GUGGENHEIM CREDIT INCOME FUND 2021 - FORM 10-Q

Attached files

file	filename
EX-99 - EXHIBIT 99 CAREY CREDIT INCOME FUND 10-Q - GUGGENHEIM CREDIT INCOME FUND 2021	ex99ccifq2201710q.htm
EX-32 - EXHIBIT 32 906 CERTIFICATION - GUGGENHEIM CREDIT INCOME FUND 2021	ccif2018tsec906ceocfo2017q2.htm
EX-31.2 - EXHIBIT 31.2 CFO 302 CERTIFICATION - GUGGENHEIM CREDIT INCOME FUND 2021	ccif2018tsec302cfo2017q2.htm
EX-31.1 - EXHIBIT 31.1 CEO 302 CERTIFICATION - GUGGENHEIM CREDIT INCOME FUND 2021	ccif2018tsec302ceo2017q2.htm

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



ý	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2017



o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 814-01206

CAREY CREDIT INCOME FUND 2018 T

(Exact name of registrant as specified in its charter)



Delaware		37-1826285
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
50 Rockefeller Plaza, New York, New York		10020
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code (212) 492-1100

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	ý Do not check if smaller reporting company	Smaller reporting company	¨
Emerging growth company	¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act			¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No ý

The number of the Registrant's common shares outstanding as of August 4, 2017 was 0.

CAREY CREDIT INCOME FUND 2018 T

INDEX



		PAGE
PART I.

Item 1.	Financial Statements (unaudited)	3

	Statements of Assets and Liabilities as of June 30, 2017 and December 31, 2016	3

	Statement of Operations for the three and six months ended June 30, 2017	4

	Statement of Cash Flows for the six months ended June 30, 2017	5

	Notes to Financial Statements	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	11

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	12

Item 4.	Controls and Procedures	12

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	13

Item 1A.	Risk Factors	13

Item 5.	Other Information	13

Item 6.	Exhibits	13

Signatures		14

Exhibit Index		15

Forward-Looking Statements

This Quarterly Report on Form 10-Q, or this Report, including Management's Discussion and Analysis of Financial Condition and Results of Operations, in Item 2 of Part I of this Report, contains statements that constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). These forward-looking statements generally are characterized by the use of terms such as "may," "should," "plan," "anticipate," "estimate," "intend," "predict," "believe," "expect," "will," "will be," and "project" or the negative of these terms or other comparable terminology. Although we believe that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, our actual results could differ materially from those set forth in the forward-looking statements. Some factors that might cause such a difference include the following: increased direct competition; changes in government regulations or accounting rules; changes in local, national, and global economic conditions and capital market conditions; availability of proceeds from our offering of common shares; and the performance of Carey Credit Income Fund (the "Master Fund") and its common shares that we own. Our actual results could differ materially from those implied or expressed in the forward-looking statements for any reason. You should exercise caution in relying on forward-looking statements as they involve known and unknown risks, uncertainties, and other factors that may materially affect our future results, performance, achievements, or transactions. Information on factors which could impact actual results and cause them to differ from what is anticipated in the forward-looking statements contained herein is included in this Report as well as in our other filings with the SEC, including but not limited to those described in Part II. Item 1A. Risk Factors of this Report and in Part I. Item 1A. Risk Factors of our Form 10-K for the fiscal year ended December 31, 2016, that was filed on March 24, 2017. Moreover, because we operate in a very competitive and rapidly changing environment, new risks are likely to emerge from time to time. Given these risks and uncertainties, you are cautioned not to place undue reliance on these forward-looking statements as a prediction of future results, which apply only as of the date of this Report, unless noted otherwise. Except as may be required by federal securities laws and the rules and regulations of the SEC, we do not undertake to revise or update any forward-looking statements. The forward-looking statements should be read in light of the risk factors identified in Part II. Item 1A. Risk Factors of this Report and in Part I. Item 1A. Risk Factors of our Form 10-K for the fiscal year ended December 31, 2016, that was filed on March 24, 2017. The forward-looking statements and projections contained in this Report are excluded from the safe harbor protection provided by Section 27A of the Securities Act and Section 21E of the Exchange Act.

All references to "Note" or "Notes" throughout this Report refer to the notes to the financial statements of the registrant in Part I. Item 1. Financial Statements (unaudited).

Unless otherwise noted, the terms "we," "us," "our," and "Company" refer to Carey Credit Income Fund 2018 T. All capitalized terms have the same meaning as defined in the Notes.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)

CAREY CREDIT INCOME FUND 2018 T

STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)



	June 30, 2017		December 31, 2016
Assets
Cash	$	14,876	$	—
Due from Advisors	32,253		17,000
Prepaid expenses	2,137		—
Total assets	49,266		17,000

Liabilities
Accounts payable, accrued expenses and other liabilities	$	431	$	—
Accrued professional services fees	48,835		17,000
Total liabilities	49,266		17,000
Commitments and contingencies (Note 4. Commitments and Contingencies)
Net Assets	$	—	$	—

Components of Net Assets:
Common Shares, $0.001 par value, 1,000,000,000 Common Shares authorized, 0 Common Shares issued and outstanding at June 30, 2017 and December 31, 2016	$	—	$	—
Paid-in-capital in excess of par value	—		—
Total net assets	$	—	$	—
Net asset value per Common Share	$	—	$	—

See Unaudited Notes to Financial Statements.

