,179,418 | ) | ||
| Net Cash Provided by Financing Activities | 3,683,125 | |||
| Net Change in Cash | (2,087,835 | ) | ||
| Cash Beginning of Year | 2,116,817 | |||
| Cash End of Year | $ | 28,982 | ||
| Non-cash financing activities not included herein consist of reinvestment of distributions of: | $ | 344,405 | ||
| Cash paid for interest on lines of credit during the year was: | $ | 2,375 |
See Notes to Financial Statements.
| 12 | www.accordantinvestments.com |
| Accordant ODCE Index Fund - Class A | Financial Highlights |
For a Share Outstanding Throughout the Periods Presented
| For the period | ||||
| November 1, 2023 | ||||
| to June 30, 2024(a) | ||||
| NET ASSET VALUE, BEGINNING OF PERIOD | $ | 10.48 | ||
| INCOME FROM OPERATIONS | ||||
| Net investment loss(b) | (0.03 | ) | ||
| Net realized and unrealized loss on investments | (0.81 | ) | ||
| Total from investment operations | (0.84 | ) | ||
| DISTRIBUTIONS | ||||
| From net investment income | (0.03 | ) | ||
| From Return of Capital | (0.26 | ) | ||
| Total distributions | (0.29 | ) | ||
| DECREASE IN NET ASSET VALUE | (1.13 | ) | ||
| NET ASSET VALUE, END OF PERIOD | $ | 9.35 | ||
| TOTAL RETURN | (8.05 | %)(c)(d) | ||
| RATIOS AND SUPPLEMENTAL DATA | ||||
| Net assets, end of period (000's) | $ | 9 | ||
| RATIOS TO AVERAGE NET ASSETS | ||||
| Ratio of expenses to average net assets including fee waivers/reimbursements | 1.38 | %(e)(f) | ||
| Ratio of expenses to average net assets without fee waivers/reimbursements | 8.86 | %(e)(f) | ||
| Net investment loss | (0.52 | %)(e)(f) | ||
| PORTFOLIO TURNOVER RATE | 3 | %(c) |
| (a) | Class A commenced operations on November 1, 2023 |
| (b) | Per share numbers have been calculated using the average shares method. |
| (c) | Not annualized. |
| (d) | Total return would have been lower had management not waived fees. |
| (e) | Annualized. |
| (f) | The ratios of expenses and net investment income to average net assets do not reflect the Fund's proportionate share of income and expenses of underlying investment companies in which the Fund invests, including management and performance fees. |
See Notes to Financial Statements.
| Annual Report | June 30, 2024 | 13 |
| Accordant ODCE Index Fund - Class I | Financial Highlights |
For a Share Outstanding Throughout the Periods Presented
|
For the Year Ended June 30, 2024 |
For the Year Ended June 30, 2023 |
For the Year Ended June 30, 2022 |
For the Period April 1, 2021 through June 30, 2021(a) |
|||||||||||||
| NET ASSET VALUE, BEGINNING OF YEAR/PERIOD | $ | 10.93 | $ | 12.79 | $ | 10.28 | $ | 10.00 | ||||||||
| INCOME FROM OPERATIONS | ||||||||||||||||
| Net investment income (loss)(b) | 0.06 | 0.12 | 0.24 | (0.01 | ) | |||||||||||
| Net realized and unrealized gain (loss) on investments | (1.12 | ) | (1.48 | ) | 2.60 | 0.39 | ||||||||||
| Total from investment operations | (1.06 | ) | (1.36 | ) | 2.84 | 0.38 | ||||||||||
| DISTRIBUTIONS | ||||||||||||||||
| From net investment income (loss) | (0.05 | ) | (0.15 | ) | (0.13 | ) | - | |||||||||
| From Return of Capital | (0.46 | ) | (0.35 | ) | (0.20 | ) | (0.10 | ) | ||||||||
| Total distributions | (0.51 | ) | (0.50 | ) | (0.33 | ) | (0.10 | ) | ||||||||
| INCREASE/DECREASE IN NET ASSET VALUE | (1.57 | ) | (1.86 | ) | 2.51 | 0.28 | ||||||||||
| NET ASSET VALUE, END OF YEAR/PERIOD | $ | 9.36 | $ | 10.93 | $ | 12.79 | $ | 10.28 | ||||||||
| TOTAL RETURN(c) | (9.73 | %) | (11.03 | %) | 27.96 | % | 3.79 | %(d) | ||||||||
| RATIOS AND SUPPLEMENTAL DATA | ||||||||||||||||
| Net assets, end of year/period (000's) | $ | 31,509 | $ | 30,632 | $ | 28,203 | $ | 6,000 | ||||||||
| RATIOS TO AVERAGE NET ASSETS | ||||||||||||||||
| Ratio of expenses to average net assets including fee waivers/reimbursements | 0.92 | %(e) | 1.36 | % | 0.14 | % | 2.74 | %(f) | ||||||||
| Ratio of expenses to average net assets without fee waivers/reimbursements | 7.49 | %(e) | 3.55 | % | 6.66 | % | 45.52 | %(f) | ||||||||
| Net investment income (loss) | 0.58 | %(e) | 0.93 | % | 2.05 | % | (0.58 | %)(f) | ||||||||
| PORTFOLIO TURNOVER RATE | 3 | % | 3 | % | 0 | % | 0 | %(d) |
| (a) | Class I commenced operations on April 1, 2021. |
| (b) | Per share numbers have been calculated using the average shares method. |
| (c) | Total return would have been lower had management not waived fees. |
| (d) | Not annualized. |
| (e) | The ratios of expenses and net investment income to average net assets do not reflect the Fund's proportionate share of income and expenses of underlying investment companies in which the Fund invests, including management and performance fees. |
| (f) | Annualized. |
See Notes to Financial Statements.
| 14 | www.accordantinvestments.com |
| Accordant ODCE Index Fund - Class Y | Financial Highlights |
For a Share Outstanding Throughout the Periods Presented
|
For the period November 1, 2023 to June 30, 2024(a) |
||||
| NET ASSET VALUE, BEGINNING OF PERIOD | $ | 10.48 | ||
| INCOME FROM OPERATIONS | ||||
| Net investment loss(b) | (0.01 | ) | ||
| Net realized and unrealized loss on investments | (0.82 | ) | ||
| Total from investment operations | (0.83 | ) | ||
| DISTRIBUTIONS | ||||
| From net investment income | (0.03 | ) | ||
| From Return of Capital | (0.26 | ) | ||
| Total distributions | (0.29 | ) | ||
| DECREASE IN NET ASSET VALUE | (1.12 | ) | ||
| NET ASSET VALUE, END OF PERIOD | $ | 9.36 | ||
| TOTAL RETURN | (7.95 | %)(c)(d) | ||
| RATIOS AND SUPPLEMENTAL DATA | ||||
| Net assets, end of period (000's) | $ | 172 | ||
| RATIOS TO AVERAGE NET ASSETS | ||||
| Ratio of expenses to average net assets including fee waivers/reimbursements | 1.12 | %(e)(f) | ||
| Ratio of expenses to average net assets without fee waivers/reimbursements | 8.47 | %(e)(f) | ||
| Net investment loss | (0.23 | %)(e)(f) | ||
| PORTFOLIO TURNOVER RATE | 3 | %(c) |
| (a) | Class Y commenced operations on November 1, 2023. |
| (b) | Per share numbers have been calculated using the average shares method. |
| (c) | Not annualized. |
| (d) | Total return would have been lower had management not waived fees. |
| (e) | The ratios of expenses and net investment income to average net assets do not reflect the Fund's proportionate share of income and expenses of underlying investment companies in which the Fund invests, including management and performance fees. |
| (f) | Annualized. |
See Notes to Financial Statements.
| Annual Report | June 30, 2024 | 15 |
| Accordant ODCE Index Fund | Notes to Financial Statements |
June 30, 2024
1. ORGANIZATION
Accordant ODCE Index Fund (formerly known as IDR Core Property Index Fund Ltd) (the "Fund") is a non-diversified, closed-end management investment company registered under the Investment Company Act of 1940, as amended (the "1940 Act"), that operates as an "interval fund." The Fund was formed as a Maryland corporation on April 11, 2019. On May 31, 2023, the Fund entered into a Plan of Conversion (the "Conversion"), which was declared effective September 8, 2023. In connection with the Conversion, the Fund converted to a Delaware statutory trust and changed its name to Accordant ODCE Index Fund. The Fund also has (i) a new investment advisory agreement between the Fund and Accordant Investments LLC (the "Adviser"); (ii) a new sub-advisory agreement by and among the Adviser, the Fund and IDR Investment Management, LLC ("IDR" or "Sub-Adviser,"); (iii) a new expense limitation and reimbursement agreement; (iv) a new policy to make quarterly repurchase offers for the Fund's shares; and (v) a new Board of Trustees (the "Board").
