Valuation · Updated 2026-10-25
REIT NAV Explained: How to Estimate Net Asset Value
Net asset value estimates the value of a REIT's real estate portfolio after debt and other claims. It is a useful valuation lens, not a guaranteed liquidation price.
The basic NAV formula
Estimate gross property value by dividing stabilized NOI by an appropriate capitalization rate. Subtract net debt and other liabilities, then divide the result by diluted shares outstanding.
Why cap rate selection matters
A lower cap rate produces a higher property value, while a higher cap rate produces a lower value. Sector, location, lease term, tenant quality, growth, and interest rates all influence the range.
Public price versus private value
A REIT can trade at a premium or discount to estimated NAV. The spread may reflect financing costs, management quality, growth expectations, taxes, liquidity, or investors' view of private-market pricing.
Use a sensitivity table
Run several cap-rate assumptions and debt scenarios. A range is more informative than a single NAV point estimate, especially when transaction markets are thin.
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Frequently asked questions
Is REIT NAV the same as book value?
No. NAV is generally a market-based estimate of property value less obligations, while book value follows accounting rules and historical cost conventions.
What does a discount to NAV mean?
It means the public share price is below the estimated per-share value of the underlying assets, but the estimate may be wrong or the discount may reflect real risk.