SOROS CONTINUES REAL ESTATE DIVERSIFICATION
NEW YORK, Sept. 8 /PRNewswire/ -- Soros Fund Management, which provides investment advisory services to the Quantum Group of funds, announced two important developments today concerning its expanding real estate activities. Quantum Realty Fund, launched on March 1, 1993 in association with Paul Reichmann to acquire properties in the U.S. and Canada, will complete its first acquisition today, a $634 million portfolio of real estate from The Travelers Corporation. Separately, it was announced today that Quantum Fund N.V.'s interest in the U.K. real estate joint venture with British Land PLC will be spun off as a new vehicle, Quantum U.K. Realty Fund. The new fund will be offered to Quantum Fund shareholders, who will be given the option to invest their upcoming distribution of $2,250 per share in shares of the new fund in lieu of receiving cash. Quantum Realty-Travelers Transaction The $634 million transaction scheduled for completion today by Quantum Realty with Travelers brings the fund a geographically diverse portfolio of 47 assets, comprising approximately 6 million square feet of commercial space and 6,000 residential units. Paul Reichmann, executive chairman of Reichmann International, which advises the Quantum Realty Fund, said, "The acquisition will provide Quantum Realty investors with strong current cash flow as well as the prospect for significant capital appreciation as the property markets recover later in the decade." The cash contribution by Quantum Realty and its affiliates for this transaction is approximately $300 million, of which approximately $90 million is being provided by George Soros and various Soros family investment entities. The remainder of the purchase price has been raised through a Wall Street investment firm in the form of an acquisition loan as a prelude to commercial mortgage securitization. Mr. Soros commented, "This acquisition is not, at this moment, highly leveraged." He speculated that in the future, some or all of this portfolio of assets, or possibly Quantum Realty Fund itself, might be further securitized as a domestic real estate investment trust which could then be publicly offered and listed on a major U.S. exchange. "We are exploring, on a longer term basis, how we might eventually make some of our real estate investments more broadly available, even to Americans." Currently, all funds within the Quantum Group are closed to U.S. citizens and residents, including American institutional investors. The net asset value of Quantum Realty Fund has appreciated by approximately 35 percent since its inception in March. This is because Quantum Realty Fund has the unique feature of keeping its capital invested in Quantum Group funds until it is employed for the purchase of real estate. Following the Travelers transaction, Quantum Realty Fund will still have approximately $500 million of equity resources available to it to continue its real estate investment program in the United States and Canada. Offering of Quantum U.K. Realty Fund Regarding its joint-venture with British Land, Quantum Fund said that a circular was mailed to Quantum Fund shareholders yesterday. It describes the spin-off to Quantum Fund shareholders and the formation of the Quantum U.K. Realty Fund. On June 2, 1993, Quantum Fund and British Land PLC announced that they had entered into a joint venture to acquire high quality commercial real estate in the United Kingdom as opportunities arise. At the same time, Quantum Fund purchased approximately 11 million shares of British Land. This spin-off will not change the nature or terms of the partnership with British Land, which is called the BLQ Property Investment Partnership. In their agreement, Quantum Fund and British Land each committed to contribute 250 million pounds to the partnership, for a total of 500 million pounds, which should enable it to acquire over one billion pounds of U.K. real estate on a leveraged basis. The 250 million pound commitment by Quantum Fund will also be augmented by an additional 40-60 million pounds of capital committed by George Soros and his private investment entities. Mr. Soros commented, "We believe that the current economic conditions in the United Kingdom provide an attractive opportunity for investing in U.K. real estate." The Quantum U.K. Realty Fund, acting through its partnership with British Land, will acquire freehold and long-leasehold interests. The fund may also acquire shares in property companies, secured and unsecured debt of property companies, and may provide other types of real estate financing where the returns are considered attractive. Like its sister real estate fund, Quantum U.K. Realty Fund will have the same provision of keeping its capital temporarily invested in Quantum Group funds until it is called for real estate investment. Mr. Soros said, "The offering of Quantum Fund's interest in its partnership with British Land as a new fund to Quantum Fund shareholders provides them with an opportunity, which many welcome, to keep their money invested in Quantum Group funds instead of receiving a cash distribution." Mr. Soros also stated that he anticipates that the new fund, once substantially invested in real estate, will seek a listing of its shares on a securities exchange outside the United States, although no application has been submitted at this time. In the meantime, Edgar Astaire & Co. Limited in London and the other authorized dealers in shares of the Quantum Group of funds may arrange deals in shares of Quantum U.K. Realty Fund on a matched bargain basis. "This will be the first fund within the Quantum Group that will be denominated in sterling," Mr. Soros said. He speculated that, when combined with a possible exchange listing, this could result in a larger U.K. shareholder base, over time, than currently exists for other Quantum Group funds. Since 1989, in order to limit its size, Quantum Fund has paid a distribution to its shareholders, approximately equal to its net realized earnings for the prior year. Since 1991, shareholders have been given the option to take this distribution in cash or invest in one of several new funds.
Shareholders of the Quantum Fund have seen their shares appreciate by 53 percent in 1991, 68 percent in 1992 and 41 percent through the current year to date. Since its inception in 1969 through the end of 1992, Quantum Fund has achieved a compounded annual rate of return of 34.8 percent. If an investor purchased $100,000 in shares of Quantum Fund at its inception in 1969 and reinvested its dividends, his investment would have appreciated to over $183 million by Aug. 31, 1993. In total, the Quantum Group of funds has over $10 billion in net assets under management.
Soros Fund Management, located in New York, is a private investment management firm which serves as the principal investment advisor to the Quantum Group of funds. George Soros is the sole proprietor of Soros Fund Management. -0- 9/8/93 /CONTACT: David Kronfeld of Kekst and Company, 212-593-2655/
CO: Soros Fund Management ST: New York IN: FIN SU: RLE
MP -- NY066 -- 9903 09/08/93 14:38 EDT
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|Date:||Sep 8, 1993|
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