The Fund's investment objective is to employ an indexing investment approach that seeks to track the NCREIF Fund Index - Open End Diversified Core Equity (the "NFI-ODCE Index") on a net-of-fee basis while minimizing tracking error. The Fund seeks to achieve its investment objective by investing, under normal circumstances, at least 80% of its net assets, plus the amount of any borrowings for investment purposes, in real estate investment vehicles that comprise the NFI-ODCE Index (the "Eligible Component Funds"). The NFIODCE Index performance is reported on a capitalization-weighted and equal-weighted basis and returns are reported gross and net of fees. Performance measurement and reporting is time-weighted. The National Council of Real Estate Investment Fiduciaries has established inclusion criteria guidelines for the NFI-ODCE Index, which similarly apply to each of the Eligible Component Funds in which the Fund invests. The NFI-ODCE Index is currently comprised of 25 Eligible Component Funds and the number of Eligible Component Funds the Fund expects to invest in may range from 18 to 25 under normal circumstances. The Adviser serves as the investment adviser to the Fund, and IDR (together with the Adviser, the "Advisers") serves as the sub-adviser to the Fund. The Sub-Adviser of the Fund previously served as the adviser to the Fund prior to its conversion in September 2023. The Fund has been structured with the intent of providing exposure and streamlining investor access to real estate investment vehicles (the "Underlying Funds"). These Underlying Funds are those that invest in interests in real estate equity and debt, including mortgages and other interests therein, commonly through entities qualifying as real estate investment trusts ("REITs"). The Underlying Funds' investments may be targeted in any one or more of the many sectors of the real estate market, including, but not limited to, the retail, office, multifamily, hospitality, industrial, residential, medical and self-storage sectors. The Fund is a Delaware statutory trust and intends to continue to qualify as a "real estate investment trust" ("REIT") for U.S. federal income tax purposes under the Internal Revenue Code of 1986, as amended (the "Code").
The Fund currently offers three classes of shares: Class A shares ("Class A Shares"), Class I shares ("Class I Shares"), and Class Y shares ("Class Y Shares" and together with the Class A and Class I Shares, the "Shares"). The Fund currently relies on exemptive relief granted by the SEC on October 24, 2023, permitting the Fund to issue multiple classes of shares with varying sales loads and asset based service and/or distribution fees. Class A Shares, Class I Shares and Class Y Shares will be continuously offered at the Fund's net asset value ("NAV") per share, plus, in the case of Class A Shares, a maximum sales load of up to 5.75%, from which a dealer-manager fee of up to 0.75% of offering proceeds may also be paid. Holders of Class A Shares, Class I Shares, and Class Y Shares have equal rights and privileges with each other, except that Class I Shares and Class Y Shares do not pay a sales load or dealer manager fees. Class I Shares and Class Y Shares are each not subject to a sales load; however, investors could be required to pay brokerage commissions on purchases and sales of Class I or Class Y Shares to their selling agents. Shareholders will be entitled to the payment of dividends and other distributions when, as and if declared by the Board. All shares have equal rights to the payment of dividends and the distribution of assets upon liquidation.
2. SIGNIFICANT ACCOUNTING POLICIES
Basis of Preparation and Use of Estimates - The Fund is an investment company and follows the accounting and reporting guidance under Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 946, Financial Services - Investment Companies. The Fund financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP"). The preparation of the financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from these estimates.
Determination of the Fund's Net Asset Value - The Fund determines the NAV of its shares daily, as of the close of regular trading on the New York Stock Exchange (normally, 4:00 p.m. Eastern Time). The calculation of NAV is made by the Fund's sub-administrator, subject to the oversight of the Advisers and the administrator, based on valuation information provided by the Advisers. The NAV per share of the Fund's shares is determined by dividing the total assets of the Fund (the value of investments, plus cash or other assets, including interest and distributions accrued but not yet received) less the value of any liabilities (including accrued expenses or distributions), by the total number of shares outstanding.
Valuation of the Fund's Portfolio - The Board has designated the Adviser as the valuation designee to perform fair valuations pursuant to Rule 2a-5 under the 1940 Act. The Board has adopted policies and procedures for determining the fair value of the Fund's assets, and has delegated responsibility for applying the valuation policies to the Adviser. The Adviser, pursuant to the policies adopted by the Board, is responsible for making fair value determinations, evaluating the effectiveness of the Fund's valuation policies, overseeing the calculation of the NAV per share for each class of shares and reporting to the Board. A large percentage of the assets in which the Underlying Funds invest will not have a readily ascertainable market price and will be fair-valued by the Underlying Fund. The Adviser provides the Board with periodic reports on a quarterly basis, or more frequently if necessary, describing the valuation process applicable to that period.
| 16 | www.accordantinvestments.com |
| Accordant ODCE Index Fund | Notes to Financial Statements |
June 30, 2024
Valuation of Private Investment Funds - The Fund's investments generally include open-end and closed-end private investment companies. The sponsors or managers of these investment companies measure their investment assets at fair value and report a NAV per share or NAV equivalent at least quarterly (the "Investment NAV"). These funds have generally adopted valuation practices consistent with the valuation standards and techniques established by professional industry associations that advise the institutional real estate investment community. Such valuation standards seek general application of U.S. GAAP fair value standards, uniform appraisal standards and the engagement of independent valuation advisory firms. In accordance with ASC 820, Fair Value Measurements ("ASC 820"), the Fund has elected to apply the practical expedient, and to value its investments at their respective NAVs or NAV equivalents at each quarter.
Underlying Funds - The valuation of the Fund's investments in the Underlying Funds is based upon valuations provided by the underlying fund managers on a daily or quarterly basis. Such Investment NAVs are reviewed by the Adviser upon receipt and subsequently applied to the Fund's NAV following consultation with the fund manager, if necessary. To the extent that the Fund does not receive timely information from the underlying funds regarding their valuations, and the NAV of the Fund's own investment in such underlying Fund, the Adviser, who has been named as the valuation designee by the Board, shall inform the Valuation Committee and a meeting may be called to determine fair value, and the Fund's ability to accurately calculate the Fund's NAV may be impaired.
Fair valuation procedures may be used to value a substantial portion of the assets of the Fund. The Fund may use the fair value of a security to calculate its NAV when, for example, (1) a portfolio security is not traded in a public market or the principal market in which the security trades is closed, (2) trading in a portfolio security is suspended and not resumed prior to the normal market close, (3) a portfolio security is not traded in significant volume for a substantial period, or (4) the Adviser determines that the quotation or price for a portfolio security provided by a broker-dealer or independent pricing service is inaccurate.
Investment Transactions, Interest and Dividends - Investment transactions are recorded on trade date. Realized gains and losses on investment transactions are determined on a specific identification. Interest income and expense is recognized under the accrual basis. Dividend income is recognized on the ex-dividend date.
Income from Investment Companies - Distributions received or receivable from investments in investment companies are evaluated to determine if the distribution is income, capital gains or a return of capital. Generally, income is not recorded unless the manager of the investment Fund has declared the distribution, there is cash available to make the distribution and there are accumulated earnings in excess of the amount recorded as income. Distributions classified as a return of capital are a reduction in the cost basis of the investment. Realized gains and losses are recognized upon final disposal of the position. Amounts shown as expenses in the statement of operations and financial highlights include only those expenses charged directly to the Fund and do not reflect management fees, advisory fees, performance fees or incentive allocations, brokerage commissions and other expenses incurred by investment companies in which the Fund is invested. These amounts are included in net change in unrealized depreciation on investments in the accompanying statement of operations. Also, included in the net change in unrealized appreciation on underlying investments is the Fund's allocable share of realized and unrealized gains or losses from underlying investments held by the investment companies.
Unfunded Commitments - Typically, when the Fund invests in an underlying fund, the Fund makes a binding commitment to invest a specified amount of capital in the applicable Underlying Fund. The capital commitment may be drawn by the general partner of the Underlying Fund either all at once or through a series of capital calls at the discretion of the general partner. As such, an unfunded commitment represents the portion of the Fund's overall capital commitment to a particular underlying manager that has not yet been called by the general partner of the Underlying Fund. Unfunded commitment may subject the Fund to certain risks. Further, the organizational documents of the Private Fund in which the Fund invests typically have set redemption schedules and notification requirements. As of June 30, 2024, the Fund had no unfunded commitments.
Indemnification - The Fund indemnifies its officers and trustees for certain liabilities that may arise from the performance of their duties to the Fund. In addition, in the normal course of business, the Fund enters into contracts that contain a variety of representations and warranties and which provide general indemnities. The Fund's maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Fund that have not yet occurred. However, based on industry experience, the Fund expects the risk of loss due to these warranties and indemnities to be remote.
