Thames River to launch Real Estates Securities Fund
26. Jan 2010
Thames River Capital confirms the planned launch of the Thames River Real Estate Securities Fund in Q1 2010*. The Fund will be one of the first UCITS III vehicles of its kind aiming to provide market plus returns and a measure of downside protection within a regulated structure. Managed by James Wilkinson and Marcus Phayre-Mudge, it will offer daily liquidity and a high level of transparency via investments focussed on listed real estate companies in Europe.
The Fund will aim to outperform the benchmark, the FTSE EPRA/NAREIT Developed Europe Capped Index in Sterling in all market conditions. It aims to achieve this through a multi-layered approach to portfolio construction, incorporating a macro-view of markets, active management of risk, volatility and overall market exposure, bottom-up stock selection and on-the-ground market intelligence. The Fund will have the benefit of the full UCITS III flexibility. However, in normal market conditions gross exposure to real estate securities will be limited to between 80% and 160% of net assets and net exposure to between 60% and 140%.
The Fund will exploit opportunities in listed real estate markets throughout Europe. The physical assets underlying those markets have experienced significant falls in valuations over the last two years. In Continental Europe, prices are 10-15% below their peak in mid-
2007 and in the UK, they remain one third lower in spite of a 10% increase from June 2009’s trough.
Fund Manager, James Wilkinson said, “We believe real estate is an attractive asset class as it is a long term real asset that offers relatively high levels of income return. Rental yields in excess of 7% in Europe and the UK are significantly ahead of the yields from European government or investment grade corporate bonds. In addition, rents are generally secured by relatively long term lease contracts which produce stable, transparent and predictable earnings. Listed property companies have recapitalised their balance sheets and reset their banking covenants to the extent that the majority are now on a sound commercial footing. Most are now buyers rather than sellers of property.”
James Wilkinson added, “Most investors view real estate as illiquid. By contrast, real estate equities offer good liquidity, enabling us the opportunity to construct a portfolio with precisely targeted exposure. We think that now is an opportune time to be launching the Fund and a good time for investors to consider re-allocating the sector.”
Thames River Investment Director, Michael Warren added, “By bringing the Thames River Real Estate Securities Fund to market we are responding to investor demand for an innovative real estate equities vehicle combining market exposure with capital protection within a regulated framework. The Fund will utilise the skills successfully used in our existing products including the TR Property Investment Trust, which has outperformed its benchmark by 6% per annum over the past ten years, and the equity long/short fund, Longstone, which has returned +19.8% since inception against the EPRA benchmark of - 39.5%. The experience and stability of the nine-strong investment team is widely recognised within the marketplace and this expertise will underline the multi-layered approach to the Fund’s management.”
Key features of the Thames River Real Estate Securities Fund:
Structure: UCITS III Fund with Irish domicile
Share classes: GBP Accumulation and Distribution share classes EUR, NOK Accumulation share classed
Minimum retail investment: €/£ 10,000 / NOK 100,000
Minimum institutional investment: €/£2.5m / NOK 25m
Annual Retail Management Fee: 1.5%
Annual Institutional Management fee: 1%
Performance fee: 15% above benchmark (FTSE EPRA/NAREIT Developed Europe Capped Index in Sterling) HWM
For further information, please contact:
Thames River Capital LLP Tel: 020 7360 1200
Michael Warren Investment Director Tel: 020 7360 1370
Quill PR Tel: 020 7758 2230
Jo Stonier Tel: 020 7758 2236
Marina Sejer-Hansen Tel: 020 7758 2239
Notes to Editors
Thames River Capital LLP is authorised and regulated by the Financial Services Authority. Thames River Capital was established in 1998. Thames River Capital LLP together with its affiliates Nevsky Capital LLP and Thames River Multi-Capital LLP, manages £8.3 billion /US$13.3 billion, with 168 staff including 91 investment professionals and 28 in sales and marketing as at 31 December 2009.
Thames River Capital and its affiliates manage a range of multi-manager funds, property funds, UCITS III funds, and long / short funds investing in equities (Global, Emerging Market, European and UK), and bonds (Global Credit and OECD Sovereign).
Thames River Real Estate Team
The real estate team manages the award winning TR Property Investment Trust plc (TRPIT), the UK’s largest closed-ended specialist real estate equity fund. AUM as at 30 November 2009 stand at $1.2bn (£0.7bn) invested in Pan European real estate securities (90%) and UK physical real estate (10%).