Joint-venture partners will launch first new long/short property equities fund for two years and widen investor base of successful Iceberg vehicle
Reech CBRE Alternative Real Estate is to dramatically expand its real estate hedge fund products at the start of 2010. Joint-venture partners CB Richard Ellis and Reech Alternative Investment Management will unveil the ﬁrst long/short real estate equities fund to be launched for two years and will expand Iceberg, the property relative value hedge fund launched by the joint venture in May 2007. CBRE UK managing director Martin Samworth said: “Real estate as an asset class is attracting more attention and indirect has become more popular, while Iceberg has a two-year-plus track record.”
The long/short equities fund is called SPIRE and its fund manager is Martin Allen, a well-regarded former Morgan Stanley analyst. SPIRE will be a directional fund, meaning that it will go net long or net short on property shares, depending on the fund manager’s view. Allen left Morgan Stanley last February to develop the new fund and joined Reech CBRE in June.
No new long/short property equity funds have been launched since Q4 2007, when Thames River Capital, Henderson and New Star launched products. At that time there were seven, but all but two have closed or are closing after failing to survive the very high market volatility during 2008 and 2009. The latest one to founder is the Portland Capital Real Estate Hedge Fund, which was set up by George Kountouris.
However, Thames River’s Longstone Fund and Insinger de Beaufort’s have thrived. Iceberg has also achieved outstanding performance, with a positive return this year of 22.45% and 44% since launch. But Reech CBRE has been disappointed by its failure to grow beyond £125m and plans to launch a new ‘wrapper’ for the fund to attract a wider investor base.
“I would like to see it grow to twice the size next year and we have been working on some new elements to do that,” Samworth said. He added that these would not be feeder funds but “different wrappers to build the investor base for the market- neutral strategies employed by Iceberg”. Reech CBRE director Graham Barnes said: “Since Iceberg’s launch in 2007, the property market has been over the peak and down the rollercoaster to the bottom, and now we are seeing a sharp recovery. Through all that, the fund has carried on doing what it should.”