CAREY CREDIT INCOME FUND 2018 T

STATEMENT OF OPERATIONS (UNAUDITED)



	Three Months Ended			Six Months Ended
	June 30, 2017			June 30, 2017
Operating Expenses
Trustees fees	$	863		$	863
Professional services fees	37,909			58,415
Organization expenses	2,745			2,745
Other expenses	431			431
Total operating expenses	41,948			62,454
Less: Expense support from related parties (See Note 3. Related Party Agreements and Transactions)	(39,203		)	(59,709		)
Reimbursable organization expenses paid by Advisors (See Note 4. Commitments and Contingencies)	(2,745		)	(2,745		)
Net increase in net assets resulting from operations	$	—		$	—

See Unaudited Notes to Financial Statements.

CAREY CREDIT INCOME FUND 2018 T

STATEMENT OF CASH FLOWS (UNAUDITED)



	Six Months Ended
	June 30, 2017
Operating activities
Net increase (decrease) in net assets resulting from operations	$	—
Adjustments to reconcile net increase (decrease) in net assets from operations to net cash provided by operating activities:
Increase in operating assets:
Due from Advisors	(15,253		)
Other assets	(2,137		)
Increase in operating liabilities:
Accounts payable, accrued expenses and other liabilities	431
Accrued professional services fees	31,835
Net cash provided by operating activities	14,876

Net increase in cash	14,876
Cash, beginning of period	—
Cash, end of period	$	14,876

See Unaudited Notes to Financial Statements.

CAREY CREDIT INCOME FUND 2018 T

NOTES TO FINANCIAL STATEMENTS (Unaudited)

Note 1. Principal Business and Organization

Carey Credit Income Fund 2018 T (formerly known as Carey Credit Income Fund 2017 T) (the "Company") was formed as a Delaware statutory trust on March 18, 2016. The Company's investment objectives are to provide its shareholders with current income, capital preservation, and, to a lesser extent, long-term capital appreciation by investing substantially all of its equity capital in Carey Credit Income Fund (the "Master Fund"). The Company is a non-diversified closed-end management investment company that elected to be treated as a business development company (a "BDC") under the Investment Company Act of 1940, as amended (the "1940 Act").

The Master Fund has elected to be treated as a BDC under the 1940 Act and it has the same investment objectives as the Company. The Master Fund is externally managed by Carey Credit Advisors, LLC (the "Advisor"), an affiliate of W. P. Carey Inc. ("WPC"), and Guggenheim Partners Investment Management, LLC ("GPIM") (collectively the "Advisors"), which are responsible for sourcing potential investments, analyzing and conducting due diligence on prospective investment opportunities, structuring investments and ongoing monitoring of the Master Fund's investment portfolio. Both Advisors are registered as investment advisers with the U.S. Securities and Exchange Commission ("SEC"). The Advisor also provides administrative services necessary for the operations of the Company and the Master Fund. The Master Fund commenced investment operations on April 2, 2015. The Master Fund's consolidated financial statements are an integral part of the Company's financial statements and should be read in their entirety.

The Company's common shares ("Shares" or "Common Shares") are registered pursuant to a registration statement on Form N-2 (the “Registration Statement”), Securities Act File No. 333-211613 effective October 3, 2016, covering its continuous public offering of up to $1 billion of Common Shares (the “Public Offering”). The Company intends to use funds raised in its Public Offering to acquire Master Fund common shares in a continuous series of private placement transactions with the proceeds from its Public Offering. As of June 30, 2017, and as of August 4, 2017, the Company has not sold any of its Common Shares, it has not acquired any Master Fund common shares, and it has not commenced investment operations.

Note 2. Significant Accounting Policies

Basis of Presentation

Management has determined that the Company meets the definition of an investment company and follows the accounting and reporting guidance in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946 — Financial Services — Investment Companies (“ASC Topic 946”).

The Company's interim financial statements have been prepared pursuant to the requirements for reporting on Form 10-Q and the disclosure requirements stipulated in Articles 6 and 10 of Regulation S-X, and therefore do not necessarily include all information and notes necessary for a fair statement of financial position and results of operations in accordance with accounting principles generally accepted in the U.S. ("GAAP"). In the opinion of management, the unaudited financial information for the interim period presented in this Report reflects all normal and recurring adjustments necessary for a fair statement of financial position and results from operations. Operating results for interim periods are not necessarily indicative of operating results for an entire year. The Company's unaudited financial statements should be read in conjunction with the Master Fund's unaudited consolidated financial statements; the Master Fund's quarterly report on Form 10-Q is incorporated by reference and filed as an exhibit to this report.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities at the date of the financial statements, (ii) the reported amounts of income and expenses during the reported period, and (iii) disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ materially from those estimates under different assumptions and conditions.

