N-Q 1 a19-9386_1nq.htm N-Q

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

FORM N-Q

 

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED
MANAGEMENT INVESTMENT COMPANY

 

Investment Company Act file number

811-22260

 

RMR REAL ESTATE INCOME FUND

(Exact name of registrant as specified in charter)

 

Two Newton Place, 255 Washington Street, Suite 300

Newton, Massachusetts

 

02458

(Address of principal executive offices)

 

(Zip code)

 

Fernando Diaz, President

RMR Real Estate Income Fund

Two Newton Place, 255 Washington Street, Suite 300

Newton, Massachusetts 02458

(Name and address of agent for service)

 

Copy to:

 

Brian Hall

State Street Bank and Trust Company

1 Iron Street, 10th Floor

Boston, Massachusetts 02210

 

Karen Jacoppo-Wood, Esq.

State Street Bank and Trust Company

One Lincoln Street, Boston, Massachusetts 02111

 

Registrant’s telephone number, including area code:

(617) 332-9530

 

 

Date of fiscal year end:

December 31, 2019

 

 

Date of reporting period:

March 31, 2019

 

 


 

RMR Real Estate Income Fund

Portfolio of Investments —  March 31, 2019 (unaudited)

 

Company

 

Shares

 

Value

 

COMMON STOCKS — 112.3%

 

 

 

 

 

REAL ESTATE INVESTMENT TRUSTS — 112.3%

 

 

 

 

 

 

 

 

 

 

 

DATA CENTERS — 4.0%

 

 

 

 

 

CyrusOne, Inc. (a) 

 

68,000

 

$

3,565,920

 

Digital Realty Trust, Inc. (a)(b) 

 

42,000

 

4,998,000

 

Equinix, Inc.

 

1,000

 

453,160

 

QTS Realty Trust, Inc.

 

15,000

 

674,850

 

 

 

 

 

9,691,930

 

DIVERSIFIED — 8.1%

 

 

 

 

 

Armada Hoffler Properties, Inc. (a) 

 

175,353

 

2,733,753

 

Colony Capital, Inc. (a) 

 

104,980

 

558,494

 

Gladstone Commercial Corp. (a) 

 

88,611

 

1,840,450

 

Global Net Lease, Inc.

 

112,082

 

2,118,350

 

Lexington Realty Trust (a) 

 

513,638

 

4,653,560

 

One Liberty Properties, Inc.

 

29,295

 

849,555

 

VEREIT, Inc. (a) 

 

283,716

 

2,374,703

 

Vornado Realty Trust (a)(b) 

 

39,835

 

2,686,472

 

Whitestone REIT (a) 

 

124,535

 

1,496,911

 

 

 

 

 

19,312,248

 

FREE STANDING — 6.5%

 

 

 

 

 

Agree Realty Corp. (a) 

 

19,309

 

1,338,886

 

Essential Properties Realty Trust, Inc.

 

5,000

 

97,600

 

National Retail Properties, Inc. (a)(b) 

 

136,600

 

7,566,274

 

Realty Income Corp. (a) 

 

59,900

 

4,406,244

 

Spirit Realty Capital, Inc.

 

19,240

 

764,405

 

STORE Capital Corp.

 

40,000

 

1,340,000

 

 

 

 

 

15,513,409

 

HEALTH CARE — 18.5%

 

 

 

 

 

Global Medical REIT, Inc. (a) 

 

495,467

 

4,865,486

 

HCP, Inc. (a)(b) 

 

113,965

 

3,567,104

 

Healthcare Realty Trust, Inc. (a)(b) 

 

38,697

 

1,242,561

 

Healthcare Trust of America, Inc.

 

48,000

 

1,372,320

 

LTC Properties, Inc. (a) 

 

75,021

 

3,435,962

 

Medical Properties Trust, Inc. (a) 

 

413,609

 

7,655,903

 

National Health Investors, Inc. (a) 

 

56,893

 

4,468,945

 

New Senior Investment Group, Inc.

