The Nav Discount Of The Real Estate Funds: Evidence From The First Takeover Bids On The Italian Market

This paper enters the wide international debate about the average discount on the Net Asset Value (NAV) of the closed-end funds, considering the recent takeover bids on the Italian real estate funds. The poor empirical analysis and the anecdotical available surveys on the Italian real estate funds market stress that the main reasons of this phenomenon are referred to the structural characteristics of the market (the scarce outstanding shares, the poor liquidity of the secondary market, etc.), to the peculiarities of real estate funds (the holding discount, the low disclosure on corporate governance of management companies, etc.) and to the features of the underlying assets (the fairness of the independent expert evaluations, the real estate systematic risk, etc.). This paper argues these assumptions in the light of the first takeover bids recently occurred on the Italian real estate funds market: the one on Tecla Fund and Berenice Fund managed by Pirelli RE SGR and the one on Beta Fund managed by Fimit SGR. Working out an empirical research on a database of the whole segment of the Italian real estate funds, from the date of the placing to December 31st, 2007, this paper aims to verify if the average NAV discounts on Italian real estate funds is also a function of behavioural reasons. Particularly, the survey observes the discount tendency during the takeover bid periods and puts in evidence some specific signals and performances shown by the market.