WEST PALM BEACH, FL (HEDGECO.NET) – Apollo Real Estate Advisors, one of the country’s largest real estate opportunity funds, has unveiled a new hedge fund according to Reuters wire reports. Accordingto the report, the Real Estate firm raised the sum of $30 million from some of its principals and high net worth individuals to seed the new hedge fund. The new fund is called Claros Real EstateSecurity hedge fund.
According to published reports, the new Claros hedge fund generated an impressive annualized return of about 20% during the first four months of trading. However, one of the funds partners Brad Wildauer, has warned investors that the future returns may be smaller. Wildauer said, “We don’t want to represent that as what our returns will be, we�ve been fortunate with our timing,� according to him.
Wildauer expects the Claros Real Estate Fund would return an average of 14% to 15% annually, �above Libor and net returns to investors�. The managers have begun an aggressive campaign to raise additional investment assets for the new hedge fund, targeting institutional investors as well as other affluent individuals. They are hoping to attract an additional $170 million.
Another partner in the Claros hedge fund, Richard Mack, thinks an opportunity exists through potential interest rate hikes. He feels this could lead to a scenario whereby real estate fundamentals may lag the economic recovery. Such scenario may lead to arbitrage opportunities, according to him. Mack said, “We feel that there’s arbitrage opportunity in the secondary market for real estate debt securities.”
The new strategy will be investing primarily in the secondary market for real estate debt, but will also invest in equities as well, according to Wildauer. He added, “Using our real estate underwriting skills, we’re able to identify value opportunities that other investors may shy away from because they lack the skill, the resources, or the time to underwrite the situation and find the value�.
Fee structure and minimum investment requirements were not immediately provided.
Paul Oranika
Editor-in-Chief
HedgeCo.Net
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