Another update on my basket of Italian real estate funds

Four years ago I bought a basket of various Italian real estate funds because I liked the combination of a 50% discount to NAV and the fact that these funds all have a fixed maturity date. When I started tracking these funds there were 24 different entities with a total NAV of €4.0 billion. Two years ago that number had shrunk to 21 different funds with a NAV of €2.6 billion and now just 14 funds are remaining with a total NAV of €1.5 billion. It’s taking quite some time to sell the assets of these funds, but they are liquidating. At the same time the average discount of the remaining funds has shrunk a little bit, but is still quite high at 41%:

So far my investment in this basket has worked out to my satisfaction. As of today my internal rate of return stands at 14.7% which I think is pretty okay for real estate. While all the funds I bought have appreciated in price, most of the return can be attributed to just two funds that have now been fully liquidated. While things have worked out for me, just blindly buying all these funds would probably have been a bit less successful. Most funds have been quite successful in slowly selling their assets close to NAV, but some have sold them at sizable discounts. The Obelisco fund liquidated this year, writing down their NAV to zero, and without making a single distribution to shareholders…

Another fund that is close to liquidating is Unicredito Immobiliare Uno. In the latest annual report the management company reports that they have received offers from multiple investors to acquire the remaining real-estate portfolio of the fund. I think it’s quite likely they will be able to sell their remaining assets close to NAV, and thus with the discount remaining above 20% I think it’s an attractive bet. It’s my only new position in my basket of Italian real estate funds, all the other ones in the list below have been in my possession for multiple years:

Ticker Purchase Date entry Sell Date dividend Price/Exit Return
QFUNO.MI Mar 1, 2019 727.00 765.00 5.3%
QFSEC.MI Mar 27, 2017 260.10 66.5 248.00 20.8%
QFARI.MI Mar 27, 2017 725.50 860.00 18.4%
QFSOC.MI Mar 27, 2017 237.30 27.00 244.15 5.5%
QFAL.MI Feb 26, 2015 1,150.00 278.00 1,457.00 26.6%
QFARE.MI Feb 23, 2015 1,120.00 575.50 860.00 23.4%
QFDI.MI Feb 26, 2015 41.01 85.18 107.5%
QFEI1.MI Mar 2, 2015 720.00 Mar 27, 2017 450.00 948.50 93.8%
QFID.MI Feb 27, 2015 70.90 3.50 95.25 18.4%
QFIMM.MI Feb 27, 2015 1675.00 1002.00 1,256.20 34.6%
QFVIG.MI Feb 27, 2015 1635.00 1,751.95 554.00 40.9%

Disclosure

Author is long everything in the table that hasn’t liquidated yet

11 thoughts on “Another update on my basket of Italian real estate funds

  1. marko

    “The Obelisco fund liquidated this year, writing down their NAV to zero, and without making a single distribution to shareholders…”

    What happened here? How can you have a discount of 50% to NAV and lose?

    Reply
    1. Alpha Vulture Post author

      Leverage. Never followed the fund very closely, but at the end of 2016 they had for example 75M in real estate on the balance sheet and 64M in debt. That doesn’t leave a large margin of safety… but of course, things had been going bad in the years before as well…

      Reply
  2. Mac

    skimmed through a couple. really liked the one managed by BNP (QFID). Regarding the QFUNO, why do you think they extended the period of liquidation a second time?

    Reply
  3. Mac

    If it turns out like QFAL (Fondo Alpha), where they extended the period until 2030, it becomes less appealing I would say. Sorry for double commenting

    Reply

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.