I hold DRPF … but I didn’t want to sell as I don’t quite understand what’s happening here
Very sad… and pissed at UBS.
I think eventually you will have 4-5% holding in Residentia and 15% in HOSP. So if they go up, it will compensate a bit
I will hold for now. But obviously if all details are out, i will reevaluate.
The residentia doesnt even bother me so much as its very small. And i was looking to add it anyways.
I just really dont like hospitality and value added in there.
And the CS livingplus is much bigger if i checked correctly.
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To be fair, it kinda does. The fund is much bigger and likely becomes more attractive if it’s marketed as “the global RE fund for CH”, it becomes a no brainer for anyone investing in RE funds. Currently for a retail investor you have to make a bunch of micro decision to decide among 5 similar fund (and then you might end up piling up in the biggest one, increasing the premium).
For time being it doesn’t seem like market participants agree to this idea
Although I also think the idea to do this must be to be a better option versus all four of them. UBS would need to sell this story very well to bring the price back up
I’m not sure I can follow some of the arguments here. I understand that it’s sad to see a position trade down and I don’t want to rub salt into wounds. I had my fair share of losers (lost on EUR/CHF depeg etc.)
But- if you bought the funds on the market, then you bought it from a seller that most certainly isn’t UBS.
I don’t see how UBS is to blame. There are some winners (holders of UBS Residentia, CS Hospitality) and some losers (UBS Direct Residential, CS Living Plus). Of course if UBS client advisors pushed clients to buy DRPF on the market recently then they are to blame. Would be surprised if they did.
The new units in DRPF were sold at 14.9, i.e. still well below current market price.
Market forces will determine the premium of the new fund. It could, of course, well be that some learned a lesson and will be more careful paying 40% premia on funds. To be fair, 40% was already near the highest levels in a long time.But again not something UBS can be blamed for. If anything it showed the product is in high demand and popular.
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I don’t think the price will really go back up (at least not in efficient markets), the premium should be arbitraged to become ~identical for all the funds (maybe not exactly but close to it, since there’s the risk of the merge not happening).
It would impact the long term price tho (but that’s a 5-10y horizon), if this becomes one of the most popular RE fund post merge.
Sorry to see how this pans out for DRPF investors. As far as I understand, this fund has always been a discretionary, active fund. So whatever crap piece of RE UBS is buying, you’re buying. That’s simply the risk of being invested in a non-index or rules-based discretionary fund. You get no saying in this.
“Der Fonds investiert überwiegend in
Wohnbauten in der deutschen Schweiz, wobei
sich die Anlagen mehrheitlich auf grössere Städte sowie ausgewählte Agglomerationsregionen
konzentrieren.”
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I think we shouldn’t refer to NAV as NAV is an accounting number. The whole point of having a fund is to create higher value than the NAV through diversification , selection of investment and grouping them together.
Market value is what matters because that is the price people pay to buy the fund units. If DRPF was worth 20 CHF until 7 NOV, then UBS as a company managing the fund is responsible for making sure that their decisions do not destroy value.
If UBS decides to merge funds and it ends up being a value destruction exercise , then the management of UBS is responsible and no one else.
Now , having said that, I am pretty sure UBS is not crazy. They did it to deliver long term value to their shareholders (all of them). They should however explain this to people. For me it’s not clear what’s the point of merging a hospitality real estate with residential.
I agree. It’s a long game.
Anyways when I invest in Direct RE funds, it’s for 20 years time frame.
So it’s only a notional loss.
But its a good learning to understand how this process works
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Every share or ETF you buy is not from the company or the fund manager directly.
But if a company make decisions which impact market value of the stock then it is responsibility of the company.
Let’s say you buy Google stock (in open market) and tomorrow they say they are going to invest in Tesla and buy it for 3 trillion dollars. This would tank Google stock , who is responsible? Google or person who sold you the Google stock on open market or you (the investor) ?
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The investment atrategy can also change for passive index funds and they can be merged with other funds. The index can change, etc.
I think such a major strategy shift is just very bad business practice.
A good example is meme companies issuing more stock to benefit from the inflated price, I don’t think there’s anything illegal about it.
Also I guess being a closed end funds matters a lot, the investors should know that price distortions are more likely to happen and fund can trade away from fundamentals.
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I think this is not a good example. DRPF was raising 70MM and they decided to issue X number of shares at 14.9. They could have also issued less than X shares at 20 CHF. In the end it had to add up to 70MM.
It does not matter what is the issue price, what matters is what is the worth of those shares. The assets they were going to buy were considered worth 70MM by market and that is why it was fully subscribed.
Are you sure they could? Not sure they can issue away from NAV. It’s not like a company trading in the stock market where the market decides.
I am not an expert but DRPF decided to issue 10% extra shares. What if they decided to issue 20% extra shares? would it also be at NAV? If they did, the subscription would be 0 because it would not be worth it…
NAV is reflecting value of the assets they have. Not the assets they want to buy. So i think the common practice is to issue shares at NAV and issue equivalent number of shares to match the fair value of assets being purchased.
And on the bright side, I can go to 25 hours hotel and ask for ownership discount next year;)
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They would ussue subscription rights to the existing investors, which could be sold or executed.
So the existing investors wont be worse off than before.
I think they would always need to issue at fund NAV. Sometimes there are tiny levies for enter/exit.
But in this instance investors are mainly compensated through the value of the rights