 

104,121

 

567,459

 

Omega Healthcare Investors, Inc. (a)(b) 

 

66,298

 

2,529,269

 

Physicians Realty Trust (a) 

 

179,791

 

3,381,869

 

Sabra Health Care REIT, Inc. (a) 

 

113,154

 

2,203,108

 

Ventas, Inc. (a) 

 

98,200

 

6,266,142

 

Welltower, Inc. (a)(b) 

 

34,200

 

2,653,920

 

 

 

 

 

44,210,048

 

INDUSTRIAL — 11.1%

 

 

 

 

 

Americold Realty Trust

 

10,000

 

305,100

 

Duke Realty Corp. (a) 

 

73,059

 

2,234,144

 

Liberty Property Trust (a) 

 

84,637

 

4,098,124

 

Monmouth Real Estate Investment Corp. (a) 

 

178,358

 

2,350,758

 

Plymouth Industrial REIT, Inc.

 

60,000

 

1,009,200

 

Prologis, Inc. (a)(b) 

 

114,807

 

8,260,364

 

Rexford Industrial Realty, Inc. (a) 

 

39,176

 

1,402,893

 

STAG Industrial, Inc. (a) 

 

231,693

 

6,869,697

 

 

 

 

 

26,530,280

 

LODGING/RESORTS — 7.1%

 

 

 

 

 

Apple Hospitality REIT, Inc. (a) 

 

71,400

 

1,163,820

 

Ashford Hospitality Trust, Inc. (a) 

 

105,000

 

498,750

 

Braemar Hotels & Resorts, Inc. (a) 

 

111,762

 

1,364,614

 

Chatham Lodging Trust (a) 

 

97,000

 

1,866,280

 

Chesapeake Lodging Trust (a) 

 

70,900

 

1,971,729

 

Condor Hospitality Trust, Inc.

 

59,420

 

534,780

 

DiamondRock Hospitality Co. (a) 

 

60,603

 

656,330

 

Hersha Hospitality Trust (a) 

 

132,475

 

2,270,622

 

Host Hotels & Resorts, Inc. (a) 

 

67,000

 

 

1,266,300

 

Park Hotels & Resorts, Inc.

 

14,328

 

445,314

 

Pebblebrook Hotel Trust (a) 

 

90,480

 

2,810,309

 

RLJ Lodging Trust (a) 

 

68,688

 

1,206,848

 

Summit Hotel Properties, Inc. (a) 

 

63,203

 

721,146

 

Xenia Hotels & Resorts, Inc.

 

8,100

 

177,471

 

 

 

 

 

16,954,313

 

MANUFACTURED HOMES — 4.8%

 

 

 

 

 

Sun Communities, Inc. (a) 

 

72,856

 

8,634,893

 

UMH Properties, Inc. (a) 

 

195,796

 

2,756,808

 

 

 

 

 

11,391,701

 

MORTGAGE — 2.8%

 

 

 

 

 

Annaly Capital Management, Inc. (a) 

 

319,998

 

3,196,780

 

Jernigan Capital, Inc. (a) 

 

32,758

 

689,228

 

RAIT Financial Trust

 

3,568

 

6,244

 

Starwood Property Trust, Inc.

 

129,100

 

2,885,385

 

 

 

 

 

6,777,637

 

OFFICE — 11.8%

 

 

 

 

 

Alexandria Real Estate Equities, Inc. (a) 

 

39,300

 

5,602,608

 

Boston Properties, Inc. (a) 

 

27,100

 

3,628,148

 

Brandywine Realty Trust (a) 

 

165,300

 

2,621,658

 

City Office REIT, Inc. (a) 

 

117,783

 

1,332,126

 

Corporate Office Properties Trust (a) 

 

83,500

 

2,279,550

 

Douglas Emmett, Inc. (a) 

 

51,322

 

2,074,435

 

Franklin Street Properties Corp. (a) 

 

76,269

 

548,374

 

Highwoods Properties, Inc. (a) 

 

49,723

 

2,326,042

 

Hudson Pacific Properties, Inc.

 

26,000

 

894,920

 

Kilroy Realty Corp. (a) 

 

35,600

 

2,704,176

 

Mack-Cali Realty Corp. (a) 

 

78,030

 

1,732,266

 

SL Green Realty Corp. (a) 

 

27,900

 

2,508,768

 

 

 

 

 

28,253,071

 

REGIONAL MALLS — 6.3%

 

 

 

 

 

CBL & Associates Properties, Inc. (a) 

 

528,694

 

819,476

 

Pennsylvania Real Estate Investment Trust (a) 

 

203,491

 

1,279,958

 

Simon Property Group, Inc. (a)(b) 

 

47,527

 

8,659,895

 

Taubman Centers, Inc.

