The Bermuda-based fund was established in June 2003 for institutional investors and high-net-worth investors who could meet the $100,000 minimum investment. However, the company has now set up a feeder fund allowing IFA clients with at least $20,000 to gain access to this fund’s niche property portfolio.
The fund will initially invest mainly in the UK and parts of Europe such as France, but is likely to widen its investment remit at a later date to regions such as Canada and Costa Rica. It will invest in opportunities where properties, whether residential or commercial, can be bought at a discount then refurbished or renovated to make a profit. It is expected that capital growth will be achieved for investors by the sale of the properties while rents will provide the income.
The fund’s investment strategy may involve buying commercial properties which can be transformed into smaller residential properties. The fund can be geared 50-60 per cent to enhance potential returns.
The fund will be managed by Jonathan Adam and Christopher Wetherill. Adam is a solicitor who has built up an investment advisory and financial planning business focusing on Bermuda and the Caribbean.
Wetherill, an accountant, founded a Bermuda-based financial services company in 1981, from which he retired in 2000. His main area of expertise is property development in France and consequently, the French market is likely to feature strongly in the fund’s portfolio.
According to Hemisphere, one of the factors affecting growth in residential property prices in France has been British people buying holiday homes. The company believes the market has further potential to grow and will look for niche opportunities there, and elsewhere, that are not going to be affected by a downturn in the market. They will make use of property developers to find suitable opportunities that can generate decent returns for investors within an acceptable level of risk.
Although property funds may be attractive, it is important that the managers have detailed knowledge of their markets. Buying properties abroad can also introduce elements of currency risk in the portfolio and a lack of liquidity could be a problem for a fund of this type.