Amathus Capital is a Cyprus Alternative Investment Fund (the “Fund”) with an innovative strategy that perfectly embodies Cyprus 4.0.
What makes the fund’s Growth/Value blended strategy innovative is its capacity to source unique opportunities for both (Growth and Value) using its network. A strong and efficient network on both fronts especially is very difficult to establish, and the fund has been very successful at that. The blend itself is not exactly innovative, but it is certainly unique. Our data analytics allow us to follow the market trends and adjust our mandate accordingly – shift from Growth to Value and vice-versa as needed.
.Having started 12 years ago with a series of investments for small investor groups, Amathus has transformed its structure to take full advantage of Cyprus’s progressive regulatory regime. These previously separate interests have been combined into the Fund’s first close, and act as the core of its value Strategy.
As a result of this first close, and the fact that the Fund is currently fully deployed, subsequent closes offer the significant advantage of providing a return on investment right from the start, minimising any J-curve effect; most Funds start off with large amounts of cash in their early years and then go through an investment period of 1-3 years before beginning to generate yield – this is called the J-curve.
The Fund, which invests in UK real estate, has a diversified strategy of buy-to-let (Value Strategy) and development projects (Growth Strategy) to offer investors a unique blend of income and capital growth.
Licenced in April 2020 by CySEC, the Fund focuses on Greater London – one of the world’s highest value property markets, and has £65 million of gross assets under management.
With about 40 investors, nearly all from Cyprus, the Fund targets smaller / more granular assets which are less competitive in nature. Currently about 70 per cent of the portfolio is invested in buy-to-let properties, however, in the next 24 months, the Fund’s target is to increase its investment in development assets (from about 30 per cent to 40-50 per cent), while slightly increasing its investment in commercial properties (from 15 per cent to 20-25 per cent).
A move in that direction will enable the Fund to target an internal rate of return (IRR) of 12 per cent.
Amathus is managed by a skilled team with extensive real estate experience and has long-standing relationships with high-quality managers and local contacts, providing a considerable competitive advantage to its investors.
With its innovative strategy, Amathus utilises rigorous data analysis / reporting to achieve and maintain portfolio optimisation: maximising rental income / value of assets for the Value Strategy and optimising deal sourcing (buy or sell) for the Growth Strategy.
Value Strategy
The Fund’s value strategy focuses on competitive and stable rental yields. The investments are a blend of (i) family houses in the outskirts of London, in middle to high-end residential neighborhoods that include strong amenities (schools, access to high street etc.) and good transport links; (ii) mid-market multi-unit properties in London (Zones 2 to 6), and (iii) commercial / mixed-use properties on the high streets of Zones 2 to 6. The areas of focus are ones where the Fund’s management team has experience in and maintains strong links through local collaborations. This ensures a high quality tenant base and the minimization of vacancies / tenant turnover, which maximizes value. The Fund targets long-term occupancies and defensive rental yields.
Growth Strategy
The Fund’s growth strategy focuses on undervalued assets, with short to medium term development and / or re-positioning potential. This entails opportunities with specific profiles, e.g. land in favorable planning zones, underutilized properties, distressed assets and local development initiatives. There is a formulaic approach to development using tried and tested contractors to maximize efficiency and protect margins. Further, to enhance the value at exit, the management aims to secure tenants for assets prior to disposal. To source opportunities, the management relies on leveraging its extensive network of local professionals with early access to deals. Potential opportunities are rigorously assessed through qualitative and quantitative analysis before acquisition. An investment’s monitoring continues throughout development and until disposal. Where an investment from the Growth Strategy is deemed suitable for the Fund’s Value Strategy (i.e. to hold and rent out), then such an opportunity is transferred from the growth element of the portfolio to value.
Going forward
The Fund’s management remain committed to the Cyprus market given its core investor base. In fact, the Fund is seeking to expand even further its group of Cypriot investors with new high-net-worth individuals, as well as institutional investors, ultimately targeting a Fund size of £250 million in gross assets under management.