Organization Expenses

Organization expenses include, among other things, the cost of incorporating the Company, including the cost of legal services and other fees pertaining to the Company's organization. The reimbursement of Advisor-paid organization expenses is conditional on the Company's receipt of equity capital from the sale of its Common Shares. Any reimbursement to the Advisors for their funding of organization expenses will be recorded as "Reimbursement of Organization Expenses Paid by Advisors" in future periods on the statement of operations. (See Note 3. Related Party Agreements and Transactions and Note 4. Commitments and Contingencies).

Notes to Financial Statements (Unaudited)

Offering Expenses

The Company's offering expenses include legal fees, registration fees and other costs pertaining to the preparation of the Company's Registration Statement (and any amendments or supplements thereto) relating to its Public Offering. Offering expenses will be recorded as deferred offering costs on the statement of assets and liabilities and then subsequently amortized to expense on the Company's statement of operations over 12 months on a straight-line basis when operations begin. During the three and six months ended June 30, 2017, the Company incurred offering expenses of $61,384 and $195,494, respectively, which were paid on behalf of the Company by the Advisors. The offering expenses do not presently represent a liability of the Company since the obligation to reimburse the Advisors for Advisor-paid offering expenses is solely conditional on the Company's receipt of equity capital from the sale of its Common Shares. (See Note 3. Related Party Agreements and Transactions and Note 4. Commitments and Contingencies).

Federal Income Taxes

The Company intends to elect to be treated for federal income tax purposes, and thereafter intends to maintain its qualification, as a Regulated Investment Company ("RIC") under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). Generally, a RIC is not subject to federal income taxes on distributed income and gains if it distributes dividends in a timely manner out of assets legally available for distributions to its shareholders of an amount generally at least equal to 90% of its “Investment Company Taxable Income,” as defined in the Code. The Company intends to distribute sufficient dividends to maintain its RIC status each year and it does not anticipate paying a material level of federal income taxes.

The Company is generally subject to nondeductible federal excise taxes if it does not distribute dividends to its shareholders in respect of each calendar year of an amount at least equal to the sum of (i) 98% of its net ordinary income (taking into account certain deferrals and elections) for the calendar year, (ii) 98.2% of its capital gain net income (i.e., capital gains in excess of capital losses), adjusted for certain ordinary losses, for the one-year period generally ending on October 31 of the calendar year and (iii) any net ordinary income and capital gain net income for preceding calendar years that were not distributed during such calendar years and on which the Company paid no federal income tax. The Company may, at its discretion, pay a 4% nondeductible federal excise tax on under-distribution of taxable ordinary income and capital gains.

Note 3. Related Party Agreements and Transactions

All of the Company’s executive officers, except its chief executive officer and chief compliance officer, also serve as executive officers of the Advisor. Its chief executive officer also serves as chief executive officer of WPC, the Advisor's ultimate parent. The memberships of the Board of Trustees of the Company and the Master Fund are identical and consequently the Company and the Master Fund are related parties. All of the Company's executive officers also serve as executive officers of the Master Fund.

The Company has entered into agreements with the Advisor whereby the Company agrees to (i) receive expense support payments from the Advisor and (ii) reimburse the Advisor for certain expenses of, and to pay for, administrative, expense support, organization and offerings costs incurred on the Company's behalf. The Company has entered into an agreement with Carey Financial, LLC, a Delaware limited liability company (the "Dealer Manager"), an affiliate of the Advisor, to compensate the Dealer Manager for capital market services in connection with the marketing and distribution of the Company's Shares. The Company has entered into agreements with GPIM whereby the Company agrees to (i) receive expense support payments from GPIM, and (ii) reimburse GPIM for certain expenses such as expense support and organization and offering costs incurred on the Company's behalf.

Administrative Services Agreement

On October 3, 2016, the Company entered into an amended and restated administrative services agreement with the Advisor (the "Administrative Services Agreement") whereby the Advisor agreed to provide administrative services to the Company, including office facilities and equipment, and clerical, bookkeeping, and record-keeping services. More specifically, the Advisor, serving as the Administrator (the "Administrator), performs and oversees the Company's required administrative services, which include financial and corporate record-keeping, preparing and disseminating the Company's reports to its shareholders, and filing reports with the SEC. In addition, the Administrator assists in determining net asset value, oversees the preparation and filing of tax returns, oversees the payment of expenses and distributions, and oversees the performance of administrative and professional services rendered by others. For providing these services, facilities, and personnel, the Company reimburses the Administrator the allocable portion of overhead and other expenses incurred by the Administrator in performing its obligations under the Administrative Services Agreement. As of June 30, 2017, the Company had not incurred any obligation to reimburse the Administrator for any services or other expenses incurred directly by the Administrator or its affiliates.

The Administrative Services Agreement may be terminated at any time, without the payment of any penalty: (i) by the Company upon 60 days' written notice to the Administrator upon the vote of the Company's independent trustees, or (ii) by the Administrator upon not less than 120 days' written notice to the Company. Unless earlier terminated, the Administrative Services Agreement will remain in effect each year if approved annually by a majority of the Company's Board of Trustees and the Company's Independent Trustees.

Notes to Financial Statements (Unaudited)

On May 11, 2017, the Company's Board of Trustees, including all of the Independent Trustees, approved the annual renewal of the Administrative Services Agreement.