Federal Income Taxes - The Fund intends to continue to qualify as a REIT pursuant to the Code. The Fund will continue to be organized and operate in such a manner as to qualify for taxation as a REIT under the applicable provisions of the Code. The Fund's qualification as a REIT depends upon the continuing satisfaction by the Fund of requirements of the Code relating to qualification for REIT status. Some of these requirements depend upon actual operating results, distribution levels, diversity of stock ownership, asset composition, source of income and record keeping. Accordingly, while the Fund intends to continue to qualify to be taxed as a REIT, the actual results of the Fund or of certain subsidiaries that are also REITs ("REIT Subsidiaries") for any particular year might not satisfy these requirements since the ability to satisfy such requirements depends on the operations of the underlying Eligible Component Funds over which the Fund has no control.
| Annual Report | June 30, 2024 | 17 |
| Accordant ODCE Index Fund | Notes to Financial Statements |
June 30, 2024
The Fund will not monitor the underlying funds' compliance with the requirements for REIT qualification. The Fund recognizes the tax benefits of uncertain tax positions only where the position is "more likely than not" to be sustained assuming examination by tax authorities. Management has analyzed the Fund's tax positions and has concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions taken on returns filed for the tax year ended December 31, 2023 or expected to be taken in the Fund's December 31, 2024 year-end tax returns. The Fund is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next twelve months.
Distributions to Shareholders - To the extent the Fund has earnings available for distribution, it expects to distribute quarterly dividends. The specific tax characteristics of the Fund's distributions will be reported to shareholders after the end of the calendar year. The Fund's quarterly dividends, if any, will be authorized and determined by the Board. Cash distributions to holders of the Fund's Shares will automatically be reinvested under the Fund's distribution reinvestment plan (the "DRIP") in additional whole and fractional shares unless the investor elects to receive distributions in cash. Investors may terminate their participation in the DRIP with prior written notice to the Fund. Under the DRIP, shareholders' distributions are reinvested in Shares of the same class of Shares owned by the shareholder for a purchase price equal to the NAV per share (for the class of Shares being purchased) on the date that the distribution is paid.
The Fund determines annually whether to distribute any net realized long-term capital gains in excess of net realized short-term capital losses (including capital loss carryover); however, it may distribute any excess annually to its shareholders.
The Fund has adopted a tax year end of December 31. The exact amount of distributable income for each tax year can only be determined at the end of the Fund's tax year ended December 31. Under Section 19 of the 1940 Act, the Fund is required to indicate the sources of certain distributions to shareholders. The estimated distribution composition may vary from quarter to quarter because it may be materially impacted by future income, expenses and realized gains and losses on securities and fluctuations in the value of the currencies in which Fund assets are denominated.
The Fund, in order to qualify as a REIT, is required to distribute dividends, other than capital gain dividends, to the Fund's shareholders in an amount at least equal to (1) the sum of (a) 90% of the Fund's "real estate investment trust taxable income," computed without regard to the dividends paid deduction and the Fund's net capital gain, and (b) 90% of the Fund's net after-tax income, if any, from foreclosure property minus (2) the sum of certain items of non-cash income.
Fair Value Measurements - ASC 820, Fair Value Measurements ("ASC 820"), defines fair value as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. ASC 820 establishes a fair value hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by prioritizing the use of the most observable input when available. Observable inputs are inputs that market participants would use in pricing the asset and liability based on market data obtained from sources independent of the reporting entity; unobservable inputs are inputs that reflect the Fund's own assumptions about the assumptions market participants would use in pricing the asset or liability.
A financial instrument level within the fair value hierarchy is based on the lowest level of any input that is deemed significant to the fair value hierarchy, the hierarchy level is determined based on the lowest level input(s) that is (are) significant to the fair value measurement in its entirety.
The three levels of the fair value hierarchy that prioritize inputs to the valuation methods are as follows:
| ● | Level 1 - Valuations based on quoted prices (unadjusted) in active markets for identical assets or liabilities. |
| ● | Level 2 - Valuations based on quoted prices for similar assets and liabilities in active markets and inputs that are observable for the asset or liability, either directly or indirectly. |
| ● | Level 3 - Valuations based on inputs that are unobservable and deemed significant to the overall fair value measurement. This includes situations where there is little, if any, market activity for the asset or liability. |
Investments in private real estate funds ("underlying investment companies") are valued at fair value based on the Fund's applicable percentage of ownership of the investment companies' reported net assets as of the measurement date, which is a practical expedient for valuation and does not require these investments to be categorized within the fair value hierarchy. In determining fair value, valuations provided by the underlying investment companies are utilized. The underlying investment companies value securities, real estate and other financial instruments at fair value. The estimated fair values of certain investments of the underlying investment companies, which may include private placements, real estate and other securities for which prices are not readily available, are determined by the general partner or sponsor of the respective investment company and may not reflect amounts that could be realized upon immediate sale, nor amounts that ultimately may be realized. Accordingly, the estimated fair values may differ significantly from the values that would have been used had a ready market existed for these investments. The fair value of the Fund's investments in other investment companies generally represents the amount the Fund would expect to receive if it were to liquidate its investment in the other investment companies excluding any redemption charges that may apply.
| 18 | www.accordantinvestments.com |
| Accordant ODCE Index Fund | Notes to Financial Statements |
June 30, 2024
The following table summarize the inputs used as of June 30, 2024 for the Fund's assets measured at fair value:
| Investments in Securities at Value |
Level 1 - Quoted Prices |
Level 2 - Other Significant Observable Inputs |
Level 3 - Significant Unobservable Inputs |
Total | ||||||||||||
| Private Real Estate Investment Funds | $ | - | $ | - | $ | - | $ | 24,747,879 | ||||||||
| Short Term Security | 6,892,371 | - | - | 6,892,371 | ||||||||||||
| Total | $ | 6,892,371 | $ | - | $ | - | $ | 31,640,250 |
| (a) | In accordance with ASC 820-10, certain investments that are measured at fair value using the NAV per share (or its equivalent), practical expedient, have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the Schedule of Investments. |
For the year ended June 30, 2024, the Fund did not use any significant unobservable inputs (Level 3) when determining fair value.
3. ADVISORY FEES, ADMINISTRATION FEES AND OTHER AGREEMENTS
Pursuant to the Investment Advisory Agreement, the Fund has agreed to pay the Adviser the Management Fee for services rendered under the Investment Advisory Agreement. The Management Fee is payable monthly in arrears. The Management Fee will be calculated at an annual rate of 0.60% of the Fund's net assets. Prior to the Conversion, IDR's management fee was calculated at an annual rate of 0.40% of the Fund's net assets at the end of the most recently completed calendar quarter.
The Adviser, the Sub-Adviser and the Fund have entered into an expense limitation and reimbursement agreement (the "Operating Expense Limitation Agreement") under which the Adviser has contractually agreed to waive its fees and to pay or absorb the organizational and offering-related expenses of the Fund (the "O&O Expenses") and the ordinary operating expenses of the Fund (excluding non-administrative expenses incurred by the Fund, including but not limited to (i) interest payable on debt, (ii) federal, state, local and foreign tax, (iii) the Management Fee charged by the Adviser pursuant to the Investment Advisory Agreement, (iv) brokerage fees and commissions and other costs and expenses relating to the acquisition and disposition of Fund investments, (v) non-routine expenses or extraordinary expenses not incurred in the ordinary course of the Fund's business, such as litigation expenses (vi) distribution and servicing fees payable to participating broker-dealers, and (vii) platform fees, service fees, administrative fees or similar fees or expenses charged to the Fund by third-party broker-dealers, distribution platforms or custodians in connection with investor positions in the Fund ("Operating Expenses") that exceed 0.50% of the Fund's net assets (the "Expense Limitation"), as determined as of the end of each calendar month). In consideration of the Adviser's agreement to limit the Fund's expenses, the Fund has agreed to repay the Adviser in the amount of any fees the Adviser previously waived or Fund O&O Expenses or Operating Expenses reimbursed, subject to the limitations that: (1) the payment will be made if payable not more than three years from the date incurred with respect to O&O Expenses and Operating Expenses; (2) the reimbursement may not be made if it would cause the expense limitation then in effect or in effect at the time of the waiver to be exceeded; and (3) the reimbursement is approved by the Fund's Board of Trustees (the "Board"). Prior to the Conversion, IDR and the Fund entered into an operational expense limitation agreement under which IDR agreed, during the period July 1, 2023 and ending September 10, 2023 (the "Limitation Period") to absorb the ordinary operating expenses of the Fund (excluding interest, brokerage commissions and extraordinary expenses of the Fund) that exceed 0.02% per quarter of the Fund's net assets attributable to interest in the Fund at the end of the Limitation Period. In addition to the foregoing, amounts payable to the Sub-Adviser that were waived and/or reimbursed by the Sub-Adviser under any of the Fund's prior Operational Expense Limitation Agreements with the Sub-Adviser ("Prior Operating Expenses") and the Fund's prior Organizational and Offering Expense Limitation Agreement with the Sub-Adviser ("Prior O&O Expenses," and together with Prior Operating Expenses, O&O Expenses, and Operating Expenses, "Fund Expenses") will be payable to the Sub-Adviser. The Fund has agreed to pay the Sub-Adviser in the amount of any fees that the Sub-Adviser previously waived or deferred under the prior Operational Expense Limitation Agreement and prior Organizational and Offering Expense Limitation Agreement, subject to the limitations that: (1) the payment will be made if payable not more than three years from the date incurred with respect to Prior O&O Expenses and Prior Operating Expenses; (2) the reimbursement may not be made if it would cause the expense limitation then in effect or in effect at the time of the waiver to be exceeded; and (3) the reimbursement is approved by the Board.
| Annual Report | June 30, 2024 | 19 |
| Accordant ODCE Index Fund | Notes to Financial Statements |
June 30, 2024
| At June 30, 2024, the total amount of recoverable Fund Expenses is $4,055,813, which expire as follows: | ||||
| September 30, 2024 | $ | 256,844 | ||
| December 31, 2024 | 31,485 | |||
| March 31, 2025 | 185,650 | |||
| June 30, 2025 | 821,936 | |||
| During the year ending June 30, 2026 | 829,811 | |||
| During the year ending June 30, 2027 | 1,930,087 | |||
| $ | 4,055,813 | |||
Sub-Advisory Agreements
Sub-advisory services are provided to the Fund pursuant to agreement between the Adviser and IDR. Under the terms of the sub-advisory agreement, the Adviser compensates the Sub-Adviser with a management fee for services provided under the Sub-Advisory agreement. Fees paid to the Sub-Adviser are not an expense of the Fund.
