Author Topic: QFDI - Fondo Delta  (Read 8679 times)

writser

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Re: QFDI - Fondo Delta
« Reply #10 on: March 05, 2019, 02:57:15 AM »
I know nobody is interested in this but a lot of these funds have released financials the past few weeks. I continue to like this space. Totally hated asset group and a history of horrible capital allocation / management. On the flip side, most of these funds are currently debt-free, have conservative balance sheets and are in liquidation mode. Some vulture activists are skulking around here too.

I bought a small position in QFUNO last week. E137m in real estate on the balance sheet, E154m in shareholder equity, almost no liabilities. The fund is in a 'grace period' and wants to wind down in 2019/2020. By far their biggest asset is a building under renovation in Rome, Via Boncompagni 71. Supposedly it will turn into something super nice (https://www.designboom.com/architecture/mad-architects-71-via-boncompagni-rome-12-11-2014/) but you know, it's Italy. The building was written down from E119m in 2016 to E104m as of today. Still, the location looks prime to me. A quote from the QFUNO 2018 annual report (Google Translated):

Quote
During the second half of 2018 have not successfully completed negotiations with an institutional investor initiated
at the beginning of the year. Therefore, the Company has determined to turn a new competitive procedure using the Advisor Vitale
& Co., as announced on December 28, 2018 to the market.

Received offers the SGR took note that some of the invited investors, in addition to presenting an offer on the property in
Boncompagni have expressed interest in acquiring all or part of the remaining assets of the fund; consequently the SGR
required of all participants in the process, to improve the offer price on Boncompagni and also examine the opportunity to
make an offer with reference to the remaining assets of the Fund.
Such offers were received on 21 February 2019 and the same are under evaluation by the SGR to identify
a shortlist of bidders and the best sales strategy.

So talks regarding the trophy asset broke down last year, the building was written down another E10m and a new sale procedure was started. Now it looks like there are multiple bidders and the fund received offers a few weeks ago. As far as I understand this is good news and 'new news' but shares hardly moved. In my limited experience, it's often good to be pessimistic with these funds but sometimes the market is even more pessimistic. I think this is such a case. The market cap of QFUNO is currently ~E120m. By my simplistic calculations the market is pricing in a ~E35m or ~25% haircut on the real estate and given the news above I'm willing to bet that that's a bit too pessimistic. We'll see what happens in a few weeks I hope.

QFAL still looks dirt cheap to me, basically the previous post in this topic still holds. Same for QFID (was also targetted by vulture investors in 2016) and QFARI (where an activist bought a 30% stake last year). I also own small stakes in QFARE, QFPOL and QFSOC. A bit of a basket approach. In general I think there is some value in this space but my conviction in individual names is low. As these funds are winding down you are betting on very small real estate portfolios so variance could be high for single funds.

As somebody in this topic pointed out QFATL might also be very interesting, however I'm a bit scared by their leverage in combination with the fact that they intend to liquidate this year (forced sales + leverage .. ). Still, they have 3-4 trophy assets with prime tenants that should be relatively safe so I might be too conservative here.
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Foreign Tuffett

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Re: QFDI - Fondo Delta
« Reply #11 on: March 05, 2019, 03:40:53 PM »
I'm not an expert on US tax law -- and this is not tax advice, but I think Italian closed end real estate funds
would fall under the passive foreign investment company (PFIC) label. That makes them tough for individual investors in the US to own in taxable accounts.


Spekulatius

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Re: QFDI - Fondo Delta
« Reply #12 on: March 05, 2019, 05:02:03 PM »
Looks like an interesting playground to put some IRA money in. The discounts are large enough that even when a lot of things go wrong, one should do alright. I will look at some of these buggers and probably buy a basket opportunistically.
To be a realist, one has to believe in miracles.

MarkS

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Re: QFDI - Fondo Delta
« Reply #13 on: March 05, 2019, 05:16:18 PM »
Looks like an interesting playground to put some IRA money in. The discounts are large enough that even when a lot of things go wrong, one should do alright. I will look at some of these buggers and probably buy a basket opportunistically.

I'm also not.a tax expert and not offering advice.  If it trades over the counter you can buy a foreign stock with assets in an IIRA.  I don't believe you're allowed to buy foreign shares on a foreign exchange.with proceeds from an IRA.

Spekulatius

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Re: QFDI - Fondo Delta
« Reply #14 on: March 05, 2019, 06:36:01 PM »
Looks like an interesting playground to put some IRA money in. The discounts are large enough that even when a lot of things go wrong, one should do alright. I will look at some of these buggers and probably buy a basket opportunistically.

