Q: What is the background to your company/funds (Name of fund/s, Style/strategy of Funds, launch date, principals, name of manager/s, current AUM, listing details if relevant).
SL: Lewis Charles is a full service investment boutique authorized and regulated by the Financial Services Authority, a member of the London Stock Exchange and the Association of Private Clients Investment Managers and Stockbrokers (APCIMS). Its Property Fund Management Team has a track record of investing in both public and private property funds since 2000. To date we currently manage two AIM listed property funds, with just under $140 million under management.
Q: Who are your service providers? (Name accounting firm, law firm, fund administrator)
SL: Well. We have built a group of partners from the most reputable organizations in the region.
Auditor- KPMG Middle East, Abu Dhabi, UAE
Law Firm- Lovell's ME, Dubai, UAE
Fund Administrator- Gulf Clearing Corporation (GCC), Bahrain
Q: Have there been any recent events such as launches or changes/additions to the management team?
SL: We're expecting to launch the Fund on or straight after the first week of November 2008.
Q: How and where do you distribute the fund? What is the profile of your current and targeted client base?
SL: The Fund is primarily targeting investors in the UK, the UAE and the wider Gulf region. We are directly involved in taking this opportunity to market, as well as dealing with a large network of investment advisers as well as private equity companies.
Q: What is the investment process of your fund?
SL: The investment process is very straightforward. Potential investors will be invited to submit a completed application form. This will be attached to our prospectus. They will submit this along with other client verification materials to us. From here, their application will be processed in order that they can execute their investment. All of this ensures we adhere to the standards and levels of transparency we pride ourselves on.
Q: How do you generate ideas for your fund?
SL: The opportunities in Abu Dhabi and the UAE speak for themselves. What we have done is spend the last couple of years understanding the property industry there fully and establishing key relationships that will help ensure the success of this fund. I think this last point is one of the critical elements necessary when working and investing in the Middle East region.
Q: What is your approach to managing risk?
SL: We have taken a hard stance against potential credit risk by reducing it… to zero. Instead we are able to secure significant discounts to open market value by looking for off-market ‘cash deals’. These are deals where 100% of a property’s value is committed up front instead of adhering to a payment schedule in line with construction progress – usually for significant discounts.
Furthermore, full due diligence is undertaken on any of the developers we intend to work with. Track record is key in this area.
Q: Has your performance been as per budget and expectations? (If new launch, detail results of back-testing). Do you expect your performance or style to change going forward?
SL: We fully expect the Fund’s NAV to climb at a sustainable rate. This is backed up by running back-testing models, and more tellingly, by the huge imbalances in supply/demand that have been forecasted for Abu Dhabi particularly by Colliers International and the like over the next 3 – 5 years.
Q: What opportunities are you looking at right now?
SL: A key element of our investment strategy is securing the inbuilt equity available to those able to source what are known as ‘cash deals’. These essentially buck the trend of acquiring highly leveraged properties that has been very popular in the UAE. There are a number of benefits to the cash deal approach. It reduces the Fund’s exposure in terms of borrowing (clearly a key concern at the moment) and due to the inbuilt equity realized from day one, it also protects against any market downturn, to quite a significant degree.
Q: What events do you expect to see in your sector in the year ahead?
SL: Continued, sustainable growth in both residential and commercial property
Q: How will these changes/future events impact on your own portfolio?
SL: This is exactly why we have created the Fund – to take advantage of a solid economy. Abu Dhabi’s economy is based on hydrocarbon wealth, but aside from the 100 years plus of oil remaining in Abu Dhabi’s oil fields, its economic diversification process has only served to make it a more important location for international business and finance. This is in large part helped by its strategic geography – nicely placed between the markets of the west and the east.
Q: What differentiates you from other managers in your sector?
SL: I would say a number of things: our transparency, our approachability, our ability to source and secure exceptional opportunities, our ability to utilize all the funds at our disposal – we have very low forward liabilities in terms of payments to make, debts to service. This last point also ensures we can keep our annual management charges down for investors: they are not paying us to manage financed sums as well as the money they have placed under our care.
Above all, I think what really sets us aside are our distribution network. All the time we see individuals and institutions acquiring properties that have limited appeal to the resale market for various reasons. We have made a sound exit strategy a key focus, and our ability to incentivise our distribution network ensures a swift exit from all our investments, as and when we choose to do so.
Q: Do you have any plans for similar/other product launches in the near future?
SL: Yes We are 100% focused on this Fund for the moment, but there are so many opportunities in the Gulf Region and further afield that we fully intend to take the next logical step and to explore other GCC countries like Qatar, Oman and Saudi. The Saudi Arabian market is on target for sustained growth within the next 5 years.