Fund Administrator and Accounting Fees and Expenses
The Adviser will also serve as the Fund's administrator (in such capacity, the "Administrator"). The Administrator provides, or arranges for the provision of, the administrative services necessary for the Fund to operate. In accordance with the Administration Agreement (the "Administration Agreement"), the Fund has agreed to reimburse the Administrator for the costs and expenses it incurs in performing its obligations and providing personnel and facilities thereunder. The Administrator may provide the Fund such administrative services directly, or engage one or more third-party sub-administrators to provide the Fund such administrative services on its behalf. The Adviser has engaged SS&C GIDS, Inc. as a third-party sub-administrator to the Fund.
Transfer Agency Fees and Expenses
SS&C GIDS, Inc. serves as transfer agent, dividend disbursing agent and registrar with respect to the shares of the Fund
Custody Fees and Expenses
UMB Bank, N.A. serves as the Fund's custodian and receives customary fees from the Fund for such services.
Distribution and Shareholder Servicing Fees and Expenses
The Fund has entered into a Distribution Agreement with ALPS Distributors, Inc. (the "Distributor") to provide distribution services to the Fund. The Distributor serves as principal underwriter of shares of the Fund. Participating broker-dealers will receive ongoing distribution fees of 0.75% of NAV per annum for Class A Shares (the "Distribution Fee")) payable monthly. Participating broker-dealers will also receive ongoing servicing fees of 0.25% of NAV per annum for Class A Shares (the "Servicing Fee") payable monthly. No ongoing distribution, recordkeeping or servicing fees will be paid with respect to Class Y Shares. No ongoing distribution fees will be paid with respect to Class I Shares, although the Fund may pay recordkeeping or shareholder servicing fees to certain intermediaries with regards to Class I Shares.
Officer and Trustee Compensation
Each Independent Trustee receives an annual retainer of $75,000, paid quarterly, as well as reimbursement for any reasonable expenses incurred attending Board meetings. None of the executive officers receive compensation from the Fund. Certain Trustees and officers of the Fund are also officers of the Adviser and are not paid by the Fund for serving in such capacities.
4. PURCHASES AND SALES OF INVESTMENT SECURITIES
The cost of purchases and proceeds from the sale of securities, other than short-term securities, for the year ended June 30, 2024 were as follows:
| Purchases of Securities |
Proceeds from Sales of Securities |
|||||||
| $ | 675,000 | $ | 1,689,881 |
| 20 | www.accordantinvestments.com |
| Accordant ODCE Index Fund | Notes to Financial Statements |
June 30, 2024
5. TAX BASIS INFORMATION
Distributions are determined in accordance with federal income tax regulations, which differ from U.S. GAAP, and, therefore, may differ significantly in amount or character from net investment income and realized gains for financial reporting purposes. Financial reporting records are adjusted for permanent book/tax differences to reflect tax character but are not adjusted for temporary differences.
The tax character of distributions paid for the year ended December 31, 2023 were as follows:
| 2023 | Ordinary Income | Long-Term Capital Gain | Return of Capital | |||||||||
| Class I | $ | - | $ | 202,630 | $ | 1,358,667 | ||||||
| Class A | $ | - | $ | - | $ | 96 | ||||||
| Class Y | $ | - | $ | - | $ | 1,285 |
As of December 31, 2023, the components of accumulated deficit on a tax basis were as follows:
| Undistributed ordinary income | $ | - | ||
| Undistributed long term capital gains | - | |||
| Accumulated capital and other losses | (55,545 | ) | ||
| Unrealized appreciation/(depreciation) on investments | (745,508 | ) | ||
| Total accumualted deficit | $ | (801,053 | ) |
As of June 30, 2024, net unrealized appreciation of investments based on the federal tax cost was as follows:
|
Gross Appreciation (excess of value over tax cost) |
Gross Depreciation (excess of tax cost over value) |
Net Unrealized Appreciation/(Depreciation) |
Cost of Investments for Income Tax Purposes |
|||||||||||
| $ | - | $ | (1,844,698 | ) | $ | (1,844,698 | ) | $ | 33,484,948 |
As of December 31, 2023, for federal income tax purposes, the Fund had $55,454 of net operating loss (NOL) carryforwards available to offset future income, if any, that may be carried forward indefinitely, to the extent provided by the Treasury regulations.
The difference between book basis and tax basis distributable earnings and unrealized appreciation/(depreciation) is primarily attributable to the tax deferral of losses on wash sales, investments in partnerships, and certain other investments.
GAAP requires that certain components of net assets be reclassified between financial and tax reporting. These reclassifications have no effect on net assets or net asset value per share. As of the tax year ended December 31, 2023, permanent differences in book and tax accounting, primarily due to non-deductible expenses, have been reclassified to paid-in capital and accumulated deficit as follows:
| Accumulated Deficit | Paid-in Capital | |||||
| $ | 1,417 | $ | (1,417 | ) | ||
6. REPURCHASE OFFERS
As a closed-end interval fund, the Fund has adopted a fundamental policy pursuant to Rule 23c-3 under the 1940 Act in which it offers to repurchase at a NAV no less than 5% and at most 25% of the outstanding shares of the Fund once each quarter. In the event that a repurchase offer by the Fund is oversubscribed, the Fund may repurchase, but is not required to repurchase, additional shares up to a maximum amount of 2% of the outstanding shares of the Fund. If the Fund determines not to repurchase additional shares beyond the repurchase offer amount, or if shareholders tender an amount of shares greater than that which the Fund is entitled to repurchase, the Fund will repurchase the shares tendered on a prorata basis. The Fund may, in its sole discretion, and for administrative convenience, accept all shares tendered by shareholders who own less than 200 shares and who tender all of their shares, before prorating other amounts tendered. Liquidity will be provided to shareholders only through the Fund's quarterly repurchase offers. Shareholders will receive written notice of each quarterly repurchase offer ("Repurchase Offer Notice") that includes the date the repurchase offer period ends ("Repurchase Request Deadline") and the date the repurchase price will be determined ("Repurchase Pricing Date"). Shares will be repurchased at the NAV per share determined on the Repurchase Pricing Date.
| Annual Report | June 30, 2024 | 21 |
| Accordant ODCE Index Fund | Notes to Financial Statements |
June 30, 2024
During the year ended June 30, 2024, the Fund conducted the following repurchase offers:
| Commencement Date |
Repurchase Request Deadline |
Repurchase Pricing Date |
Net Asset Value as of Repurchase Offer Date |
Shares Repurchased |
Amount Repurchased |
Percentage of Outstanding Shares Repurchased |
||||||||||||||
| January 17, 2024 | February 6, 2024 | February 6, 2024 | $ | 9.82 | 157,273 | $ | 1,544,420 | 5.00 | % | |||||||||||
| April 16, 2024 | May 7, 2024 | May 7, 2024 | $ | 9.52 | 156,692 | $ | 1,491,708 | 5.00 | % |
7. CREDIT FACILITY
On January 12, 2024, the Fund entered into a one-year $2.0 million credit and security agreement (the "Credit Facility") with TriState Capital Bank that matures on January 10, 2025. All of the Fund's investments are designated as collateral on the credit and security agreement. Borrowings under the Credit Facility bear interest at a rate of one-month SOFR plus 2.75%. The Credit Facility may be increased to a maximum of $15.0 million. During the period from January 12, 2024 to June 30, 2024, there were no borrowings under the Credit Facility and the Fund paid unused fees of $2.4 thousand. There are no outstanding borrowings under the Credit Facility on June 30, 2024.
8. PRINCIPAL RISK FACTORS
The following list is not intended to be a comprehensive listing of all of the potential risks associated with the Fund. For a more comprehensive list of potential risks the Fund may be subject to, please refer to the Fund's Prospectus and Statement of Additional Information ("SAI").
Credit Risk - Financial assets which potentially expose the Fund to credit risk consist principally of cash and investments. The Fund, at times, may maintain deposits with a single high-quality financial institution in amounts that are in excess of federally insured limits; however, the Fund has not experienced, nor does it anticipate, incurring any losses in its cash accounts. Investments in other investment companies are subject to credit risk should those other investment companies be unable to fulfill their redemption obligations.
