NAV (Net Asset Value)

Net asset value (NAV) is the estimated per-share value of an investment vehicle's underlying assets minus its liabilities, divided by the number of shares or units outstanding. For real estate funds and non-traded REITs, NAV is the central pricing concept: an independent or sponsor-directed valuation appraises the fund's real estate, adds cash and other assets, subtracts debt and accrued fees, and divides by shares outstanding to produce a NAV per share. Non-traded NAV REITs use this figure to set the price at which investors buy in and at which the fund repurchases shares under its periodic redemption program, since these vehicles do not trade on an exchange. NAV is an estimate, not a market-clearing price; it depends heavily on the appraisal assumptions used for capitalization rates and property values, and it may lag rapid changes in market conditions. Publicly traded REITs, by contrast, trade at a market price that can sit at a premium or discount to their estimated NAV, and the size of that gap is itself a signal analysts watch. Investors should understand how a fund calculates NAV, how often it is updated, who performs the valuation, and what redemption limits apply, because NAV-based redemptions can be gated or suspended during periods of stress.