AlexL.

CEF Weekly Review: Real Estate Extends Gains

Man I think I need to refresh my page more often... totally missed your comment before posting.


On Sep 21 01:58 PM Joe Eqcome wrote:

> Follow Up on BCT
>
> In a conversation with Blackrock with regards to BCT, its original
> objective was to liquidate the CEF at the original issue share price
> of $15 per share at the end of 2009. However, this was not a guarantee.
>
>
> The trust will be liquidated now on or about October 30, 2009 at
> NAV--which is now approximately $12.42 per share.
>
> Assuming you buy 200 shares of BCT at the prevailing price of $12.25
> per share and pay a commission of $10 per share your average cost
> would be $12.30 per share. Assuming you get approximately $12.42
> per share liquidation distribution, the liquidation payment would
> represent a $.12 per share increment over your embedded cost. <br/>
>
> This would be a return on your money of less than 1% for the holding
> period of approximately a month and a week. However, the distribution
> would be a return of capital, i.e. you wouldn’t have to pay taxes
> on the increment distribution.
>
> There are too many moving parts and a low projected return for this
> to be an interesting arbitrage. I’m sure there will be some liquidation
> costs that might reduce the liquidation distribution.
>
> The stated objective of returning to investors their original IPO
> invested capital of $15 per share and then placing a caveat that
> they just might not seems a little misleading. A more accurate and
> honest objective would have been, "protection of the original shareholders'
> invested capital".
>
> And they didn't even do that--let alone investors getting back their
> original $15 per share.
>
> Yes, Virginia, it was too good to be true.
>
> Joe Eqcome

CEF Weekly Review: Real Estate Extends Gains

After having read the fact sheet and several press releases from BlackRock regarding BCT, I believe that the $15 to be returned to shareholders at the maturity of the trust (they announced on June 3rd that final distribution will take place on Oct 30th) was solely based on the initial offering price of the fund. The main objective of the fund was capital preservation (i.e. the $15 NAV), which it looks like they were unable to achieve as 9/18 NAV was $12.42. Doesn't look like there is much to get excited about on this one.

Once again, thanks for the comperehensive CEF coverage...