 

10,000

 

528,800

 

The Macerich Co. (a) 

 

46,970

 

2,036,150

 

Washington Prime Group, Inc. (a)(b) 

 

331,148

 

1,870,986

 

 

 

 

 

15,195,265

 

RESIDENTIAL — 16.5%

 

 

 

 

 

American Campus Communities, Inc. (a)(b) 

 

26,900

 

1,279,902

 

American Homes 4 Rent (a) 

 

16,100

 

365,792

 

Apartment Investment & Management Co. (a)(b) 

 

25,451

 

1,279,931

 

AvalonBay Communities, Inc. (a) 

 

34,375

 

6,900,094

 

Bluerock Residential Growth REIT, Inc. (a) 

 

405,557

 

4,371,904

 

BRT Apartments Corp.

 

3,354

 

46,553

 

Camden Property Trust (a) 

 

11,300

 

1,146,950

 

Equity Residential (a) 

 

69,000

 

5,197,080

 

Essex Property Trust, Inc. (a) 

 

16,500

 

4,772,460

 

Independence Realty Trust, Inc. (a) 

 

489,429

 

5,280,939

 

Investors Real Estate Trust

 

6,281

 

376,295

 

Invitation Homes, Inc. (a) 

 

50,000

 

1,216,500

 

Mid-America Apartment Communities, Inc. (a) 

 

29,671

 

3,243,930

 

NexPoint Residential Trust, Inc.

 

21,102

 

809,051

 

 

See Notes to Portfolio of Investments.

 


 

Company

 

Shares

 

Value

 

COMMON STOCKS — CONTINUED

 

 

 

 

 

REAL ESTATE INVESTMENT TRUSTS — CONTINUED

 

 

 

 

 

Preferred Apartment Communities, Inc.

 

56,479

 

$

837,019

 

UDR, Inc. (a) 

 

52,000

 

2,363,920

 

 

 

 

 

39,488,320

 

SHOPPING CENTERS — 5.6%

 

 

 

 

 

Acadia Realty Trust (a) 

 

30,000

 

818,100

 

Brixmor Property Group, Inc. (a) 

 

37,775

 

693,927

 

Cedar Realty Trust, Inc. (a) 

 

103,627

 

352,332

 

Kimco Realty Corp. (a) 

 

197,226

 

3,648,681

 

Kite Realty Group Trust (a) 

 

125,125

 

2,000,749

 

Retail Opportunity Investments Corp.

 

35,000

 

606,900

 

Retail Properties of America, Inc.

 

13,446

 

163,907

 

RPT Realty

 

82,220

 

987,462

 

SITE Centers Corp.

 

68,500

 

932,970

 

Urstadt Biddle Properties, Inc.

 

31,000

 

639,840

 

Weingarten Realty Investors (a) 

 

91,225

 

2,679,278

 

 

 

 

 

13,524,146

 

SPECIALTY — 6.6%

 

 

 

 

 

American Tower Corp.

 

3,200

 

630,592

 

Crown Castle International Corp. (a) 

 

10,000

 

1,280,000

 

EPR Properties (a) 

 

114,660

 

8,817,354

 

Farmland Partners, Inc. (a) 

 

109,344

 

699,802

 

Gladstone Land Corp.

 

35,000

 

442,750

 

Innovative Industrial Properties, Inc.

 

27,500

 

2,246,475

 

Iron Mountain, Inc.

 

30,000

 

1,063,800

 

VICI Properties, Inc.

 

29,600

 

647,648

 

 

 

 

 

15,828,421

 

STORAGE — 2.6%

 

 

 

 

 

CubeSmart (a) 

 

25,000

 

801,000

 

Extra Space Storage, Inc. (a) 

 

7,910

 

806,108

 

Life Storage, Inc. (a) 

 

12,000

 

1,167,240

 

Public Storage (a)(b) 

 

15,700

 

3,419,146

 

 

 

 

 

6,193,494

 

Total Real Estate Investment Trusts (Cost $212,866,208)

 

 

 

268,864,283

 

Total Common Stocks (Cost $212,866,208)

 

 

 

268,864,283

 

 

 

 

 

 

 

PREFERRED STOCKS — 27.3%

 

 

 

 

 

REAL ESTATE INVESTMENT TRUSTS — 27.3%

 

 

 

 

 

 

 

 

 

 

 

DATA CENTERS — 0.7%

 