Organization and Offering Expense Reimbursement Agreement

On December 21, 2016, the Company entered into an organization and offering expense reimbursement agreement (the "O&O Agreement") with the Advisors. Under the O&O Agreement the Company reimburses the Advisors for organization and offering costs incurred on the Company's behalf, including, but not limited to, legal services, audit services, printer services, and the registration of securities under the Securities Act. The Company is conditionally obligated to reimburse the Advisors for these organization and offering expenses solely in connection with the capital raise activity of its Public Offering. There is no liability on the Company’s part for the offering or organization costs funded by the Advisors until the Company commences to raise capital from the sale of its Common Shares. At such time, the Advisors will be entitled to receive up to 1.5% of the gross proceeds raised from shareholders until all offering costs and organization costs incurred, and future organization costs to be incurred, by the Advisors, have been recovered by the Advisors. Any such reimbursement will not exceed actual expenses incurred by the Advisors and their affiliates. In the event that the Advisors waive a reimbursement payment in connection with any specific capital raise amounts, then the Advisors may not later reinstate a reimbursement payment on such capital raise amount. The Advisors will be responsible for the payment of the Company's cumulative organization and offering expenses to the extent they exceed 1.5% of the aggregate proceeds from the sale of the Company's Common Shares, without recourse against or reimbursement by the Company. The O&O Agreement may be terminated at any time, without the payment of any penalty, by the Company or the Advisors, with or without notice, The O&O Agreement shall automatically terminate in the event of (i) the termination by the Master Fund of the investment advisory agreement between the Master Fund and the Advisor or (ii) the Master Fund's board of trustees makes the determination to dissolve or liquidate the Master Fund.

Expense Support and Conditional Reimbursement Agreement

Pursuant to an expense support and conditional reimbursement agreement executed on December 21, 2016 by and between the Advisors and the Company (the "Expense Support Agreement"), the Advisors have agreed to reimburse the Company for expenses in an amount that is sufficient to ensure that no portion of the Company's distributions to shareholders will be paid from Common Share offering proceeds. The Advisors agreed to reimburse the Company monthly for expenses in an amount equal to the difference between (i) the Company's cumulative distributions paid to its shareholders through such month, less (ii) the Company's estimated cumulative investment company taxable income and net capital gains through such month.

Pursuant to the Expense Support Agreement, the Company has a conditional obligation to reimburse the Advisors for any amounts funded by the Advisors under this arrangement if (and only to the extent that), during any month occurring within three years of the date on which the Advisors funded such amount, the sum of the Company's estimated investment company taxable income and net capital gains exceeds the ordinary cash distributions paid by the Company to its shareholders; provided, however, that (i) the Company will only reimburse the Advisors for expense support payments made by the Advisors to the extent that the payment of such reimbursement (together with any other reimbursement paid during such fiscal year) does not cause "other operating expenses" (as defined below) (on an annualized basis and net of any expense support reimbursement payments received by the Company during such fiscal year) to exceed the lesser of (A) 1.75% of the Company's average net assets attributable to its Common Shares for the fiscal year-to-date period after taking such payments into account and (B) the percentage of the Company's average net assets attributable to its Common Shares represented by "other operating expenses" during the fiscal year in which such expense support payment from the Advisors was made (provided, however, that this clause (B) will not apply to any reimbursement payment which relates to an expense support payment from the Advisors made during the same fiscal year); and (ii) the Company will not reimburse the Advisors for expense support payments made by the Advisors if the annualized rate of regular cash distributions declared by the Company at the time of such reimbursement payment is less than the annualized rate of regular cash distributions declared by the Company at the time the Advisors made the expense support payment to which such reimbursement payment relates. "Other operating expenses" means the Company's total "operating expenses" (as defined below), excluding any investment advisory fee, a performance-based incentive fee, organization and offering expenses, distribution and shareholder servicing fees, interest expense, brokerage commissions and extraordinary expenses. "Operating expenses" means all operating costs and expenses incurred, as determined in accordance with GAAP for investment companies.

The Company may terminate the Expense Support Agreement at any time. The Advisors may terminate the Expense Support Agreement at any time after December 31, 2017. The Expense Support Agreement will automatically terminate if (i) the Master Fund terminates the investment advisory agreement with the Advisor, or (ii) the Company's Board of Trustees makes a determination to dissolve or liquidate the Company.

The specific amount of Advisors' expense support obligation is determined at the end of each month. Upon termination of the Expense Support Agreement by the Advisors, they are required to fund any amounts accrued thereunder as of the date of termination. Similarly, the conditional obligation of the Company to reimburse the Advisors pursuant to the terms of the Expense Support Agreement shall survive the termination of such agreement by either party. There can be no assurance that the Expense Support Agreement will remain in effect or that the Advisors will reimburse any portion of the Company's expenses in future periods beyond December 31, 2017.

