The joint venture partnership between CBRE and derivatives specialist fund manager Reech AiM confirmed that it would offer up to six real estate hedge fund strategies as it seeks to capitalize on the surge in interest from investors in the asset class.
The announcement coincides with the official launch on 1st May 2007 of the joint venture's first European real estate fund Iceberg Alternative Real Estate - a relative value absolute return fund which is targeting LIBOR +15% and investing in a range of financial instruments with exposure to real estate assets including listed securities, unlisted real estate vehicles and property derivatives. Iceberg's targeted capacity is £400 million (approx. €547 mln).
"Iceberg is a pure alpha real estate fund and the first true hedge fund play offering an opportunity to invest in a new asset class. The response to the derivatives application of real estate has been extremely positive and we expect the market to grow exponentially.
"We believe that real estate hedge funds are going to provide new risk and return dimensions to traditional 'long only' physical property exposure. Our range of funds will provide a range of sectorial, geographical or risk budgeting allocation options for either real estate or alternative investors," comments Christophe Reech. Martin Samworth, Managing Director of CB Richard Ellis, adds, "Our joint venture with Reech AiM and the launch of the Iceberg Fund are examples of the growing financial sophistication of the real estate markets and the opportunity that this represents for our business.
"The fund has been well received and we already have commitments from investors of up to 25% of Iceberg's capacity following an international marketing campaign over the last five weeks during which we have presented to over 350 institutions, fund of funds and sophisticated private investors. Investment into Iceberg by geographic region has been predominantly European although we are beginning to experience increasing interest from investors in the US and the Middle East."
The investor base comprising the first phase of Iceberg's fund raising activities is evenly split across traditional investors and alternatives managers as well as property investors seeking to hedge their risk to direct property holdings.
The decision to commit to a further five investment strategies is in direct response to investor demands and each strategy will adopt differing investment styles and approaches.
Service providers to Iceberg include; Goldman Sachs (prime broker); SJ Berwin (legal advisers); Deloitte (auditors) and Citco (administrators).
Source: CB Richard Ellis