Thames River Capital is to launch a Dublin-domiciled Real Estate Securities Fund.
The Ucits III product will aim to provide above market returns while offering a degree of capital protection by being able to limit net market exposure to as low as 60%.
The fund, due for launch before the end of March, will be managed by Marcus Phayre-Mudge and James Wilkinson, provide daily liquidity and focus on listed property companies in Europe.
It will be benchmarked against the sterling FTSE EPRA/NAREIT Developed Europe Capped Index. Thames River said it would benefit from full Ucits flexibility but in normal conditions gross exposure to property shares would be limited between 80% and 160% of net assets and net exposure between 60% and 140%.
Valuation opportunities
Thames River said physical property assets in Europe, prices were between 10% and 15% below their peak in 2007, while in the UK, they remain some 33% lower.
Wilkinson said: “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.”
Thames River investment director Michael Warren said the company’s experience of running the TR Property Investment Trust and the equity long/short fund, Longstone, would count in favour of the management of the new fund.
He added: “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
Minimum retail investment: €/£ 10,000 / NOK 100,000
Minimum institutional investment: €/£2.5m / NOK 25m
Annual Retail Management Fee: 1.5%