Notes to Financial Statements (Unaudited)

The table below presents a summary of all monthly expenses supported by the Advisors and the associated dates through which such expenses are eligible for reimbursement by the Company:



Month Ended	Expense Support from Advisors		Expense Support Reimbursement to Advisors		Unreimbursed Expense Support		Ratio of Other Operating Expenses to Average Net Assets for the Period ⁽¹⁾	Annualized Regular Cash Distribution Rate/Share, Declared ⁽²⁾	Eligible for Reimbursement through
December 2016	$	17,000	$	—	$	17,000	NM	NA	December 31, 2019
January 2017	7,063		—		7,063		NM	NA	January 31, 2020
February 2017	6,380		—		6,380		NM	NA	February 29, 2020
March 2017	7,063		—		7,063		NM	NA	March 31, 2020
April 2017	6,836		—		6,836		NM	NA	April 30, 2020
May 2017	7,063		—		7,063		NM	NA	May 31, 2020
June 2017	25,304		—		25,304		NM	NA	June 30, 2020
Total	$	76,709	$	—	$	76,709

______________________


(1)	Other operating expenses include all expenses borne by the Company excluding organization and offering costs, an investment advisory fee, a performance-based incentive fee, financing fees and costs, and interest expense. "NM" means not measurable in these months due to the absence of a positive value for Average Net Assets.

(2)

"Annualized Regular Cash Distribution Rate/Share, Declared" equals the annualized rate of average weekly distributions per Share that were declared with record dates in the subject month immediately prior to the date the expenses support payment obligation was incurred by the Advisors. Regular cash distributions do not include declared special cash or share distributions, if any. "NA" means not applicable since no shares were outstanding and therefore no distributions were declared by the Company's board of trustees.

Dealer Manager Agreement

On April 12, 2017, the Company entered into a second amended and restated dealer manager agreement (the "Dealer Manager Agreement") with the Dealer Manager and the Master Fund. Under the terms of the Dealer Manager Agreement, the Dealer Manager is to act on a best efforts basis as the exclusive dealer manager for (i) the Company's Public Offering and (ii) the public offering of common shares for future feeder funds affiliated with the Master Fund. The Company, not the Master Fund, is responsible for the compensation of the Dealer Manager pursuant to the terms of the Dealer Manager Agreement. The Deal Manager Agreement may be terminated by the Company or the Dealer Manager upon 60 calender days' written notice to the other party. In the event that the Company or the Dealer Manager terminates the Dealer Manager Agreement with respect to the Company, the Dealer Manager Agreement will continue with respect to any other feeder fund.

On June 15, 2017, the Board of Directors of WPC approved a plan to exit all non-traded retail fundraising activities carried out by the Dealer Manager, its wholly-owned broker-dealer subsidiary, effective June 30, 2017, in keeping with WPC’s long-term strategy of focusing exclusively on net lease investing for its balance sheet. The Company, the Master Fund, and any other affiliated feeder funds is within the scope of WPC's plan to exit all non-retail fundraising activities.

Beginning in the first calendar quarter after the close of the Company's Public Offering, the Company will be subject to distribution and shareholder servicing fees, to be paid quarterly to the Dealer Manager, at an annual rate of 0.90% of the average net purchase price per share to compensate the Dealer Manager and participating broker-dealers for services and expenses for providing shareholder services to their investor clients who become shareholders of the Company. The Company will cease paying the distribution and shareholder servicing fees at the earlier of: (i) the date at which the underwriting compensation from all sources, including the distribution and shareholder servicing fees, offering fees paid to the Dealer Manager for underwriting, and underwriting compensation paid by the Company and shareholders, equals 10% of the gross proceeds from the Company's Public Offering, excluding proceeds from the sale of Shares pursuant to the Company's distribution reinvestment program; (ii) the date at which a liquidity event (as described in the Company's Registration Statement) occurs, or (iii) the date that the Dealer Manager Agreement is terminated by the Dealer Manager or the Company.

Indemnification

The Administrative Services Agreement provides certain indemnification to the Administrator, its directors, officers, persons associated with the Administrator, and its affiliates. In addition, the Company's Declaration of Trust, as amended, provides certain indemnifications to its officers, trustees, agents, and certain other persons. The Dealer Manager Agreement provides for certain indemnifications from the Company (with respect to the primary offering of its Common Shares) to the Dealer Manager, any selected dealers and their respective officers, directors, employees, members, affiliates, agents, representatives and, if any, each person who controls such person or entity within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act. Such indemnifications are subject to certain limitations as provided for in the Company’s Declaration of Trust and the North

Notes to Financial Statements (Unaudited)

American Securities Administrators Association Guidelines and are considered customary by management. As of June 30, 2017, management believes that the risk of incurring any losses for such indemnification is remote.

Note 4. Commitments and Contingencies

As of June 30, 2017, the Advisors have incurred total organization and offering costs on behalf of the Company of approximately $846,664, comprised of $22,669 in organization costs and $823,995 in offering costs. Under the terms of the O&O Agreement, the Company is conditionally obligated to reimburse the Advisors for these organization and offering costs solely in connection with the capital raise activity of its Public Offering. The Company’s total obligation for organization and offering costs is capped at 1.5% of actual capital raised from its Public Offering, if any. The Company will have to raise a minimum of $56,444,267 in gross proceeds from the sale of Common Shares to reimburse the Advisors for these organization and offering costs. The Company has no financial liability to reimburse the Advisors for offering or organization costs paid by the Advisors until the Company commences to raise capital from the sale of its Common Shares.

