In a year in which the average hedge fund was down about 4%, Dallas-based KeyPoint Capital’s opportunistic real estate hedge fund added 15.6%.
The $20 million fund, founded by Bear Stearns and Goldman Sachs alumnus Rod Hinze, specializes in very liquid long/short investments in real estate-related U.S. equity securities. In addition to Hinze, the firm’s principals include COO Glenn Solomon and advisor Carl Esrey.
The fund was up in every month of 2011 with the exception of August, when it dipped 3.7%. It ended December with a modest gain of 0.5%. Last year’s gain builds on the fund’s 2009 and 2010 results of 16.5% and 10.7%, respectively.
The fund generated absolute returns on both sides of the portfolio in 2011, with long positions returning about 6.6% and short positions approximately 9.0%.
In a letter to investors seen by FINalternatives, KeyPoint said the fund’s December gains came primarily from a long position in a student housing REIT that won a contract with the University of Kentucky.
“We learned about this RFP in mid-November 2011, while meeting with the senior management team and the competitors to the REIT,” said KeyPoint. “We believe this announcement from UK will transform the student housing industry and provide an additional avenue for secular growth.”
KeyPoint said the fund also performed well in a long position in an industrial REIT that was trading 20% below NAV, “yielding over 8% on our cost basis and is making accretive acquisitions in owner-occupied industrial warehouses at attractive cap-rates.”
The firm believes the market is continuing to show “unique opportunities on both sides of the portfolio” for 2012.