Stavros Loizou, chief executive of Lewis Charles Securities, says the Lewis Charles Abu Dhabi Property Fund, to be launched early next month, aims to use so-called cash deals involving unleveraged property to take advantage of huge imbalances between supply and demand forecast for Abu Dhabi over the next three to five years.

PFW: What is the background to your company?

SL: Lewis Charles is a full-service investment boutique authorised 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 USD140m under management.

PFW: Who are your service providers?

SL: We have built a group of partners from the most reputable organisations in the region. Our auditor is KPMG Middle East in Abu Dhabi, our law firm is Lovells (Middle East) in Dubai, and our fund administrator is Gulf Clearing Corporation in Bahrain.

PFW: Have you had any recent launches?

SL: We're expecting to launch the Lewis Charles Abu Dhabi Property Fund in or straight after the first week of November.

PFW: How and where do you distribute the fund? What is the profile of your targeted client base?

SL: The fund is primarily targeting investors in the UK, the United Arab Emirates 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.

PFW: How do you generate ideas for your fund?

SL: The opportunities in Abu Dhabi and the UAE speak for themselves. We have spent the past couple of years understanding the property industry there fully and establishing key relationships that will help ensure the success of this fund. This last point is a critical element when working and investing in the Middle East.

PFW: 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', where 100 per cent 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 developers we intend to work with. Track record is key in this area.

PFW: What are your performance expectations?

SL: We fully expect the fund's net asset value to climb at a sustainable rate. This is backed up by back-testing models, and more tellingly, by the huge imbalances between supply and demand forecast for Abu Dhabi over the next three to five years by analysts such as Colliers International.

PFW: 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 cash deals, which buck the trend of acquiring highly-leveraged properties that has been very popular in the UAE. There are a number of benefits to this approach, which reduces the fund's exposure in terms of borrowing (clearly a key concern at the moment) and, due to the inbuilt equity realised from day one, it also protects against any market downturn to quite a significant degree.

PFW: What events do you expect to see in your sector in the year ahead?

SL: We expect continued sustainable growth in both residential and commercial property

PFW: How will these developments 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-plus years remaining in Abu Dhabi's oilfields, its economic diversification process has made it a more important location for international business and finance. This is helped by its strategic geography - nicely placed between the markets of west and east.

PFW: What differentiates you from other managers in your sector?

SL: A number of things: our transparency, our approachability, our ability to source and secure exceptional opportunities, our ability to utilise all the funds at our disposal - we have very low forward liabilities in terms of payments to make or debts to service. The latter 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, what really sets us aside is 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.

PFW: Do you have any plans for further product launches in the near future?

SL: Yes. We are 100 per cent focused on this fund for the moment, but there are so many opportunities in the Gulf region and further afield that we intend to take the next logical step and explore other Gulf Co-operation Council countries such as Qatar, Oman and Saudi Arabia. The Saudi Arabian market is on target for sustained growth within the next.