Distribution Policy Risk - The Fund's distribution policy is to make quarterly distributions to shareholders. All distributions will be paid at the sole discretion of the Board and will depend on the Fund's earnings, financial condition, maintenance of REIT status, compliance with applicable investment company regulations and such other factors as the Board may deem relevant from time to time. In the event that the Fund encounters delays in locating suitable investment opportunities, the Fund may pay its distributions from the proceeds of the offering or from borrowings in anticipation of future cash flow, which may constitute a return of capital. Such a return of capital is not immediately taxable, but reduces a shareholder's tax basis in the Fund's shares, which may result in a shareholder recognizing more gain (or less loss) when its shares are sold. Distributions from the proceeds of the Fund's offering or from borrowings also could reduce the amount of capital the Fund ultimately invests in its investments.
Limited Liquidity - Shareholders will have limited rights to redeem capital from the Fund. As a result, a Shareholder that desires to liquidate his or her investment in the Fund may be unable to do so within a given timeframe, if at all. Therefore, Shareholders must be prepared to bear the financial risks of an investment in shares of the Fund for an indefinite period of time.
LIBOR Risk - The Fund's investments, payment obligations and financing terms may be based on floating rates, such as LIBOR, Secured Overnight Financing Rate ("SOFR"), Euro Interbank Offered Rate and other similar types of reference rates (each, a "Reference Rate"). Certain LIBORs were generally phased out by the end of 2021, and some regulated entities have ceased to enter into new LIBOR-based contracts beginning January 1, 2022. On March 15, 2022, the Adjustable Interest Rate (LIBOR) Act was signed into law. This law provides a statutory fallback mechanism on a nationwide basis to replace LIBOR with a benchmark rate that is selected by the Board of Governors of the Federal Reserve System and based on SOFR which measures the cost of overnight borrowings through repurchase agreement transactions collateralized with U.S. Treasury securities for certain contracts that reference LIBOR and contain no, or insufficient, fallback provisions. Although the transition process away from LIBOR has become increasingly well-defined in advance of the anticipated discontinuation date, there remains uncertainty regarding the future use of LIBOR, and the nature of any replacement rate. As such, the potential effect of a transition away from LIBOR on the Fund or the LIBOR-based instruments in which the Fund invests cannot yet be determined, and it is not possible to completely identify or predict any establishment of alternative Reference Rates or any other reforms to Reference Rates that may be enacted in the UK or elsewhere. The termination of certain Reference Rates presents risks to the Fund. The elimination of a Reference Rate or any other changes or reforms to the determination or supervision of Reference Rates could have an adverse impact on the market for or value of any securities or payments linked to those Reference Rates and other financial obligations held by the Fund or on its overall financial condition or results of operations. In addition, any substitute Reference Rate and any pricing adjustments imposed by a regulator or by counterparties or otherwise may adversely affect the Fund's performance and/or NAV. The transition process away from LIBOR may involve, among other things, increased volatility or illiquidity in markets for instruments that currently rely on LIBOR. The transition process may also result in a reduction in the value of certain instruments held by the Fund or reduce the effectiveness of related Fund transactions. While some instruments in which the Fund invests may contemplate a scenario where LIBOR is no longer available by providing for an alternative rate setting methodology, not all instruments in which the Fund invests may have such provisions and there is significant uncertainty regarding the effectiveness of any such alternative methodologies. Any potential effects of the transition away from LIBOR on the Fund or on financial instruments in which the Fund invests, as well as other unforeseen effects, could result in losses to the Fund.
| 22 | www.accordantinvestments.com |
| Accordant ODCE Index Fund | Notes to Financial Statements |
June 30, 2024
Market Risk - The Fund invests in other investment companies which are subject to the terms of the respective investment companies' agreements, private placement memoranda and other governing agreements. The Fund's investments in other investment companies are subject to the market and credit risks of investments held by those entities. The Fund bears the risk of loss only to the extent of the cost of its respective investment in the other investment companies.
In addition, the following risks may affect real estate markets generally or specific assets and include, without limitation, general economic and social climate, regional and local real estate conditions, the supply of and demand for properties, the financial resources of tenants, competition for tenants from other available properties, the ability of the Underlying Funds to manage the real properties, changes in building, environmental, tax or other applicable laws, changes in real property tax rates, changes in interest rates, negative developments in the economy that depress travel activity, uninsured casualties, natural disasters and other factors which are beyond the control of the Fund, and the Adviser. Furthermore, changes in interest rates or the availability of debt may render the investment in real estate assets difficult or unattractive.
Moreover, certain expenditures associated with real estate, such as taxes, debt service, maintenance costs and insurance, tend to increase and, in most cases, are not decreased by events adversely affecting rental revenues such as an unforeseen downturn in the real estate market, a lack of investor confidence in the market or a softening of demand. Thus, the cost of operating a property may exceed the rental income thereof. Insurance to cover losses and general liability in respect of properties may not be available or may be available only at prohibitive costs to cover losses from ongoing operations and other risks such as terrorism, earthquake, flood or environmental contamination. Although the Fund intends to confirm that the Underlying Funds in which it invests maintain comprehensive insurance on its investments in amounts sufficient, in a commercially reasonable manner, to permit replacement in the event of total loss, certain types of losses are uninsurable or are not economically insurable, and the Fund will have no control over whether such insurance is maintained.
Non-Diversified Status - The Fund is classified as "non-diversified" under the 1940 Act. As a result, the Fund can invest a greater portion of its assets in obligations of a single issuer than a "diversified" fund. The Fund may therefore be more susceptible than a diversified fund to being adversely affected by any single corporate, economic, political or regulatory occurrence. The Fund has a fundamental policy to invest, under normal circumstances, more than 25% of its total assets in real estate-related investments, including real estate investment vehicles that in turn hold real estate-related investments, or companies that otherwise operate in the real estate industry. In addition, the Fund's focus on investments in REITs in accordance with its investment objective and strategies makes the Fund vulnerable to a downturn in the real estate sector generally, or to specific events or circumstances, including a rise in borrowing costs for real estate assets, that may materially and adversely impact the real estate investment sector. Any such impact on the real estate investment sector would likely materially and adversely affect the Fund's results of operations and financial condition.
REIT Risk - The Fund will operate in a manner consistent with REIT qualification rules; however, there can be no assurance that the Fund will qualify as a REIT or that it will remain so qualified. Determining whether the Fund qualifies as a REIT involves the application of highly technical and complex provisions of the Code to the Fund's operations for which there are only limited judicial and administrative interpretations. In addition, determining whether the Fund qualifies as a REIT will involve numerous factual determinations concerning matters and circumstances not entirely within the Fund's control.
9. SUBSEQUENT EVENTS
Subsequent events after the date of the Statement of Assets and Liabilities have been evaluated through the date the financial statements were issued.
As outlined in the Fund's Quarterly Repurchase Offer Notice dated July 16, 2024, the Fund offered to repurchase at least 5% of its outstanding shares at the net asset value of such shares on August 6, 2024. The Fund repurchased approximately 8.94% of the total number of shares of Class I tendered for repurchase by the repurchase deadline, which resulted in 328,213 shares being repurchased for $3,072,080.
Management has determined that there were no additional subsequent events to report through the issuance of these financial statements.
| Annual Report | June 30, 2024 | 23 |
| Accordant ODCE Index Fund |
Report of Independent Registered Public Accounting Firm |
To the Shareholders and Board of Trustees of
Accordant ODCE Index Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Accordant ODCE Index Fund (formerly known as IDR Core Property Index Fund Ltd) (the "Fund") as of June 30, 2024, the related statements of operations, cash flows, and changes in net assets, and the financial highlights for the year then ended, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of June 30, 2024, the results of its operations and its cash flows, the changes in net assets, and the financial highlights for the year then ended, in conformity with accounting principles generally accepted in the United States of America.
The Fund's financial statements and financial highlights for the years or period ended June 30, 2023, and prior, were audited by other auditors whose report dated August 29, 2023, expressed an unqualified opinion on those financial statements and financial highlights.
Basis for Opinion
These financial statements are the responsibility of the Fund's management. Our responsibility is to express an opinion on the Fund's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement whether due to error or fraud.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of June 30, 2024, by correspondence with the custodian and underlying fund advisors or administrators. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
We have served as the Fund's auditor since 2023.
COHEN & COMPANY, LTD.
Cleveland, Ohio
August 29, 2024
| 24 | www.accordantinvestments.com |
| Accordant ODCE Index Fund |
Renewal of Investment Advisory Agreement and Sub-Advisory Agreements |
June 30, 2024 (Unaudited)
At meetings held on May 31 and July 17, 2023, the Board of Trustees (the "Board") of Accordant ODCE Index Fund (the "Fund"), including all of trustees who are not "interested persons" ("Independent Board Members") (as defined in the Investment Company Act of 1940, as amended ("1940 Act")), unanimously approved an investment advisory agreement (the "Advisory Agreement") between Accordant Investments LLC (the "Adviser") and the Fund, and has determined that the Fund's entry into such agreement is in the best interests of the Fund and its shareholders.
