Unlocking Value from Within Exploring Ownership’s Impact on Discounts to Net Asset Values in the Swedish Real estate market

Abstract

In recent times, the economy has undergone a rapid transformation, characterized by a notable increase in interest rates. As a consequence, real estate firms have been particularly impacted by these changes. This paper aims to investigate whether the type of ownership in a firm can influence the discount to net asset value. Specifically, we explore the relationship between institutional ownership and the magnitude of discounts. Our findings reveal a negative relationship between the level of institutional ownership and the extent of discounts observed. This suggests that firms with higher institutional ownership may experience reduced discounts, which can be attributed to the potential benefits of effective monitoring and expertise provided by institutional investors. Moreover, in addition to institutional ownership's impact on discounts, our study identifies significant relationships between size, return, and risk. These findings contribute to a broader understanding of the factors influencing the valuation of firms in the current economic landscape.