A Novel Exit Strategy Emerges for Besieged Interval Funds

Harrison Street Real Estate’s VCMIX investors need to stumble no more over one another in attempts to withdraw money. The fund, which has capped redemptions for 15 straight quarters, will have the option to put its shares up for auction between scheduled quarterly repurchase periods.

Although auctions are not novel in themselves, offering an intraperiod one for an interval fund is, and this first of its kind could ease the stampede for the exits. Indeed, by creating an off-ramp, Harrison Street hopes to cut down on, if not cease entirely, the number of prorations it has imposed on investors’ redemption requests.

With these auctions, Harrison Street aims to create a permanent rather than temporary solution to the problem of liquidity for the end investor. The auction will be conducted in a collaboration between financial-technology trading platform Lodas Markets and Nasdaq Fund Secondaries.

Once the auction is concluded, there needs to be another two consecutive quarters of proration to trigger the next one. When used, auctions will supplement the liquidity available through regular repurchasing windows and, in that sense, remain separate from them.

In exchange for that liquidity, investors must pay a price. Sellers will be able to choose from preestablished targets—a 5% discount to the fund’s net asset value, for example—to potentially redeem shares outside of the normal quarterly repurchasing window. Buyers, meanwhile, place bids based on the same preset target discount rates.

Shares trade hands at the conclusion of the three-week auction window, and only at the price with the highest number of matches, limiting the possibility for buyers and sellers to transact at different prices. Such a setup also ensures that there would be no way to game the system by submitting bids or offers earlier or later in the auction window to get superior execution.

Subsequent auctions will not take place without prior notice. Harrison Street will file fund prospectus supplements detailing its plans to schedule any such auctions.

Winning by Not Losing

Offering investors an additional avenue for liquidity could reduce the pressure persistent redemption requests place on an interval fund. Even well-managed funds investing in private markets can see their liquidity buffers erode during prolonged periods of heavy outflows and, unlike other semiliquid vehicles, interval funds can’t generally suspend repurchases. As liquidity becomes more constrained, managers may be forced into increasingly unattractive options that can harm redeeming as well as remaining shareholders.

Bluerock Private Real Estate illustrates the potential consequences. In December 2025, liquidity pressures prompted it to convert from an interval fund to a listed closed-end fund. This allowed investors to exit the strategy, but at a steep price: In the first week of trading, the shares traded at a more than 40% discount to their net asset value, wiping out years of gains in a single day. That discount has persisted. At the end of July 2026, the shares were trading at a 46% discount to NAV. Although Bluerock fundholders voted to approve the change, it’s hard to see this as a win for investors.

It remains to be seen what discount Harrison Street Real Estate fundholders would have to accept to exit the strategy or how many of them would be willing to sell at that price. But at the very least, unlike Bluerock’s conversion, an auction leaves that decision in their hands. Those who want liquidity can choose to accept the market-clearing price, while those who believe the discount is too steep can remain invested and look to exit at the next quarterly redemption window. That seems like a better outcome than forcing every shareholder to bear whatever discount the public market assigns.