In making its determination regarding the Advisory Agreement, the Board considered, among other things, information furnished by the Adviser, including information concerning the conversion of the Fund from a Maryland corporation to a Delaware statutory Trust (the "Conversion"), as well as other information that it deemed relevant. The Board also requested and received responses from the Adviser to a series of questions encompassing a variety of topics prepared by the Board, in consultation with counsel to the Fund. Attention was given by the Independent Board Members to all information furnished. However, no single factor reviewed and discussed by the Board was identified as the principal factor in determining whether to approve the Advisory Agreement. The following discussion notes the primary considerations relevant to the Board's deliberations and determinations.
Nature, Scope and Quality of Services. In assessing the nature, scope and quality of services to be provided by the Adviser, the Independent Board Members considered the anticipated structure and capabilities of the Adviser, as well as the professional experiences and qualifications of the Adviser's personnel that would be providing advisory services to the Fund. The Independent Board Members considered the structure and capabilities of the Adviser in view of the anticipated capitalization of its indirect parent, Emphasis Capital LLC ("Emphasis Capital"). They also considered the Adviser's research and portfolio management capabilities, as well as its respective administrative and compliance infrastructure. The Independent Board Members also specifically reviewed and considered the increase in management fees under the Advisory Agreement. They noted that the increase in management fees under the Advisory Agreement was reasonable and appropriate in light of the nature, extent and quality of services to be provided by the Adviser under the Advisory Agreement, and compared to those which were previously provided by IDR Investment Management, LLC ("IDR") under an investment advisory agreement between IDR and the Fund ("IDR Agreement"). The Board further considered the oversight services the Adviser will provide the Fund in addition to the anticipated increased complexity of complying with Rule 23c-3 under the 1940 Act applicable to interval funds, including managing a continuously offered closed-end fund required to calculate a daily net asset value and maintaining compliance with applicable requirements of the additional oversight services that the Adviser would provide as the Fund's investment adviser.
Comparative Advisory Fees and Expenses. The Independent Board Members considered the proposed management fee and expenses of the Fund under the Advisory Agreement compared to both the IDR Agreement and to the advisory fees or similar expenses paid by other registered investment companies with similar investment objectives. The Independent Board Members considered the reasonableness of the proposed management fee under the Advisory Agreement in light of the nature, scope and quality of the services anticipated to be provided under the Advisory Agreement compared to those provided under the IDR Agreement.
Profitability. The Independent Board Members considered the expected profits to the Adviser under the Advisory Agreement, in light of the amount of the Fund's total net assets over recent years.
Benefits to the Adviser and Sub-Adviser. The Independent Board Members determined that the Adviser would not receive any significant direct or indirect benefits from its relationship with the Fund, other than the payment of fees and other amounts under the Advisory Agreement.
Economies of Scale. The Independent Board Members noted that economies of scale in an investment adviser's costs of services may be realized when a fund's assets increase significantly. They determined that the proposed advisory fee rate under the Advisory Agreement, and aggregate fees payable by the Fund to the Adviser as a percent of the net assets of the Fund, would continue to reflect a sharing with the Fund of the benefit of economies of scale previously realized by IDR under the IDR Agreement. The Independent Board Members further considered the additional economies of scale that were expected to be realized by the Adviser as a result of the capitalization of its indirect parent, Emphasis Capital, and the extent to which these economies of scale would be shared with the Fund and its shareholders through the terms of the Advisory Agreement.
Investment Performance. The Independent Board Members considered the gross and net performance of the Fund under the IDR Agreement, and how this was anticipated to change, if at all, under the Advisory Agreement. The Independent Board Members noted that the Adviser did not advise any registered investment companies with sufficient performance history to assess the quality or degree of such history as of the date of the meeting. Notwithstanding this, the Independent Board Members concluded from the other materials presented that: the Adviser was expected to provide high quality investment advisory services to the Fund; the Fund benefits from the high ethical standards that would be adhered to by the Adviser and its personnel; and the key principal at the Adviser, Mr. Stark, has extensive professional experience and familiarity with the markets in which the Fund invests.
General Conclusions. The Independent Board Members determined that the services proposed to be provided by the Adviser pursuant to the Advisory Agreement to the Fund were expected to be of very high quality and concluded that they were very satisfied with the proposed services to be provided to the Fund by the Adviser, and further that they were satisfied with the proposed fees and expenses under the Advisory Agreement. No single factor reviewed by the Independent Board Members was identified by them as the principal factor in determining whether to approve the Advisory Agreement.
| Annual Report | June 30, 2024 | 25 |
| Accordant ODCE Index Fund |
Renewal of Investment Advisory Agreement and Sub-Advisory Agreements |
June 30, 2024 (Unaudited)
Sub-Advisory Agreement
At meetings held on May 31 and July 17, 2023, the Board, including the Independent Board Members, unanimously approved an investment sub-advisory agreement (the "Sub-Advisory Agreement") by and among IDR (the "Sub-Adviser"), the Adviser and the Fund, and has determined that the Fund's entry into such agreement is in the best interests of the Fund and its shareholders.
In making its determination regarding the Sub-Advisory Agreement, the Board considered, among other things, information furnished by IDR, including information concerning the Conversion and change in control of IDR, as well as other information that it deemed relevant. The Board also considered information provided by IDR, in both its capacity as the proposed Sub-Adviser to the Fund post-Conversion and as the investment adviser to the Fund under the terms of an interim advisory agreement between IDR and the Fund ("Interim Advisory Agreement") and the IDR Agreement, which was most recently renewed by the Board at a meeting in August 2022. The Board also requested and received responses from IDR to a series of questions encompassing a variety of topics prepared by the Board, in consultation with counsel to the Fund. Attention was given by the Independent Board Members to all information furnished. However, no single factor reviewed and discussed by the Board was identified as the principal factor in determining whether to approve the Sub-Advisory Agreement. The following discussion notes the primary considerations relevant to the Board's deliberations and determinations.
Nature, Scope and Quality of Services. In assessing the nature, scope and quality of services to be provided by IDR, the Independent Board Members considered the structure and capabilities of IDR, as evidenced by the services provided by IDR to the Fund under the Interim Advisory Agreement and IDR Agreement. The Independent Board Members considered the structure and capabilities of IDR and the benefits that the spin-out of Emphasis Capital from its former parent, Affinius Capital LLC (the "Restructuring") had on IDR's capabilities. They also considered IDR's research and portfolio management capabilities, as well as its administrative and compliance infrastructure.
Comparative Advisory Fees and Expenses. The Independent Board Members considered the proposed management fee and expenses to be paid under the Sub-Advisory Agreement, noting that, pursuant to the terms of the Sub-Advisory Agreement, the management fee owed to IDR would be paid by the Adviser rather than by the Fund directly. The Independent Board Members compared the management fee and expenses proposed to be paid to IDR under the Sub-Advisory Agreement to both the IDR Agreement and to the advisory fees or similar expenses paid to other investment advisers that provide sub-advisory services to registered investment companies with similar investment objectives. The Independent Board Members considered the reasonableness of the proposed management fee under the Sub-Advisory Agreement in light of the nature, scope and quality of the services anticipated to be provided under the Sub-Advisory Agreement.
Profitability. The Independent Board Members considered the expected profits to IDR under the Sub-Advisory Agreement in light of the amount of the Fund's total net assets over recent years.
Benefits to the Adviser and Sub-Adviser. The Independent Board Members determined that IDR would not receive any significant direct or indirect benefits from its relationship with the Fund, other than the payment of fees and other amounts under the Sub-Advisory Agreement.
Economies of Scale. The Independent Board Members noted that economies of scale in an investment adviser's costs of services may be realized when a fund's assets increase significantly. They determined that the proposed advisory fee rates under the Sub-Advisory Agreement, and aggregate fees payable to IDR as a percent of the net assets of the Fund, would continue to reflect a sharing with the Fund of the benefit of economies of scale previously realized by IDR under the IDR Agreement. The Independent Board Members further considered the additional economies of scale that were expected to be realized by IDR as a result of its indirect acquisition by Emphasis Capital, and the extent to which these economies of scale would be shared with the Fund and its shareholders through the terms of the Sub-Advisory Agreement.
Investment Performance. The Independent Board Members considered the gross and net performance of the Fund under the IDR Agreement, and how this was anticipated to change, if at all, under the Sub-Advisory Agreement. The Independent Board Members concluded that: IDR continues to do an outstanding job in providing investment advisory services to the Fund (and, in particular, has delivered high quality investment advisory services in recent years during the COVID-19 pandemic); the Fund benefits from the high ethical standards that are adhered to by IDR and its personnel; IDR has delivered excellent value to the Fund; and that IDR was expected to continue to retain each of these qualities in its capacity as Sub-Adviser to the Fund.
