Real Associates Eastern Europe Limited

INVESTMENT OBJECTIVE

Real Associates Eastern Europe seeks to provide long-term growth through a combination of capital appreciation and income.

The aim of the fund is to maximize returns for its unit-holders. The fund invests in properties in regions exposed to growth in the Eastern European countries – mainly in the new EU member states the Romania, Czech Republic, Estonia, Latvia, Lithuania, Poland, Slovakia, Slovenia and Hungary.

INVESTMENT STRATEGY

Real Associates invests directly in properties in regions exposed to growth in the Eastern European countries and Scandinavia. The overall objective is to invest in properties in the residential and commercial sectors in selected countries, primarily for capital gain. Returns are increased by the appropriate use of gearing to acquire properties.

Real Associates applies a conservative investment strategy focusing on investing in regions with a well developed framework for property ownership. Conservative assumptions are used in currency and mortgage selection to diversify the portfolio across countries as well as sectors.

Property selections are based on fundamental bottom-up and top-down analysis that generally seeks to identify high quality objects with both good appreciation prospects and income producing potential.

In pursuing its investment objective the management has the discretion to purchase some properties that do not meet its normal investment criteria, when it perceives an unusual opportunity for gain.

WHY EASTERN EUROPE?

Real Associates believes that the following factors are some of the key factors for capital gains and thereby strong performance for the fund: The purchasing power of Eastern Europeans is growing strongly from a very low base, as is the inflow of direct foreign investment. This is creating a massive demand for quality real estate. However the supply of quality buildings is extremely limited since the existing building stock is of poor quality, often in need of significant repairs or demolition. The introduction of the Euro had a large impact on the property prices in old Europe. It will have a similar impact in Eastern Europe and force the countries to apply a much more disciplined fiscal policy. The financial structures are beginning to resemble the systems of Western Europe, complete with banks (mostly foreign owned), stock markets, mortgages, property laws and governance codes. This is reflected in the converging interest rates. As mortgages, banking and fiscal policy, property laws and governance codes are re-aligned on European models, both foreign and domestic investment are attracted, thus further inflating property prices.

PERFORMANCE OF REAL ESTATE FUNDS

Funds engaged in the real estate area can provide significant long-term total return. At different times, the market may favour one type of real estate investment over another and Real Associates flexible investment charter enables it to seek opportunities wherever they exist in the industry. Both capital appreciation and current income are important components of total return and the contribution made by each at any time will depend on the composition of the portfolio and market conditions.

Other potential benefits include:

• Diversification: while long term returns from real estate stocks have been attractive, periods of strong performance have not always coincided with those of the broad market. Therefore, real estate may provide beneficial diversification in an investment portfolio when combined with other stocks and asset classes.
• Inflation hedge: historically real estate has tended to appreciate during times of accelerating inflation and consequently may provide a hedge against inflation.

Closure date : June 30, 2007 

Euro denominated. Minimum investment EUR20,000.

Invest through ^{investoffshoredirect.com} and the initial charge is reduced

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