 

 

 

 

Digital Realty Trust, Inc., Series C, 6.63%

 

35,000

 

919,800

 

Digital Realty Trust, Inc., Series G, 5.88%

 

30,000

 

748,800

 

 

 

 

 

1,668,600

 

DIVERSIFIED — 2.2%

 

 

 

 

 

Colony Capital, Inc., Series B, 8.25%

 

9,609

 

240,417

 

Colony Capital, Inc., Series E, 8.75%

 

36,999

 

931,265

 

Gladstone Commercial Corp., Series D, 7.00% (a) 

 

100,000

 

2,577,000

 

Global Net Lease, Inc., Series A, 7.25%

 

55,000

 

1,411,850

 

 

 

 

 

5,160,532

 

HEALTH CARE — 0.5%

 

 

 

 

 

Global Medical REIT, Inc., Series A, 7.50%

 

44,000

 

1,123,320

 

 

 

 

 

 

 

INDUSTRIAL — 1.8%

 

 

 

 

 

Plymouth Industrial REIT, Inc., Series A, 7.50%

 

70,000

 

 

1,764,000

 

Rexford Industrial Realty, Inc., Series B, 5.88% (a) 

 

40,000

 

978,800

 

STAG Industrial, Inc., Series C, 6.88% (a) 

 

55,000

 

1,453,100

 

 

 

 

 

4,195,900

 

LODGING/RESORTS — 9.0%

 

 

 

 

 

Ashford Hospitality Trust, Inc., Series D, 8.45% (a) 

 

39,304

 

999,894

 

Ashford Hospitality Trust, Inc., Series F, 7.38% (a) 

 

74,565

 

1,726,925

 

Ashford Hospitality Trust, Inc., Series G, 7.38% (a) 

 

250,000

 

5,727,500

 

Ashford Hospitality Trust, Inc., Series H, 7.50% (a) 

 

60,000

 

1,389,000

 

Ashford Hospitality Trust, Inc., Series I, 7.50% (a) 

 

60,000

 

1,396,200

 

Braemar Hotels & Resorts, Inc., Series B, 5.50% (a) 

 

25,000

 

499,000

 

Hersha Hospitality Trust, Series C, 6.88% (a) 

 

46,000

 

1,110,900

 

Hersha Hospitality Trust, Series D, 6.50% (a) 

 

70,000

 

1,602,300

 

Hersha Hospitality Trust, Series E, 6.50% (a) 

 

35,958

 

858,677

 

Pebblebrook Hotel Trust, Series C, 6.50% (a) 

 

78,684

 

2,025,326

 

RLJ Lodging Trust, Series A, 1.95% (a)(c) 

 

96,117

 

2,418,304

 

Sotherly Hotels, Inc., Series C, 7.88% (a) 

 

40,000

 

998,800

 

Summit Hotel Properties, Inc., Series E, 6.25% (a) 

 

33,200

 

771,568

 

 

 

 

 

21,524,394

 

MANUFACTURED HOMES — 1.4%

 

 

 

 

 

UMH Properties, Inc., Series B, 8.00% (a) 

 

66,650

 

1,740,898

 

UMH Properties, Inc., Series C, 6.75% (a)(b) 

 

20,000

 

511,800

 

UMH Properties, Inc., Series D, 6.38% (a) 

 

49,105

 

1,158,878

 

 

 

 

 

3,411,576

 

MORTGAGE — 2.1%

 

 

 

 

 

Annaly Capital Management, Inc., Series G, 6.50%

 

40,000

 

957,600

 

ARMOUR Residential REIT, Inc., Series B, 7.88% (a) 

 

30,000

 

750,000

 

iStar, Inc., Series D, 8.00%

 

11,810

 

301,745

 

iStar, Inc., Series G, 7.65%

 

21,241

 

529,963

 

iStar, Inc., Series I, 7.50%

 

15,100

 

382,332

 

MFA Financial, Inc., Series B, 7.50%

 

17,171

 

428,760

 

New York Mortgage Trust, Inc., Series B, 7.75%

 

33,450

 

815,845

 

New York Mortgage Trust, Inc., Series D, 8.00%

 

20,000

 

473,400

 

RAIT Financial Trust, Series A, 7.75%

 

136,497

 

327,593

 

 

See Notes to Portfolio of Investments.

