Description
Since the inception of the first NAV REIT in 2013, these funds have emerged to meet investor demand for more precise and transparent valuation methods, especially in volatile markets. NAV REITs are distinct from publicly traded REITs in that they regularly disclose their net asset value (NAV), offer shares based on NAV prices, and buy back shares at NAV-based prices. This approach aims to stabilize the NAV per share compared to the fluctuating share prices of traded REITs, making NAV REITs attractive to investors seeking reduced portfolio risk through greater price stability. While not necessarily perpetual, most NAV REITs are structured with long-term objectives. They feature investor-friendly traits such as enhanced liquidity through regular redemptions, lower fees, and multiple share classes. However, due to their complex legal nature, investors are advised to approach NAV REITs with careful consideration and discipline.
Learning Objectives
o Private real estate has provided historically strong performance vs. public real estate
o NAV REITs were created to provide greater valuation transparency to investors
o Investment managers can capitalize on market dislocations and valuation declines through NAV REITs
o The NAV REIT structure is investor-friendly
o Certain property sectors are under-allocated within NAV REITs