Explaining deviations from NAV in UK property companies: rationality and sentimentality

One of the most vexing issues for analysts and managers of property companies across Europe has been the existence and persistence of deviations of Net Asset Values of property companies from their market capitalisation. The issue has clear links to similar discounts and premiums in closed-end funds. The closed end fund puzzle is regarded as an important unsolved problem in financial economics undermining theories of market efficiency and the Law of One Price. Consequently, it has generated a huge body of research. Although it can be tempting to focus on the particular inefficiencies of real estate markets in attempting to explain deviations from NAV, the closed end fund discount puzzle indicates that divergences between underlying asset values and market capitalisation are not a ‘pure’ real estate phenomenon. When examining potential explanations, two recurring factors stand out in the closed end fund literature as often undermining the economic rationale for a discount – the existence of premiums and cross-sectional and periodic fluctuations in the level of discount/premium. These need to be borne in mind when considering potential explanations for real estate markets. There are two approaches to investigating the discount to net asset value in closed-end funds: the ‘rational’ approach and the ‘noise trader’ or ‘sentiment’ approach. The ‘rational’ approach hypothesizes the discount to net asset value as being the result of company specific factors relating to such factors as management quality, tax liability and the type of stocks held by the fund. Despite the intuitive appeal of the ‘rational’ approach to closed-end fund discounts the studies have not successfully explained the variance in closed-end fund discounts or why the discount to net asset value in closed-end funds varies so much over time. The variation over time in the average sector discount is not only a feature of closed-end funds but also property companies. This paper analyses changes in the deviations from NAV for UK property companies between 2000 and 2003. The paper present a new way to study the phenomenon ‘cleaning’ the gearing effect by introducing a new way of calculating the discount itself. We call it “ungeared discount”. It is calculated by assuming that a firm issues new equity to repurchase outstanding debt without any variation on asset side. In this way discount does not depend on an accounting effect and the analysis should better explain the effect of other independent variables.

Voltage-gated sodium (NaV) channel blockade by plant cannabinoids does not confer anticonvulsant effects per se

Cannabidiol (CBD) is a non-psychoactive, well-tolerated, anticonvulsant plant cannabinoid, although its mechanism(s) of seizure suppression remains unknown. Here, we investigate the effect of CBD and the structurally similar cannabinoid, cannabigerol (CBG), on voltage-gated Na+ (NaV) channels, a common anti-epileptic drug target. CBG’s anticonvulsant potential was also assessed in vivo. CBD effects on NaV channels were investigated using patch-clamp recordings from rat CA1 hippocampal neurons in brain slices, human SH-SY5Y (neuroblastoma) cells and mouse cortical neurons in culture. CBG effects were also assessed in SH-SY5Y cells and mouse cortical neurons. CBD and CBG effects on veratridine-stimulated human recombinant NaV1.1, 1.2 or 1.5 channels were assessed using a membrane potential-sensitive fluorescent dye high-throughput assay. The effect of CBG on pentyleneterazole-induced (PTZ) seizures was assessed in rat. CBD (10M) blocked NaV currents in SH-SY5Y cells, mouse cortical neurons and recombinant cell lines, and affected spike parameters in rat CA1 neurons; CBD also significantly decreased membrane resistance. CBG blocked NaV to a similar degree to CBD in both SH-SY5Y and mouse recordings, but had no effect (50-200mg/kg) on PTZ-induced seizures in rat. CBD and CBG are NaV channel blockers at micromolar concentrations in human and murine neurons and recombinant cells. In contrast to previous reports investigating CBD, CBG had no effect upon PTZ-induced seizures in rat, indicating that NaV blockade per se does not correlate with anticonvulsant effects.