 


 

Company

 

Shares

 

Value

 

PREFERRED STOCKS — CONTINUED

 

 

 

 

 

REAL ESTATE INVESTMENT TRUSTS — CONTINUED

 

 

 

 

 

RAIT Financial Trust, Series B, 8.38%

 

35,122

 

$

79,025

 

 

 

 

 

5,046,263

 

OFFICE — 0.4%

 

 

 

 

 

SL Green Realty Corp., Series I, 6.50% (a) 

 

40,000

 

1,032,800

 

 

 

 

 

 

 

REGIONAL MALLS — 2.1%

 

 

 

 

 

CBL & Associates Properties, Inc., Series D, 7.38% (a) 

 

132,461

 

1,286,196

 

CBL & Associates Properties, Inc., Series E, 6.63%

 

25,000

 

226,250

 

Pennsylvania Real Estate Investment Trust, Series B, 7.38% (a)(b) 

 

40,000

 

860,000

 

Pennsylvania Real Estate Investment Trust, Series D, 6.88%

 

35,000

 

745,850

 

Washington Prime Group, Inc., Series H, 7.50% (a) 

 

65,000

 

1,434,550

 

Washington Prime Group, Inc., Series I, 6.88% (a) 

 

30,000

 

588,000

 

 

 

 

 

5,140,846

 

RESIDENTIAL — 2.6%

 

 

 

 

 

Bluerock Residential Growth REIT, Inc., Series A, 8.25% (a) 

 

180,000

 

4,784,400

 

Bluerock Residential Growth REIT, Inc., Series C, 7.63% (a) 

 

37,645

 

941,125

 

Bluerock Residential Growth REIT, Inc., Series D, 7.13%

 

17,300

 

418,660

 

 

 

 

 

6,144,185

 

SHOPPING CENTERS — 4.0%

 

 

 

 

 

Cedar Realty Trust, Inc., Series B, 7.25%

 

24,258

 

594,564

 

Cedar Realty Trust, Inc., Series C, 6.50% (a) 

 

100,307

 

2,131,524

 

Saul Centers, Inc., Series D, 6.13% (a) 

 

25,000

 

605,375

 

Seritage Growth Properties, Series A, 7.00% (a) 

 

80,000

 

1,936,000

 

SITE Centers Corp., Series J, 6.50% (a) 

 

45,586

 

1,177,942

 

SITE Centers Corp., Series K, 6.25% (a) 

 

86,000

 

2,213,640

 

Wheeler Real Estate Investment Trust, Inc., Series D, 8.75% (a)(b)(c) 

 

71,354

 

1,000,383

 

 

 

 

 

9,659,428

 

SPECIALTY — 0.5%

 

 

 

 

 

CorEnergy Infrastructure Trust, Inc., Series A, 7.38%

 

24,800

 

619,008

 

EPR Properties, Series E, 9.00% (a)(c) 

 

16,400

 

621,396

 

 

 

 

 

1,240,404

 

Total Real Estate Investment Trusts (Cost $69,960,722)

 

 

 

65,348,248

 

Total Preferred Stocks (Cost $69,960,722)

 

 

 

65,348,248

 

 

 

 

 

 

 

INVESTMENT COMPANIES — 2.5%

 

 

 

 

 

Aberdeen Global Premier Properties Fund (a) 

 

196,826

 

1,182,924

 

BlackRock Credit Allocation Income Trust

 

9,274

 

115,090

 

Blackstone/GSO Loan Financing Ltd

 

5,496,600

 

2,928,761

 

Cohen & Steers Quality Income Realty Fund, Inc. (a) 

 

90,197

 

 

1,154,522

 

Eaton Vance Enhanced Equity Income Fund II

 

35,188

 

579,547

 

Total Investment Companies (Cost $10,142,986)

 

 

 

5,960,844

 

 

 

 

 

 

 

SHORT-TERM INVESTMENTS — 0.4%

 

 

 

 

 

 

 

 

 

 

 

MONEY MARKET FUNDS — 0.4%

 

 

 

 

 

State Street Institutional U.S. Government Money Market Fund, 2.39% (d) (Cost $863,196)

 

863,196

 

863,196

 

Total Investments — 142.5% (Cost $293,833,112)

 

 

 

341,036,571

 

Other assets less liabilities — 1.2%

 

 

 

2,949,429

 

Revolving credit facility — (36.8)%

 

 

 

(88,000,000

)

Preferred Shares, at liquidation preference — (6.9)%

 

 

 

(16,675,000

)

Net Assets applicable to common shareholders — 100.0%

 

 

 

$

239,311,000

 

 


Notes:

 

(a)         As of March 31, 2019, the Fund has pledged portfolio securities with a market value of $212,976,251 as collateral in connection with its revolving credit facility with BNP Paribas Prime Brokerage International Ltd. (“PBL”). Those pledged securities comprised all or a portion of the shares noted by this footnote (a).

