Over the last days and weeks, I made a number of add-on transactions in my Italian real estate fund sub portfolio:
After news spread that a fund has acquired a 30% share in Amundi Re Italia, I increased my position by 0.9% to 2.2% of the portfolio at an average price of EUR 845 per share from December 22 to December 29 2017. I expect the GWM Value Activist Fund to positively affect the liquidation process until the end of 2019.
Europa Immobiliare Uno sold its two remaining assets before year end. Consequently, the fund is left with cash and an undisclosed amount of liabilities and provisions. The final distribution will be announced at the beginning of March 2018. Management commented that they expect the final distribution to be in a range between EUR 420 to EUR 459 per share. This does not include potential pay offs from two pending law suits. I increased my position by 1.5% to 3% at an average price of EUR 431 per share from December 27 to December 29 2017. The potential upside from this transaction more than compensates for a 2% loss in a worst case scenario.
Immobilium 2001 sold its best asset in Rome above appraisal value. After completion the current market cap will be covered 68% by cash. With a remaining real estate portfolio that has already been written down substantially, I believe the fund offers a very attractive return potential. Given the low trading volume, I was only able to increase my position by 0.2% to 0.6% at an average price of EUR 1,782 from December 27 to December 29 2017.
After a sharp price increase in the share price of Unicredito Immobiliare Uno, I reduced my position by 1.0% to 3.7% of the portfolio at an average price of EUR 937 from December 22 to December 29 2017.
I also bought a 0.5% a new position in Securfondo at an average price of EUR 281 from September 1 to December 29 2017.
This brings the total weight of Italian REIFs in my portfolio to 11.2%. The following table provides an overview for each fund (click on table to enlarge):
Notes to the table:
1) Cumulative write down as a percentage of total historic costs (based on current real estate portfolio).
2) Cash available plus short term investments and current assets less current liabilities as a percentage of current market cap plus debt.
3) Expected 2017 free cash to unit holders (after all cash costs).
4) Total annual gross rent as a percentage of current total real estate portfolio appraisal value (including vacant space and excluding developments / refurbishments).
5) Weighted average lease term as of YE 2017, best estimate given that disclosure differs by asset manager.
6) As of 6/30/2017, based on total leaseable area.
7) From a location perspective; note that other assets in the portfolio might have better characteristics in terms of leasing or asset liquidity.
8) Assumptions: liquidation at current NAV. In the case of Europa Immobiliare this scenario also includes a positive outcome from two legal claims.
9) Assumptions: liquidation of property portfolio at 60% of current appraisal values except for the best asset. Best asset to be sold at current appraisal value.
10) Assumption: liquidation of total property portfolio at 30% of current appraisal value.
11) Equal weighting of each scenario.
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