Real estate private index fund systems and methods

Abstract

Systems and methods for creating and administering and a real estate private index fund as a single investable instrument which tracks a non-investable real estate index of open-ended funds with minimal tracking error.

1 .- 24 . (canceled) 
     
     
         25 . A system for creating an open-ended private real estate private index fund (REPIF) that replicates an open end, unlisted, private, transparently-reported real estate index (OUPTREI) within a desired tracking error using investment in fewer than all of the component funds of the OUPTREI, the system comprising:
 a computer database containing financial information on a plurality of investible unlisted real estate investment funds;   a computer communicatively connected to the computer database and programmed to:   calculate a net asset value of each of the plurality of real estate investment funds, the calculation of net asset value of each of the plurality of real estate investment funds including valuation variables for each of the real estate investment funds to determine real estate asset pricing data based on a quarterly appraisals of real estate assets held by the real estate investment funds;   combine the real estate asset pricing data with pricing data related to real estate investment fund share interests held by the plurality of real estate investment funds, and   weight the net asset values of each of the plurality of real estate investment funds to determine investment allocation for the real estate private index fund;   a valuation module operated by the computer operative to create uniform real estate asset pricing data between periodic appraisals and configured to calculate net asset values of the plurality of real estate investment funds based on the real estate valuation data and other real estate asset pricing data;   a data storage module accessible by the computer for tracking investment activity and index composition of unlisted real estate investment funds related to the real estate private index; and   a module in the computer program operative to determine investment allocations for the real estate private index fund according to weightings of the unlisted real estate funds;   the computer programmed to combine the real estate asset pricing data with pricing data related to fund share interests held by the plurality of real estate investment funds to provide an indication of the relative weighting of each unlisted real estate investment fund within the real estate private index fund.   
     
     
         26 . A method of investment for return based upon an open end unlisted real estate index fund (REPIF) that replicates an open end, unlisted, private, transparently-reported real estate index (OUPTREI) within a desired tracking error using investment in fewer than all of the component funds of the OUPTREI, having performance within a range of predetermined tracking error, the method comprising the steps of:
 identifying a plurality of unlisted component real estate investment funds which allow for investment income to be reinvested for rebalancing;   determining and selecting, by use of the computer or computer network, a subset of the identified unlisted component real estate investment funds comprising a minimum number of the identified component real estate investment funds necessary to represent a statistically significant amount of funds necessary to track the OUPTREI within the range of predetermined tracking error;   rebalancing, using a computer or computer network, the selected subset of unlisted component real estate investment funds quarterly in order to track the OUPTREI within the range of predetermined tracking error;   calculating, by use of the computer or computer network, a net asset value for each of the selected subset of unlisted component real estate investment funds based on the real estate valuation data and pricing data related to real estate assets of the selected subset of unlisted component real estate investment funds;   calculating, by use of the computer or computer network, a net asset value of the REPIF based on the real estate appraisal data and pricing data related to real estate assets of the selected subset of unlisted component real estate investment funds;   determining, by use of the computer or computer network, relative weightings of the selected subset of unlisted component real estate investment funds within the REPIF;   calculating, by use of the computer or computer network, amounts of capital required for the selected subset of unlisted component real estate funds required to maintain the weightings and an amount of capital necessary for redemptions from the selected subset of unlisted component real estate funds;   rebalancing, by use of the computer or computer network, the selected subset of unlisted component real estate investment funds quarterly in order to track the unlisted real estate index within less than the range of predetermined tracking error.   
     
     
         27 . A method for contributing and redeeming shares of open end unlisted real estate index fund (REPIF) that replicates an open end, unlisted, private, transparently-reported real estate index (OUPTREI) within a desired tracking error using investment in fewer than all of the component funds of the OUPTREI, the method comprising the steps of:
 selecting a plurality of component unlisted real estate funds for the REPIF;   determining by use of a computer a per share net asset value for each of the selected component unlisted real estate funds by dividing net assets of each selected component unlisted real estate fund by a corresponding number of common shares of each selected component unlisted real estate funds;   weighting by use of the computer the selected component unlisted real estate funds; to accurately track the OUPTREI, the weighted selected component unlisted real estate funds; forming the REPIF;   determining by use of the computer a liquidity condition of the REPIF;   calculating by use of the computer real estate pricing data of real estate assets held by the selected component unlisted real estate funds based on a periodic appraisal of the real estate assets held by the selected component unlisted real estate funds, and combining by use of the computer the real estate pricing data with pricing data related to liquid securities held by the selected component unlisted real estate funds for determination of a component fund net asset value;   creating and applying by use of the computer a redemption cap on redemptions of interests in the REPIF; and   executing by use of the computer fund redemptions and contributions by reference to the liquidity condition of the REPIF, including the steps of:   providing by use of the computer an REPIF entry queue and attempting to match redemptions with contributions in the REPIF entry queue;   providing and using by use of the computer a segregation account for transfer of redemption interests in the REPIF;   comparing by use of the computer redemptions to investment requirements in each of the selected component unlisted real estate funds to maintain the REPIF, and processing redemptions without liquidating held by the REPIF in each of the selected component unlisted real estate funds; and   providing by use of the computer an REPIF exit queue for fund redemptions.   
     
     
         28 . The method of  claim 27 , wherein the step of weighting the selected component funds includes the steps of:
 verifying, by use of the computer, accuracy of real estate fund valuation data for the plurality of selected component unlisted real estate funds and determining by use of the computer that the OUPTREI is able to be replicated;   determining by use of the computer the weightings necessary to create the REPIF within a statistical threshold of the OUPTREI;   adjusting by use of a computer the real estate fund weightings in the REPIF based upon real estate fund asset valuation data in order to maintain the statistical threshold;   calculating by use of a computer amounts of capital required for each of the plurality of selected component real estate funds in order to maintain the weightings for replication of the OUPTREI within the statistical threshold; and   calculating, by use of the computer or computer network, amounts of capital required for the selected component unlisted real estate funds required to maintain the unlisted real estate index weightings and an amount of capital necessary for redemptions from the unlisted real estate funds.   
     
     
         29 . The method of  claim 28 , wherein the statistical threshold is within a range of 11 to 22 basis points. 
     
     
         30 . The method of  claim 28 , wherein the statistical threshold is less than 12 basis points. 
     
     
         31 . The method of  claim 25 , wherein the range of predetermined tracking error is 11 to 22 basis points. 
     
     
         32 . The method of  claim 25 , wherein the range of predetermined tracking error is less than 12 basis points.