Note 5. Subsequent Events

In connection with the recent announcement by WPC, the parent of our Advisor, of its decision to exit retail fundraising and to focus on its core real estate business, the Advisor has decided to resign as investment advisor to the Master Fund. At a Board Meeting held on August 10, 2017 (the “Board Meeting”), the Master Fund’s Board of Trustees (the “Board”) accepted the resignation of the Advisor as the Master Fund’s investment advisor (the “Advisor Resignation”) to become effective on September 11, 2017 (the “Advisor Resignation Date”) and appointed GPIM as the Master Fund’s interim advisor to become effective on the Advisor Resignation Date (the “Interim Advisor Appointment”). In connection with the Advisor Resignation and the Interim Advisor Appointment, the Board terminated the Investment Sub-Advisory Agreement with GPIM, approved Expense Support and Conditional Reimbursement Agreements with GPIM, and approved Organization and Offering Expense Reimbursement Agreements with GPIM, each to become effective on the Advisor Resignation Date. The Master Fund’s Board, including all of the Independent Trustees, approved a new investment advisory agreement with GPIM (the “New Advisory Agreement”) to become effective upon approval by a majority of the Master Fund’s outstanding common shares (as defined in the 1940 Act). The Interim Advisor Appointment will terminate upon the earlier to occur of (i) 150 days from the Advisor Resignation Date or (ii) the date Master Fund shareholders approve the New Advisory Agreement. At the Board Meeting, the Board set a shareholder meeting date of October 13, 2017 and a record date of August 25, 2017 for Master Fund shareholders to consider the approval of the New Advisory Agreement. At the Board Meeting, the Master Fund’s Board of Trustees also accepted the resignation of Carey Credit Advisors LLC as the Master Fund’s (and each Feeder Fund’s) administrator to become effective on the Advisor Resignation Date and appointed GPIM as the Master Fund’s (and each Feeder Fund’s) new administrator to become effective on the Advisor Resignation Date. At the Board Meeting, the Master Fund’s Board of Trustees also approved the assignment of the Dealer Manager Agreement from the Dealer Manager to Guggenheim Funds Distributors, LLC effective immediately.

In making the Interim Advisor Appointment and approving the New Advisory Agreement, the Board of Trustees, including all of the Independent Trustees, considered a number of factors, including, but not limited to: (i) the Master Fund's and GPIM's performance; (ii) the ability of GPIM to maintain continuity in the investment advisory services that have been provided by the Advisor and GPIM to the Master Fund, including GPIM's expectation that the key personnel of the Advisor who currently provide services to the Master Fund (and the Feeder Funds) will continue to provide those services as employees of GPIM after the Advisor Resignation Date; (iii) GPIM’s representations that it intends to provide the same or greater scope and quality of investment advisory services to the Master Fund that it and the Advisor currently provide; (iv) the estimated fees and expenses of the Master Fund (and, as relevant, the Feeder Funds), including a lower annual management fee of 1.75% of the Master Fund’s average gross assets and continued expense support by GPIM with respect to the Feeder Funds' distributions to shareholders; and (v) GPIM's longer-term business goals with regard to the business and operations of the Master Fund and Feeder Funds. The Board also considered that the Funds' shareholders will not bear any costs associated with the Interim Advisor Appointment and the proposal to shareholders to approve the New Advisory Agreement. Additional information about the Board's considerations will be provided in the Master Fund's proxy materials that will be distributed in connection with the shareholder meeting to consider the approval of the New Advisory Agreement.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

The information contained in this item should be read in conjunction with our financial statements and related notes thereto appearing elsewhere in this Report. Unless otherwise noted, the terms "we," "us," and "our" refer to Carey Credit Income Fund 2018 T. The Term "Master Fund" refers to Carey Credit Income Fund. Capitalized terms used in this Item 2 have the same meaning as in the accompanying financial statements presented in Part I. Item 1. Financial Statements (unaudited), unless otherwise defined herein.

Revenues

We will generate revenues primarily in the form of dividend income derived from our ownership of the Master Fund's common shares. Our revenues will fluctuate with the operating performance of the Master Fund and its distributions to us.

Operating Expenses

Our primary operating expenses will include administrative services, related party reimbursements, custodian and accounting services, independent audit services, compliance services, tax services fees, legal services, transfer agent services, distribution and shareholder servicing fees, organization expenses and amortization of deferred offering expenses. Additionally, we will indirectly bear the operating expenses of the Master Fund through our ownership of its common shares, such as an investment advisory fee, a performance-based incentive fee, independent audit services. third party valuation services, and various other professional services fees.

Results of Operations

Operating Expenses

We have not yet commenced investment operations and therefore there are no comparative prior years. Operating expenses consisted of the following major components for the three and six months ended June 30, 2017:



	Three Months Ended			Six Months Ended
	June 30, 2017			June 30, 2017
Trustees fees	$	863		$	863
Professional services fees	37,909			58,415
Organization expenses	2,745			2,745
Other expenses	431			431
Total operating expenses	41,948			62,454
Less: Expense support from related parties	(39,203		)	(59,709		)
Reimbursable organization expenses paid by Advisors	(2,745		)	(2,745		)
Net expenses	$	—		$	—

The operating expenses presented above do not represent our normalized operations since we expect our operating expenses to increase when we commence the issuance of Common Shares, raise equity capital and commence investment operations.