(b)         As of March 31, 2019, pledged portfolio securities of the Fund with a market value of $37,817,931 (see Note (a)) have been rehypothecated by PBL as permitted by the Fund’s revolving credit facility. Those rehypothecated securities comprised all or a portion of the securities noted by this footnote (b).

(c)          Convertible into common stock.

(d)         Rate reflects 7 day yield as of March 31, 2019.

 

See Notes to Portfolio of Investments.

 


 

RMR Real Estate Income Fund

Notes to Portfolio of Investments

March 31, 2019 (unaudited)

 

1. Portfolio Valuation

 

Investment securities of RMR Real Estate Income Fund (the “Fund”) are valued as of the close of trading at the latest sales price whenever that price is readily available on that day; securities for which no sales were reported on that day, unless otherwise noted, are valued at the average of the closing bid and ask prices on that day. Securities traded primarily on The Nasdaq Stock Market, or Nasdaq, are normally valued by the Fund at the Nasdaq Official Closing Price, or NOCP, provided by Nasdaq each business day. The NOCP is the most recently reported price as of 4:00:02 p.m., eastern time, unless that price is outside the range of the ‘‘inside’’ bid and asked prices (i.e., the bid and asked prices that dealers quote to each other when trading for their own accounts); in that case, Nasdaq will adjust the price to equal the inside bid or asked price, whichever is closer to the most recently reported price as of 4:00:02 p.m., eastern time, that day. Some fixed income securities may be valued using values provided by a pricing service.

 

To the extent the Fund holds foreign securities in its portfolio, those are valued at the latest sales price reflected on the consolidated tape of the exchange that reflects the principal market for such securities whenever that price is readily available on that day; securities for which no sales were reported on that day, unless otherwise noted, are valued at the average of the closing bid and ask prices on that day. Some foreign markets close before the close of customary trading sessions on the New York Stock Exchange, or NYSE (usually 4:00 p.m. eastern time). Often, events occur after the principal foreign exchange on which foreign securities trade has closed, but before the NYSE closes, that the Fund determines could affect the value of the foreign securities the Fund owns or cause their earlier trading prices to be unreliable as a basis for determining value. If these events are expected to affect the Fund’s net asset value, or NAV, the prices of such securities are adjusted to reflect their estimated fair value as of the close of the NYSE, as determined in good faith under procedures established by the Fund’s board of trustees.

 

Any of the Fund’s securities which are not readily marketable, which are not traded or which have other characteristics of illiquidity are valued by the Fund at fair value as determined in good faith under procedures established by the Fund’s board of trustees.

 

Numerous factors may be considered when determining fair value of a security, including cost at date of purchase, type of security, the nature and duration of restrictions on disposition of the security and whether the issuer of the security being fair valued has other securities of the same type outstanding. See Note 2 for a further description of fair value measurements.

 

Investments in open-end mutual funds are valued at the closed NAV of the fund on the valuation date.

 

2. Fair Value Measurements

 

The Fund reports the value of its securities at their fair value. Fair value is defined as the price that the Fund would receive upon selling an investment in a timely transaction to an independent buyer in the principal or most advantageous market for the investment. When valuing portfolio securities, the Fund uses observable market data when possible and otherwise uses other significant observable or unobservable inputs for fair value measurements. Inputs refer broadly to the assumptions the Fund believes that market participants would use in valuing the asset or liability, including assumptions about risk; for example, the risk inherent in using a particular valuation technique to measure fair value and the risk inherent in the inputs to the valuation technique. Inputs may be observable or unobservable. Observable inputs are inputs that reflect the assumptions market participants would use in valuing the asset or liability developed based on market data obtained from independent sources. Unobservable inputs are inputs that reflect the Fund’s own assumptions about the assumptions market participants would use in valuing the asset or liability developed based on the best information available in the circumstances. The three tier hierarchy of inputs used to value securities reported in these financial statements is summarized below:

 

·                  Level 1 — unadjusted quoted prices in active markets for identical investments.

