Brookfield Real Assets Income Fund: Investing in Real Estate and Infrastructure

Brookfield Real Assets Income Fund (NYSE:RA) is a closed-end fund that provides investors with exposure to real assets, including real estate and infrastructure. RA takes a blended approach to investing, offering a unique strategy.

Brookfield Real Assets Income Fund (NYSE:RA) is a closed-end fund that offers investors exposure to real assets, including real estate and infrastructure. This unique fund takes a blended approach, combining equities and debt securities to generate both capital appreciation and income. With an inception date of 2016, RA has nearly a decade of operating history, providing a solid foundation for analysis.

Over the past year, RA's share price has seen a modest increase of 1% [1]. However, when considering all distributions paid out to shareholders, the total return has been nearly 12.6%. One of the key attractions of RA is its starting dividend yield of approximately 10.8%. The fund's allocation to real estate assets has made it sensitive to higher interest rates, contributing to a stagnant share price in recent years [1].

RA's strategy focuses on 'real assets' such as real estate, infrastructure, and natural resources. The fund's total net assets amount to $805.5M, spread across 467 holdings. Corporate credit investments make up the largest portion of the portfolio at 57.5%, with a focus on income generation rather than growth [1]. Notable holdings include PG&E Corp. (PCG), Enbridge (ENB), and Plain All American Pipeline (PAA), but investors should not expect significant capital appreciation [1].

The fund has experienced a severe decline in share price since its inception, particularly after 2022 when interest rates started to rise [1]. However, total return, including distributions, has been 62.6% since inception [1]. RA currently trades at a discount to NAV of approximately 9%, reflecting its market weakness [1].

RA's net investment income has remained consistent since 2020, but the fund has been reliant on net realized gains to support NAV growth [1]. The fund's use of leverage, currently at 24.23% of assets, amplifies earnings but also increases risk, particularly in a high-interest rate environment [1]. The fund's exposure to below-investment-grade borrowers further heightens risk, with S&P Global estimating potential defaults of 3.5% by March 2026 [1].

RA's dividend yield is around 10.7%, but the fund has struggled to cover distributions consistently, reducing payouts in late 2023 [1]. The fund's future performance will depend on a lower interest rate environment to improve net investment income and support distributions [1].

References:
[1] https://seekingalpha.com/article/4814363-ra-collect-income-from-real-assets