I'm also not.a tax expert and not offering advice.  If it trades over the counter you can buy a foreign stock with assets in an IIRA.  I don't believe you're allowed to buy foreign shares on a foreign exchange.with proceeds from an IRA.

I probably wasn’t clear. I just wanted to say that I am investing in an IRA.
« Last Edit: March 12, 2019, 04:09:07 AM by Spekulatius »
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writser

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When you are dead, you do not know you are dead. It's only painful and difficult for others. The same applies when you are stupid.

writser

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Re: QFDI - Fondo Delta
« Reply #16 on: March 26, 2019, 01:16:20 AM »
QFUNO paid out a small E 37.5 dividend. Quote from press release from today (Google translated):

Quote
Torre SGR SpA, on behalf of the type real estate investment fund closed listed company called "Unicredito Immobiliare Uno" (the "Fund", ISIN: IT0001358479), at the end of the first phase of the competitive procedure for the disposal of the entire remaining portfolio of the Fund, select the three best offers non-binding.

Further negotiations with the three best non-binding offers for the whole portfolio. One can still buy the real estate at a ~20% - 25% discount to the latest appraisal. Caveat emptor.
« Last Edit: March 26, 2019, 01:25:36 AM by writser »
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writser

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Re: QFDI - Fondo Delta
« Reply #17 on: April 04, 2019, 02:40:33 AM »
QFUNO is now trading at ~E761 and paid out a E37.5 dividend. ~9% return since the tidbit in the annual report. Discount to appraisal values is now <20%. Tempted to sell a bit but I'm probably going to sit this one out.

QFARE, Amundi Real Estate Europa, announced the past few weeks that they signed agreements to sell a large part of their portfolio, assets in Paris and Berlin, both at a significant premium to appraisal values. Pro forma the balance sheet looks something like: no long-term debt, E89m in real estate and E59m in cash and other current assets. Current market cap is ~E98M. Note that, even though this fund is named 'Amundi real estate Europe' and there is another fund 'Amundi real estate Italy', current assets are roughly 90% Italian real estate .. The rest was easier to sell I guess. The fund is looking, according to the annual report, at a possible block sale of their Italian assets. Probably at a steep haircut.

Even though shares are up ~15% since the announcements I think the market is underestimating the impact of these transactions. Assuming a large distribution in a few months you are buying the remaining real estate at a 50%+ discount. I bought back a few shares.

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writser

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Re: QFDI - Fondo Delta
« Reply #18 on: April 15, 2019, 12:59:56 AM »
QFPOL signed a preliminary contract for the sale of their main property, Viale Aldo Moro 21 at only a slight discount to the latest appraised value. Pro forma situation: ~22m real estate, ~28m in cash and receivables. Mcap ~37m. You pay effectively ~9m for the three properties left, roughly a 55%-60% discount at the current price.

The fund has been steadily selling properties and distributing proceeds and should be able to liquidate within a year or so and will probably distribute  another 200e / share if the above deal closes.

Obviously there are some risks but I think it's too cheap at current prices. I bought some more this morning and it wouldn't surprise me if it trades higher over the next few days.

I thought my Italian real estate portfolio was more or less in run-off mode but some of these names trade at what I think are attractive levels in their final stages so I've been accumulating more instead this year. We'll see how it turns out, the risk is that I buy the last crap that these funds couldn't get rid of over the past few years and that a huge discount is warranted. But so far these positions have been performing better than how the market judges them, and my positions are small and diversified anyway.
« Last Edit: April 15, 2019, 01:10:56 AM by writser »
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Spekulatius

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Re: QFDI - Fondo Delta
« Reply #19 on: April 15, 2019, 08:29:51 AM »
QFPOL signed a preliminary contract for the sale of their main property, Viale Aldo Moro 21 at only a slight discount to the latest appraised value. Pro forma situation: ~22m real estate, ~28m in cash and receivables. Mcap ~37m. You pay effectively ~9m for the three properties left, roughly a 55%-60% discount at the current price.

The fund has been steadily selling properties and distributing proceeds and should be able to liquidate within a year or so and will probably distribute  another 200e / share if the above deal closes.

Obviously there are some risks but I think it's too cheap at current prices. I bought some more this morning and it wouldn't surprise me if it trades higher over the next few days.

I thought my Italian real estate portfolio was more or less in run-off mode but some of these names trade at what I think are attractive levels in their final stages so I've been accumulating more instead this year. We'll see how it turns out, the risk is that I buy the last crap that these funds couldn't get rid of over the past few years and that a huge discount is warranted. But so far these positions have been performing better than how the market judges them, and my positions are small and diversified anyway.

Thanks for your continued posts. I have purchased one of these companies recently (QFSOC) and so far, so good.
To be a realist, one has to believe in miracles.