General Conclusions. The Independent Board Members determined that the services proposed to be provided by IDR pursuant to the Sub-Advisory Agreement to the Fund were expected to be of very high quality and concluded that they were very satisfied with the proposed services to be provided to the Fund by IDR, and further that they were satisfied with the proposed fees and expenses under the Sub-Advisory Agreement. The Board also determined that the consummation of the Restructuring had not adversely impacted any of the above considerations. No single factor reviewed by the Independent Board Members was identified by them as the principal factor in determining whether to approve the Sub-Advisory Agreement.
| 26 | www.accordantinvestments.com |
| Accordant ODCE Index Fund | Additional Information |
June 30, 2024 (Unaudited)
1. PROXY VOTING POLICIES AND VOTING RECORD
A description of the policies and procedures that the Fund uses to vote proxies relating to its portfolio securities is available without charge upon request by calling toll-free 888.778.7781, or on the Securities and Exchange Commission's ("SEC") website at http://www.sec.gov. Information regarding how the Fund voted proxies relating to underlying portfolio securities is available without charge upon request by calling toll-free 888.778.7781, or on the SEC's website at http://www.sec.gov.
2. QUARTERLY PORTFOLIO HOLDINGS
The Fund files its complete schedule of portfolio holdings quarterly with the SEC as an exhibit to its reports on Form N-PORT. The Fund's Form N-PORT reports are available on the SEC's web site at http://www.sec.gov.
| Annual Report | June 30, 2024 | 27 |
| Accordant ODCE Index Fund | Service Providers |
June 30, 2024 (Unaudited)
Investment Adviser
Accordant Investments LLC
6710 E.Camelback Rd., Suite 100, Scottsdale, AZ 85251
Investment Sub-Adviser
IDR Investment Management, LLC
3 Summit Park Drive, Suite 450, Independence, OH 44131
Administrator
SS&C GIDS, Inc.
1055 Broadway, 7th Floor, Kansas City, MO 64105
Custodian
UMB Bank, N.A.
928 Grand Blvd 10th Floor, Kansas City, MO 64106
Distributor
ALPS Distributors, Inc.
1290 Broadway, Suite 1000, Denver, CO 80203
Independent Registered Public Accounting Firm
Cohen & Company, Ltd.
1350 Euclid Ave., Suite 800, Cleveland, OH 44115
Legal Counsel
Dechert LLP
633 West 5th Street, Suite 4900
Los Angeles, CA 90071-2032
Transfer Agent and DRIP Administrator
SS&C GIDS, Inc.
1055 Broadway, 7th Floor, Kansas City, MO 64105
| 28 | www.accordantinvestments.com |
| Accordant ODCE Index Fund | Privacy Notice |
June 30, 2024 (Unaudited)
August 2024
The Accordant Privacy Notice applies to Accordant Investments LLC ("Accordant"), its subsidiaries and affiliates and any current or future fund or investment sponsored by Accordant. There may be links from the Accordant website to other third-party websites which may have different privacy policies.
This Privacy Notice describes how Accordant and our service providers protect your personal and financial information that we collect in the course of providing our financial services. The Personal Information that you provide will be available to Accordant, its agents, representatives and third-party service providers to be used to respond to your inquiries and those purposes that may be reasonably inferred by your provision of such Personal Information. The types of personal information we collect and share depend on the investment you have with us. This information can include:
| ● | Information we receive from you on Applications, Subscription Agreements and Other Forms |
| ● | Social Security number and Income |
| ● | Employment and Residential Information |
| ● | Email Address |
| ● | Accordant Website Passwords |
| ● | Account Money and Security Balances |
| ● | Transaction Detail History |
| ● | Custodians |
| ● | Age, Marital Status, Employment History, Dependents |
| ● | Investment Objectives, Goals, & Risk Tolerance |
| ● | Credit History and Credit Scores from third parties |
Accordant does not disclose any nonpublic information about our customers or former customers to anyone, except as permitted or required by law. For example, we disclose information, as permitted by law, to our affiliates for everyday business purposes. We may disclose your personal information to non-affiliated service providers who perform business functions on our behalf - the actions necessary by financial companies to run their business and manage customer accounts, such as processing transactions, mailing, and auditing services, responding to court orders and legal investigations. These companies are required to sign confidentiality agreements with Accordant. In addition, we disclose information, as permitted or required by law, to governmental and regulatory agencies such as the Securities and Exchange Commission ("SEC") and the Internal Revenue Service ("IRS"). We will make disclosures to comply with a legal summons, court order, subpoena or similar legal process, fraud investigation, audit or examination. Finally, we are permitted to disclosure information if you have provided your written consent.
To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings as well as programs to detect, prevent and, as necessary, respond to attacks or unauthorized access to confidential information. Messages and information over the internet may not be secure. Please consider the security of your personal or confidential information when communicating over the Accordant website. Please note the Accordant Website has a separate privacy policy which can be found here: https://www.accordantinvestments.com/privacy-policy. The Accordant Website also collects additional personal information automatically through technology and details around the collection of this information is found in the Accordant website privacy policy.
Accordant will provide a privacy notice annually as long as you maintain an account with us. Accordant reserves the right to make changes to this policy. You can always review our current policy by contacting us for a copy at info@accordantinvestments or calling us at +1 (888) 778-7781. Accordant does not sell or rent personal information to any third party.
| Annual Report | June 30, 2024 | 29 |
| (b) | Not applicable. |
| Item 2. | Code of Ethics. |
(a) The registrant, as of the end of the period covered by this report, has adopted a code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party.
(c) There have been no amendments, during the period covered by this report, to a provision of the code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party, and that relates to any element of the code of ethics description.
(d) The registrant has not granted any waivers, during the period covered by this report, including an implicit waiver, from a provision of the code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party, that relates to one or more of the items set forth in paragraph (b) of this item's instructions.
| Item 3. | Audit Committee Financial Expert. |
As of the end of the period covered by the report, the registrant's board of directors has determined that R. Byron Carlockis qualified to serve as the audit committee financial expert serving on its audit committee and that they are "independent," as defined by Item 3 of Form N-CSR.
| Item 4. | Principal Accountant Fees and Services. |
Audit Fees
(a) The aggregate fees billed for the fiscal year for professional services rendered by the principal accountant for the audit of the registrant's annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for that fiscal year is $51,975 for 2023 and $49,500 for 2024.
Audit-Related Fees
(b) The aggregate fees billed for the fiscal year for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the registrant's financial statements and are not reported under paragraph (a) of this Item are $0 for 2023 and $0 for 2024. The fees listed in item 4 (b) are related to out-of-pocket expenses in relation to the annual audit of the registrant.
Tax Fees
(c) The aggregate fees billed for the fiscal year for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning are $0 for 2023 and $0 for 2024.
All Other Fees
(d) The aggregate fees billed for the fiscal year for products and services provided by the principal accountant, other than the services reported in paragraphs (a) through (c) of this Item are $0 for 2023 and $0 for 2024.
(e)(1) The audit committee's pre-approval policies and procedures described in paragraph (c)(7) of Rule 2-01 of Regulation S-X are as follows:
The Registrant's Audit Committee must pre-approve the audit and non-audit services of the Auditors prior to the Auditor's engagement.
(e)(2) The percentage of services described in each of paragraphs (b) through (d) of this Item that were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X are as follows:
(b) 0%
(c) 0%
(d) 0%
(f) The percentage of hours expended on the principal accountant's engagement to audit the registrant's financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant's full-time, permanent employees was less than fifty percent.
(g) The aggregate non-audit fees billed by the registrant's accountant for services rendered to the registrant, and rendered to the registrant's investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant for the fiscal year of the registrant was $0 for 2023 and $0 for 2024.
(h) The registrant's audit committee of the board of trustees has considered whether the provision of non-audit services that were rendered to the registrant's investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant's independence.
| (i) | Not applicable. |
| (j) | Not applicable. |
| Item 5. | Audit Committee of Listed Registrants. |
Not applicable.
| Item 6. | Investments. |
(a) Schedule of Investments in securities of unaffiliated issuers as of the close of the reporting period is included as part of the report to shareholders filed under Item 1(a) of this form.
(b) Not applicable.
| Item 7. | Financial Statements and Financial Highlights for Open-End Management Investment Companies. |
Not applicable.
| Item 8. | Changes in and Disagreements with Accountants for Open-End Management Investment Companies. |
Not applicable.
| Item 9. | Proxy Disclosures for Open-End Management Investment Companies. |
Not applicable.
| Item 10. | Remuneration Paid to Directors, Officers, and Others of Open-End Management Investment Companies. |
Not applicable.
| Item 11. | Statement Regarding Basis for Approval of Investment Advisory Contract. |
Not applicable.
| Item 12. | Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. |
PROXY VOTING POLICIES AND PROCEDURES
The Fund's Board has delegated the day-to-day proxy voting responsibility to its sub-adviser, IDR Investment Management, LLC (the "Sub-Adviser"). The proxy voting policies and procedures of the Sub-Adviser (these "Proxy Voting Policies and Procedures") are set forth below. These Proxy Voting Policies and Procedures are reviewed periodically by the Sub-Adviser and the Fund's non-interested trustees, and, accordingly, are subject to change. For purposes of these Proxy Voting Policies and Procedures described below, any capitalized terms not defined therein shall have the meaning ascribed to them in the Compliance Policies & Procedures Manual of the Sub-Adviser, currently in effect as of the date hereof.