 

·                  Level 2 — other significant observable inputs (including quoted prices for similar investments, interest rates, credit risk, etc.).

 

·                  Level 3 — significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments).

 

The Fund uses broker quotes, issuer company financial information and other market indicators to value the securities whose prices are not readily available. The types of inputs used to value a security may change as the markets fluctuate and/or the availability of data used in an investment’s valuation changes.

 

When the S&P 500 Index (an unmanaged index published as Standard & Poor’s Composite Index of 500 common stocks) fluctuates more than 0.75% from the previous day close, the Fund believes that the closing price of foreign securities on the

 


 

RMR Real Estate Income Fund

Notes to Portfolio of Investments - continued

March 31, 2019 (unaudited)

 

principal foreign exchange on which they trade may no longer represent the fair value of those securities at the time the U.S. market closes, in which case, the Fund fair values those foreign securities. In such circumstances, the Fund reports holdings in foreign securities at their fair values as determined by an independent security pricing service. The service uses a multi-factor model that includes such information as the security’s local closing price, relevant general and sector indices, currency fluctuations, depository receipts and futures, as applicable. The model generates an adjustment factor for each security that is applied to the local closing price to adjust it for post-closing events, resulting in the security’s reported fair value. The adjustment factor is applied to a security only if the minimum confidence interval is 75% or more. The types of inputs may change as the markets fluctuate and/or the availability of data used in an investment’s valuation changes.

 

All of the Fund’s investments were valued using Level 1 inputs on March 31, 2019.  The Fund recognizes interperiod transfers between the input levels as of the end of the period. On March 31, 2019, securities with a total value of approximately $3,133,062 were transferred from Level 3 to Level 1. As of March 31, 2019, there was no other transfers between Level 1, Level 2 and Level 3.

 

The following is a reconciliation of assets in which significant unobservable inputs (Level 3) were used in determining value:

 

 

 

Common Stocks

 

 

 

Other

 

Balance as of December 31, 2018

 

$

3,133,062

 

Realized gain (loss)

 

 

Change in unrealized appreciation (depreciation)

 

 

Purchases

 

 

Sales

 

 

Transfers into Level 3

 

 

Transfers out of Level 3

 

3,133,062

 

Balance, as of March 31, 2019

 

$

 

Net change in unrealized appreciation (depreciation) from investments still held as of March 31, 2019 is:

 

$

 

 

3. Tax Information

 

Although subject to adjustments, the cost, gross unrealized appreciation, gross unrealized depreciation and net unrealized appreciation of the Fund’s investments for federal income tax purposes as of March 31, 2019, are as follows:

 

Cost

 

$

294,686,326

 

Gross unrealized appreciation

 

$

74,328,683

 

Gross unrealized depreciation

 

(27,978,438

)

Net unrealized appreciation

 

$

46,350,245

 

 

The $853,214 difference between the financial reporting cost basis and tax cost basis of the Fund’s investments as of March 31, 2019 is due to the different treatment of wash sales of portfolio investments and non-taxable distributions received from portfolio investments for financial and tax reporting purposes.

 


 

Item 2.  Controls and Procedures.

 

(a)  The registrant’s principal executive officer and principal financial officer 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”)), are effective, as of a date within 90 days of the filing date of this report, based on their evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as amended.

 

(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) that occurred during the registrant’s last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.

 

Item 3. Exhibits.

 

(a)(1) Certification of Principal Executive Officer, as required by Rule 30a-2(a) under the 1940 Act attached hereto.

(a)(2) Certification of Principal Financial Officer, as required by Rule 30a-2(a) under the 1940 Act attached hereto.

 


 

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.

 

RMR REAL ESTATE INCOME FUND

 

By:

/s/ Fernando Diaz

 

 

Fernando Diaz

 

 

President (Principal Executive Officer)

 

 

 

 

Date:

May 6, 2019

 

 

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 dates indicated.

 

By:

/s/ Fernando Diaz

 

 

Fernando Diaz

 

 

President (Principal Executive Officer)

 

 

 

 

Date:

May 6, 2019

 

 

By:

/s/ Brian E. Donley

 

 

Brian E. Donley

 

 

Treasurer and Chief Financial Officer (Principal Financial Officer)

 

 

 

 

Date:

May 6, 2019