Thames River Capital has confirmed that is gearing up to launch a new real estate securities fund this quarter.
The new offering—the Thames River Real Estate Securities Fund—is structured as an UCITS III vehicle and offers daily liquidity and a high level of transparency via investments focused on listed real estate companies in Europe.
The new vehicle is being managed by James Wilkinson and Marcus Phayre-Mudge. The pair will aim to outperform the benchmark, the FTSE EPRA/NAREIT Developed Europe Capped Index in Sterling in all market conditions.
According to the London-based asset management firm, the portfolio managers will take 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. 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%.
“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,” said Wilkinson. “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 recapitalized 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 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 utilize 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 recognized within the marketplace and this expertise will underline the multi-layered approach to the Fund’s management.”