Policy
In accordance with Rule 206(4)-6 under the Advisers Act, it is the policy of the Sub-Adviser to vote all proxies in respect of securities in client accounts ("Client Securities") over which the Sub-Adviser has voting discretion in a manner consistent with best interests of the Sub-Adviser's clients. Given the Sub-Adviser's business of investing in private real estate funds (limited partnerships), proxy voting is often not applicable.
Responsibility
The CCO is responsible for ensuring adherence to the Sub-Adviser's Proxy Voting Policy.
Procedures
The Sub-Adviser generally will monitor proposed corporate actions and proxy issues regarding Client Securities, and may take any of the following actions based on the best interests of its clients: (i) determine how to vote the proxies, (ii) abstain, or (iii) follow the recommendations of an independent proxy voting service in voting the proxies.
In general, the Sub-Adviser will determine how to vote proxies based on its reasonable judgment of the vote most likely to produce favorable financial results for its clients. Proxy votes generally will be cast in favor of proposals that maintain or strengthen the shared interests of shareholders and management, increase shareholder value, maintain or increase shareholder influence over the issuer's board of directors and management and maintain or increase the rights of shareholders. Proxy votes generally will be cast against proposals having the opposite effect. However, the Sub-Adviser will consider both sides of each proxy issue.
Conflicts of Interest
Conflicts of interest between the Sub-Adviser or a principal of the Sub-Adviser and the Sub-Adviser's clients in respect of a proxy issue conceivably may arise, for example, from personal or professional relationships with a company or with the directors, candidates for director, or senior executives of a company that is the issuer of Client Securities.
If the Compliance Officer determines that a material conflict of interest exists, the following procedures shall be followed:
| ● | The Sub-Adviser may abstain from voting; or |
| ● | The Sub-Adviser may follow the recommendations of an independent proxy voting service in voting the proxies. |
Disclosure
A summary of the Sub-Adviser's Proxy Voting Policy will be included in the Sub-Adviser's Disclosure Brochure. The full text of the Sub-Adviser's Proxy Voting Policy will be provided to investors upon request.
Recordkeeping Requirements
The Fund shall maintain the following records relating to this Policy:
| ● | A copy of the Policy as it may be amended from time to time. |
| ● | A copy of each proxy statement received by the Fund in respect of securities held by the Fund. This requirement may be satisfied by relying on a third party to make and retain, on the Fund's behalf, a copy of a proxy statement (provided that the Fund has obtained an undertaking from the third party to provide a copy of the proxy statement promptly upon request), or the Fund may rely on obtaining a copy of a proxy statement from the SEC's EDGAR system. |
| ● | A record of each vote cast by the Sub-Adviser on behalf of the Fund. This requirement may be satisfied by relying on a third party to make and retain, on the Fund's behalf, a record of the vote cast (if the Fund has obtained an undertaking from the third party to provide a copy of the record promptly upon request). |
| ● | A copy of any document created by the Sub-Adviser that was material to making a decision about how to vote proxies on behalf of the Fund or that memorializes the basis for that decision. |
| ● | A copy of each written investor request for information about how the Sub-Adviser voted proxies on behalf of the Fund, and a copy of any written response by the Sub-Adviser to any such (written or oral) investor request. |
All of the foregoing records shall be maintained and preserved in an easily accessible place for a period of not less than five years from the end of the fiscal year during which the last entry was made on such record, the first two years in the offices of the Fund.
| Item 13. | Portfolio Managers of Closed-End Management Investment Companies. |
(a)(1) Identification of Portfolio Manager(s) or Management Team Members and Description of Role of Portfolio Manager(s) or Management Team Members
The following table provides biographical information about the members of the Adviser who are primarily responsible for the day-to-day portfolio management of the Fund as of June 30, 2024:
|
Name of Portfolio Manager |
Title |
Length of Time of Service to the Fund |
Business Experience During the Past 5 Years |
| Garrett E. Zdolshek | Chief Investment Officer | Chief Investment Officer (2019-present) | Chief Investment Officer and Portfolio Manager, Accordant Investments since 2023; Chief Investment Officer and Portfolio Manager at IDR Investment Management, LLC from 2022 to present; Senior Vice President and Portfolio Manager, IDR Investment Management, LLC from 2011 to 2022. |
(a)(2) Other Accounts Managed by Portfolio Manager(s) and Potential Conflicts of Interest
The following table provides information about the other accounts managed on a day-to-day basis by the portfolio managers as of June 30, 2024.
|
Number of Other Accounts Managed and Total Value of Assets by Account Type for Which There is No Performance-Based Fee |
Number of Other Accounts Managed and Total Value of Assets for Which Advisory Fee is Performance-Based: |
|||||
| Name |
Registered Investment Companies |
Other Pooled Investment Vehicles |
Other Accounts |
Registered Investment Companies |
Other Pooled Investment Vehicles |
Other Accounts |
| Garrett E. Zdolshek | 0 | 2 accounts, $4,398,689,341 | 1 account, $1,122,713,797 | None | None | None |
Conflicts of Interest
The Fund's portfolio manager serves or may serve as an officer, director or principal of entities that operate in the same or related lines of business as the Fund or of investment funds managed by the Adviser or affiliates of the Fund. Accordingly, they may have obligations to investors in those entities that may require him to devote time to services for other entities, which could interfere with the time available to provide services to the Fund. In addition, although other investment funds managed by the Adviser may have different primary investment objectives than the Fund, they may from time to time invest in asset classes similar to those targeted by the Fund. The Adviser is not restricted from raising an investment fund with investment objectives similar to the Fund's. Furthermore, the Fund may not be given the opportunity to participate in certain investments made by such entities.
As a result of the arrangements described above, there may be times when the Fund's portfolio manager has interests that differ from those of shareholders, giving rise to a conflict of interest.
(a)(3) Compensation Structure of Portfolio Manager
None of the Fund's investment personnel, including its portfolio manager, receives any direct compensation from the Fund in connection with the management of the Fund's portfolio. Garrett E. Zdolshek, through his financial interests in the Sub-Adviser, is entitled to a portion of any profits earned by the Sub-Adviser, which includes any fees payable to the Adviser under the terms of the Investment Sub-Advisory Agreement, less expenses incurred by the Sub-Adviser in performing its services under the Investment Sub-Advisory Agreement.
The specific form of compensation of a portfolio manager may also include a variety of components and may vary from year to year based on a number of factors. In particular, a portfolio manager may also receive, all or some combination of a salary and a bonus.
Base compensation
Generally, when a portfolio manager receives base compensation, it is based on their individual seniority and their position within the firm.
Discretionary compensation
In addition to base compensation, a portfolio manager may receive discretionary compensation. Discretionary compensation may be based on individual seniority and contribution.
(a)(4) Disclosure of Securities Ownership
Portfolio Management Team's Ownership of Shares
| Portfolio Manager: |
Dollar Range of Equity Securities Beneficially Owned(1)(2) |
| Garrett E. Zdolshek | None |
| (1) | Beneficial ownership has been determined in accordance with Rule 16a-1(a)(2) of the Exchange Act. |
| (2) | Dollar ranges are as follows: None, $1-$10,000, $10,001-$50,000, $50,001-$100,000, $100,001-$500,000, $500,001-$1,000,000 or Over $1,000,000. |
(b) Not Applicable
| Item 14. | Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers. |
Not applicable.
| Item 15. | Submission of Matters to a Vote of Security Holders. |
There have been no material changes to the procedures by which the shareholders may recommend nominees to the registrant's board of directors, where those changes were implemented after the registrant last provided disclosure in response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR 229.407), or this Item.
| Item 16. | Controls and Procedures. |
(a) The registrant's principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the "1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph, based on their evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or 240.15d-15(b)).
(b) There were no changes in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a-3(d)) that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.
| Item 17. | Disclosure of Securities Lending Activities for Closed-End Management Investment Companies. |
(a)(1) Not applicable.
(a)(2) Not applicable.
(a)(3) Not applicable.
(a)(4) Not applicable.
(b) Not applicable.
| Item 18. | Recovery of Erroneously Awarded Compensation. |
| (a) | Not applicable. |
| (b) | Not applicable. |
| Item 19. | Exhibits. |
(a)(1) Code of ethics or any amendments thereto, that is subject to disclosure required by item 2 is attached hereto.
(a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto.
(a)(3) Not applicable.
(a)(4) Not applicable.
(b) The certifications of principal executive officers and principal financial officers pursuant to Section 906 of Sarbanes-Oxley Act of 2002 are filed herewith.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Registrant: | Accordant ODCE Index Fund |
| By: | /s/ Greg Stark | |
| Greg Stark, President | ||
| (Chief Executive Officer) | ||
| Date: | September 5, 2024 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.
| By: | /s/ Greg Stark | |
| Greg Stark, President | ||
| (Chief Executive Officer) | ||
| Date: | September 5, 2024 | |
| By: | /s/ Michelle Bowen | |
| Michelle Bowen, Treasurer | ||
| (Chief Financial Officer) | ||
| Date: | September 5, 2024 |