The Growing Importance of Secondary Market Activities for Open-End Real Estate Fund Shares in Germany

Schmalenbach Business Review

44 Pages Posted: 20 Sep 2018 Last revised: 27 Jan 2021

See all articles by Philipp Gerlach

Philipp Gerlach

Goethe University Frankfurt

Raimond Maurer

Goethe University Frankfurt - Finance Department

Date Written: January 22, 2020

Abstract

Shares of open-end real estate funds are typically traded directly between the investor and the fund management company. However, we provide empirical evidence for the growth of secondary market activities, i.e., the trading of shares on stock exchanges. We find high trading levels in situations where the fund management company suspends the issue or redemption of shares. Shares trade at a discount when the fund management company suspends the redemption, whereas shares trade at a premium when the fund management company suspends the issue. We also find evidence that secondary market trading activity is increasing since German regulation introduced a minimum holding period and a mandatory notice period for open-end real estate funds.

Keywords: Open-end Real Estate Funds, Secondary Market, Trading Restrictions, NAV-Price-Spread

JEL Classification: G11, G28, G29

Suggested Citation

Gerlach, Philipp and Maurer, Raimond, The Growing Importance of Secondary Market Activities for Open-End Real Estate Fund Shares in Germany (January 22, 2020). Schmalenbach Business Review, Available at SSRN: https://ssrn.com/abstract=3242745 or http://dx.doi.org/10.2139/ssrn.3242745

Philipp Gerlach (Contact Author)

Goethe University Frankfurt ( email )

Theodor-W.-Adorno-Platz 3
House of Finance
Frankfurt, 60323
Germany

Raimond Maurer

Goethe University Frankfurt - Finance Department ( email )

Theodor-W.-Adorno-Platz 3
House of Finance
Frankfurt, 60323
Germany

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