What is the NAV per share?

What is the NAV per share?

An investment company calculates the NAV of a single share (or the “per share NAV”) by dividing its NAV by the number of shares that are outstanding. For example, if a mutual fund has an NAV of $100 million, and investors own 10,000,000 of the fund’s shares, the fund’s per share NAV will be $10.

Do REITs trade at a premium to NAV?

Throughout much of the 1990s, REITs traded at significant premiums to net asset or liquidation (NAV), but since the latter part of 1998 they have generally traded at discounts to NAV.

Why do REITs trade at a premium to NAV?

(2014). NAV premiums create an opportunity for REIT managers to perform a seasoned equity offering (SEO) in the stock market, where the underlying assets are relatively overvalued. The proceeds can then be used to acquire new holdings in the property market.

How is NAV calculated for reits?

NAV equals the estimated market value of a REIT’s total assets (mostly real property) minus the value of all liabilities. When divided by the number of common shares outstanding, the net asset value per share is viewed by some as a useful guideline for determining the appropriate level of share price.

How do REITs calculate NAV?

Why NAV is important for REIT?

Benefits of NAV The use of the NAV is an attempt to bypass book value in favor of providing a more accurate estimation of actual market value for REIT holdings. To calculate the NAV, an analyst generates a subjective valuation of the REIT’s assets.

What is a daily NAV REIT?

NAV REITs, perpetual-life products, are valued daily or monthly and offer periodic limited liquidity. NAV REITs were initially introduced before the Great Recession, but the Blackstone Real Estate Income Trust (BREIT), rolled out in 2017, was the first to get significant traction.

What is a good p FFO for a REIT?

The ratio between price and funds from operations (P/FFO) is probably the best metric for evaluating REITs. In the current interest rate climate, P/FFOs have generally been in the high teens with some going into the 20s. Certain REITs have had persistently low P/FFOs, with some below 10.