The composition of our professional services fees for the three and six months ended June 30, 2017:



	Three Months Ended		Six Months Ended
	June 30, 2017		June 30, 2017
Audit expense	$	20,735	$	41,241
Legal fees	17,174		17,174
Total professional services fees	$	37,909	$	58,415

Financial Condition, Liquidity and Capital Resources

Our primary sources of cash may include (i) the sale of our Common Shares, (ii) our shareholders' reinvestment of their distributions, (iii) distributions received from our ownership of the Master Fund's common shares, and (iv) expense reimbursement payments from the Advisors pursuant to the Expense Support Agreement. Our primary uses of cash may include (i) investment in Master Fund common shares, (ii) payment of operating expenses, (iii) cash distributions to our shareholders and (iv) periodic repurchases of our Common Shares pursuant to our share repurchase program. We do not intend to issue any senior securities, including preferred securities.

As of June 30, 2017 our only source of cash is expense reimbursement payments from the Advisors and our only use of cash is the payment of operating expenses.

We intend to manage our assets and liabilities such that current assets are sufficient to cover current liabilities. All remaining cash in excess of net working capital is intended to be invested in the Master Fund's common shares.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements as of June 30, 2017.

Critical Accounting Policies

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expense during the reporting period. We believe that the estimates and assumptions utilized in preparing the financial statements are reasonable. Actual results could differ from those estimates. Our significant accounting policies are described in Note 2. Significant Accounting Policies.

Valuation of Investments

We intend to invest substantially all of our equity capital in the purchase of the Master Fund's common shares.. As such, we will determine the fair value of our investment in the Master Fund as the Master Fund's net asset value per common share (as determined by the Master Fund) multiplied by the number of Master Fund common shares that we own.

Contractual Obligations

We have not entered into any agreements under which we have material future commitments that cannot otherwise be terminated within a reasonable time period.

Related Party Agreements and Transactions

We have entered into agreements with the Advisor, and certain of its affiliates, and GPIM whereby we agreed to (i) receive expense support payments from the Advisors, (ii) reimburse the Advisors for certain expenses, and to pay for, administrative services, expense support, organization and offerings costs incurred on our behalf, and (iii) compensate the Dealer Manager for capital market services in connection with the marketing and distribution of our Shares. See Note 3. Related Party Agreements and Transactions for a discussion of related party agreements and transactions and expense reimbursement agreements.

Reimbursement to the Advisors for Organization and Offering Expenses

Reimbursement to the Administrator for Administrative Services

We reimburse the Administrator for its expenses in connection with the provision of administrative services to us. These reimbursement expenses are periodically reviewed and approved by the Independent Trustees Committee of our Board of Trustees. See Note 3. Related Party Agreements and Transactions for a summary of reimbursable expenses as related to administrative services.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

None.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Our disclosure controls and procedures include internal controls and other procedures designed to provide reasonable assurance that information required to be disclosed in this and other reports filed under the Exchange Act, is recorded, processed, summarized, and reported within the required time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to management, including our chief executive officer and chief financial officer, to allow timely decisions regarding required disclosures. It should be noted that no system of controls can provide complete assurance of achieving a company’s objectives and that future events may impact the effectiveness of a system of controls.

Our chief executive officer and chief financial officer, after conducting an evaluation, together with members of our management, of the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2017, have concluded that our disclosure controls and procedures, as defined in Rule 13a-15(e) under the Exchange Act, were effective as of June 30, 2017 at a reasonable level of assurance.

Changes in Internal Control over Financial Reporting

During the most recent fiscal quarter, there was no change in our internal controls over financial reporting, as defined under Rule 13a-15(f) under the Exchange Act, that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

At August 4, 2017, we were not subject to any material legal proceedings, and, to our knowledge, there were no material legal proceedings threatened against us.

From time to time, we, or our administrator, may be a party to certain legal proceedings in the ordinary course of, or incidental to the normal course of, our business, including legal proceedings related to the enforcement of our rights under contracts with our portfolio companies. While legal proceedings, lawsuits, claims, and regulatory proceedings are subject to many uncertainties and their ultimate outcomes are not predictable with assurance, the results of these proceedings are not expected to have a material adverse effect on our financial position or results of operations.

Item 1A. Risk Factors.

As of June 30, 2017, there have been no material changes from the risk factors set forth in our Form 10-K dated and filed with the SEC on March 24, 2017.

Item 5. Other Information.

On May 30, 2017, we reported that Mr. Mark M. Goldberg informed WPC of his intended resignation, effective as of July 10, 2017, from his positions with (i) WPC, the ultimate parent of our Advisor , (ii) President of the Master Fund and each of its feeder funds, and (iii) President of Carey Credit Advisors, to pursue other interests. The effective resignation date was subsequently revised to June 19, 2017. As of August 4, 2017, our President position was vacant.

Item 6. Exhibits.

The exhibits required by this item are set forth in the Exhibit Index attached hereto and are filed or incorporated as part of this Report.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.




