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Cayman-domiciled Iceberg hedge fund outperforms in real estate

Posted: 23 May 2008

Fund manager Reech AiM has notified investors in its debut hedge fund of the continuing outperformance of Iceberg Alternative Real Estate Fund (Iceberg) - its European real estate relative value fund. The inception-to-date performance for Cayman-domiciled Iceberg delivered a +29.12% return (net of fees) with the month of April 2008 showing outperformance of +0.87%.

Employing multiple strategies and using leverage typically in the range of 1 to 2:1, the Iceberg Fund was established in May 2007, aiming to return to investors LIBOR plus 15% with an annual volatility of 10% irrespective of the direction of the underlying real estate markets.

"Despite the more challenging investment market for real estate, we have been particularly well placed to benefit from the Fund's position as a relative value, market-neutral fund," comments Christophe Reech, Chief Executive of Reech AiM. "We have been successful by capitalizing on periods of uncertainty and volatility in the market with out-performance driven primarily by value realisation throughout the year.

The emergence in recent years of an increasingly liquid market in real estate index derivatives, usually in the form of IPD swaps, has been an important development in facilitating the introduction of relative value methodologies to the real estate industry. Iceberg makes significant use of real estate derivatives, through which it takes real estate positions alongside all of the other available forms of indirect real estate risk in the U.K. and Continental Europe.

Iceberg Alternative Real Estate is a joint venture partnership between the world's largest commercial real estate services firm, CB Richard Ellis Group, Inc., and derivatives fund manager, Reech AiM.

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