Analyst: Salamanca Capital
Launching a property fund as the world’s credit markets seize up would seem either foolhardy or opportunistic – the latter best describing one of the newest vehicles in the sector, Tri FCM Salamanca Global Property.
Launched in December 2007, this portfolio has performed well over an exceptionally volatile period: it is the top-performing fund over 12 months to April 20, posting returns of 5.7 per cent – 25.8 percentage points more than the peer group average.
Martin Bellamy, chief executive of Salamanca Capital, ascribes this outperformance to the absence of legacy issues. “It’s as simple as that. It’s not a fund with half of its assets bought pre-crunch,” he says.
However, he is keen to stress the new portfolio is not a distressed or “vulture” fund. “No, it would be wrong to say it’s distressed. It is opportunistic and it just so happens that we believe the nature of the environment is opportunistic. Asset prices are more realistic now, so for those that can raise cash, there are some very sensible-looking investments to be had. It’s an exciting time to be in a position where you can be opportunistic.”
This approach, he says, increases the fund’s ability to reach its target return of 15 per cent a year. That may sound optimistic to investors who have watched their portfolios fed through the wringer since 2007, but Mr Bellamy is steadfast. “It’s a reasonable, sensible and very achievable target,” he claims.
As the name suggests, the fund is the product of a joint venture. Wealth managers Fleming Family & Partners formed a partnership with Salamanca Capital Investments, a specialist in the real estate, mining and industrial sectors, creating FCM Salamanca. Tri Investments, a London-based boutique, invited this new venture to manage a global property fund, which has been launched with a modest €11m (£9.8m) under management. Within three years, Mr Bellamy expects this to grow to €250m, the level of its three other funds. The other retail offering is Tri European Residential Property, which has performed less well and sits in the bottom quarter of its peer group over one year.
The global fund is co-managed by Catherine Gillibrand, who has seven years at Salamanca Capital Investments, and Nicos Koulouras, who has two. They make day-to-day decisions about the fund but seek approval from the tripartite investment committee – which ensures the fund’s mandate is followed – for larger investment decisions. Its remit is broad: to invest across all property-related asset classes around the world. “We can even invest in a company that has the majority of its assets in real-estate-related areas,” Mr Bellamy says.
There are currently only three holdings in the fund: development company Ecocil Investment in Brazil; a joint venture in California Residence Switzerland, from which the fund is now making an “opportunistic exit”; and a loan guarantee facility to Bulgaria Mall Project, although this matured last month and, Mr Bellamy says, “the uplift from that is about to go through”.