ABSTRACT

There’s nothing quite like takeovers to set the property share sector of the stock market buzzing. For tax and other reasons, property investment company shares normally stand in the market at a discount to their estimated current net asset value, though this discount will be smaller in a booming market than in a dull one. But investors tend to assume — sometimes rightly, sometimes wrongly — that if a takeover is to succeed the bidder will need to offer a price close if not equal to the victim’s net asset value. Why should investors be expected to sell £1 worth of assets for 80p?