			CAREY CREDIT INCOME FUND 2018 T

Date:	August XX, 2017	By:	/s/ Mark J. DeCesaris
			MARK J. DECESARIS
			Chief Executive Officer
			(Principal Executive Officer)

Date:	August XX, 2017	By:	/s/ Paul S. Saint-Pierre
			PAUL S. SAINT-PIERRE
			Chief Financial Officer
			(Principal Financial Officer)

EXHIBIT INDEX

The following exhibits are filed or incorporated as part of this Report.



3.1			Certificate of Amendment to Certificate of Trust of the Registrant. (Incorporated by reference to Exhibit 99(a)(2) filed with Post-Effective Amendment No. 1 to the Registrant's registration statement on Form N-2 (File No. 333-211613) filed on January 31, 2017.)

3.2			Amended and Restated Declaration of Trust of the Registrant. (Incorporated by reference to Exhibit 99(a)(4) filed with Post-Effective Amendment No. 1 to the Registrant's registration statement on Form N-2 (File No. 333-211613) filed on January 31, 2017.)

3.3			Bylaws of the Registrant. (Incorporated by reference to Exhibit 99(b) filed with the Registrant's initial registration statement on Form N-2 (File No. 333-211613) filed on May 25, 2016.)

4.1			Distribution Reinvestment Plan of the Registrant. (Incorporated by reference to Exhibit 99(e) filed with Pre-Effective Amendment No. 2 to the Registrant's registration statement on Form N-2 (File No. 333-211613) filed on September 21, 2016.)

10.1			Form of Administrative Services Agreement by and between the Registrant and Carey Credit Advisors, LLC. (Incorporated by reference to Exhibit 99(k)(3) filed with Registrant's Pre-Effective Amendment No. 2 to the Registration Statement on Form N-2 (File No. 333-211613) filed on September 21, 2016.)

10.2			Custody Agreement by and between the Registrant and U.S. Bank National Association. (Incorporated by reference to Exhibit 99(j) filed with Post-Effective Amendment No. 1 to the Registrant's registration statement on Form N-2 (File No. 333-211613) filed on January 31, 2017.)

10.3			Escrow Agreement by and among the Registrant, UMB Bank N.A. and Carey Financial, LLC. (Incorporated by reference to Exhibit 99(k)(1) filed with Post-Effective Amendment No. 1 to the Registrant's registration statement on Form N-2 (File No. 333-211613) filed on January 31, 2017.)

10.4			Second Amended and Restated Dealer Manager Agreement by and among Carey Credit Income Fund 2016 T, Carey Credit Income Fund and Carey Financial, LLC. (Incorporated by reference to Exhibit 10.4 filed with Carey Credit Income Fund 2016 T's Form 10-K (File No. 814-01094) filed on April 17, 2017.)

10.5			Form of Selected Dealer Agreement (revised Exhibit A to Second Amended and Restated Dealer Manager Agreement). (Incorporated by reference to Exhibit 10.5 filed with Carey Credit Income Fund 2016 T's Form 10-K (File No. 814-01094) filed on April 17, 2017.)

10.6			Expense Support and Conditional Reimbursement Agreement by and among the Registrant, Carey Credit Advisors, LLC and Guggenheim Partners Investment Management, LLC. (Incorporated by reference to Exhibit 99(k)(2) filed with Post-Effective Amendment No. 1 to the Registrant's registration statement on Form N-2 (File No. 333-211613) filed on January 31, 2017.)

10.7			Organization and Offering Expense Reimbursement Agreement by and among the Registrant, Carey Credit Advisors, LLC and Guggenheim Partners Investment Management, LLC. (Incorporated by reference to Exhibit 99(k)(4) filed with Post-Effective Amendment No. 1 to the Registrant's registration statement on Form N-2 (File No. 333-211613) filed on January 31, 2017.)

10.8			Investment Management Agreement by and between Hamilton Finance LLC and Carey Credit Income Fund. (Incorporated by reference to Exhibit 10.3 filed with Carey Credit Income Fund's Form 8-K (File No. 814-01117) filed on December 22, 2015.)

14.1			Code of Ethics of the Registrant. (Incorporated by reference to Exhibit 99(r)(1) filed with Registrant's Pre-Effective Amendment No. 2 to the Registration Statement on Form N-2 (File No. 333-211613) filed on September 21, 2016.)

14.2			Code of Ethics of Carey Credit Advisors, LLC. (Incorporated by reference to Exhibit 99(r)(2) filed with Registrant's Pre-Effective Amendment No. 2 to the Registration Statement on Form N-2 (File No. 333-211613) filed on September 21, 2016.)

14.3			Code of Ethics of Guggenheim Partners Investment Management, LLC. (Incorporated by reference to Exhibit 99(r)(3) filed with Registrant's Pre-Effective Amendment No. 2 to the Registration Statement on Form N-2 (File No. 333-211613) filed on September 21, 2016.)

31.1			Certification of Chief Executive Officer pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (Filed herewith.)



31.2			Certification of Chief Financial Officer of pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (Filed herewith.)

32			Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (Filed herewith.)

99			Form 10-Q of Carey Credit Income Fund for the quarterly period ended June 30, 2017. (Filed herewith.)

GUGGENHEIM CREDIT INCOME FUND 2021 - FORM 10-Q - August 14, 2017

Attached files

GUGGENHEIM CREDIT INCOME FUND 2021 Reports