When you own a publicly traded REIT, you always know what it's worth: the market sets a price every second the exchange is open. A non-traded REIT is different. Because its shares aren't listed on an exchange, there's no continuous market price — so the REIT's value has to be calculated rather than observed. The standard method is an appraisal-based net asset value (NAV): the sponsor, using independent third-party valuation advisors, periodically appraises the REIT's properties, adds other assets, subtracts liabilities, and divides by shares outstanding to produce a NAV per share. That NAV becomes the price at which the REIT issues and redeems shares. It's a sensible approach for an unlisted real estate portfolio, but it has important limitations: NAV is an estimate sensitive to appraisal and cap-rate assumptions, appraisals update slowly, and reported NAV can lag rapid moves in the real market. This guide explains why there's no market price, how the appraisal-based NAV process works, how often valuations happen, the limitations and lags, and what investors should watch. Note that non-traded REITs are offered through a broker-dealer to accredited or otherwise suitable investors after a suitability review; Baker 1031 does not provide tax or legal advice. This is educational information, not investment advice.
Why There's No Market Price
A non-traded REIT has no market price for a simple structural reason: its shares aren't listed on a stock exchange. A publicly traded REIT's price is set continuously by buyers and sellers transacting on an exchange — supply and demand produce a live, observable price that reflects, in real time, investor sentiment, interest-rate expectations, and the perceived value of the underlying real estate. Without a listing, none of that exists for a non-traded REIT; there's no marketplace continuously quoting a price.
So the value of a non-traded REIT can't be observed — it has to be estimated. Rather than letting the market discover a price, the REIT calculates one based on the value of what it owns: its real estate (the dominant asset), plus cash and other assets, minus its liabilities. This calculated per-share figure is the net asset value, or NAV, and it serves as the price at which the REIT sells new shares and redeems existing ones. So the absence of a market price is exactly what makes the appraisal-based NAV process necessary — there's nothing else to set the price.
So a non-traded REIT has no market price because it isn't exchange-listed, which is precisely why its value must be calculated as NAV rather than observed. So this is the starting point for understanding the whole valuation method. Why there's no market price — a non-traded REIT not being listed on an exchange, so there's no continuous marketplace of buyers and sellers to discover a price, meaning value must be calculated from the REIT's assets rather than observed — is the foundation of non-traded REIT valuation. With no market, the REIT computes NAV instead. Understanding this explains why the appraisal-based process exists. A non-traded REIT has no market price because it isn't exchange-listed — so its value must be calculated as an appraisal-based NAV rather than observed from a live market, which is the basis for everything that follows.
The Appraisal-Based NAV Process
The appraisal-based NAV process is how a non-traded REIT translates its real estate into a per-share value. Periodically, the sponsor engages independent third-party valuation advisors to appraise the REIT's properties — estimating each property's value using standard real estate methods, primarily income-based approaches that capitalize the property's net operating income at an appropriate cap rate, supported by comparable-sales and replacement-cost analyses. These appraised property values are the largest input to NAV.
From there, the calculation is straightforward in concept: the REIT takes the appraised value of its real estate, adds cash and other assets, subtracts its liabilities (including debt), and divides the result by the number of shares outstanding to arrive at NAV per share. The use of independent valuation advisors is meant to provide an objective check on the sponsor's own views, reducing the conflict of interest inherent in a sponsor valuing assets it manages and earns fees on. So NAV is essentially the appraised net worth of the REIT, expressed per share — the figure at which shares are issued and redeemed.
So the appraisal-based NAV process appraises the properties (via independent advisors), adds other assets, subtracts liabilities, and divides by shares — producing the per-share value at which the REIT transacts. So this is the engine of non-traded REIT valuation. The appraisal-based NAV process — independent third-party advisors periodically appraising the REIT's properties (mainly by capitalizing net operating income at a cap rate), after which the sponsor adds other assets, subtracts liabilities and debt, and divides by shares outstanding to compute NAV per share — is how an unlisted REIT sets its price. Independent advisors are meant to check the sponsor's conflicts. Understanding this process shows what NAV actually represents. NAV is computed by appraising the properties through independent advisors, adding other assets, subtracting liabilities, and dividing by shares — producing the per-share price at which the REIT issues and redeems shares.
NAV is not a market price — it's the appraised net worth of the REIT divided by its shares, and it's only as good as the appraisals and assumptions that go into it.
Valuation Frequency
How often a non-traded REIT recalculates NAV has changed significantly over time, and it matters a great deal for how current the reported value is. Legacy non-traded REITs historically valued their shares infrequently — often holding the offering price fixed for an initial period and then publishing an updated NAV only about once a year. That meant the reported value could be quite stale, reflecting conditions from many months earlier.
Modern NAV REITs, by contrast, value much more frequently — commonly monthly, and in some cases daily. These perpetual-life structures are designed around a regularly updated NAV that governs both new share sales and redemptions, so the value investors transact at is refreshed far more often than in the legacy model. More frequent valuation reduces (though doesn't eliminate) the staleness problem and gives investors a more current picture. So the frequency depends on the type of non-traded REIT: roughly annual for older structures, monthly or daily for modern NAV REITs.
So valuation frequency ranges from about annual (legacy non-traded REITs) to monthly or even daily (modern NAV REITs) — and the more frequent the valuation, the more current the reported NAV. So frequency is a key thing to check. Valuation frequency — legacy non-traded REITs typically updating NAV only about annually (after an initial fixed-price period), versus modern perpetual-life NAV REITs updating monthly or even daily to govern ongoing share sales and redemptions — determines how current the reported value is. More frequent valuation means less staleness. Understanding a REIT's valuation frequency tells you how fresh its NAV is. Valuation frequency ranges from roughly annual (legacy non-traded REITs) to monthly or daily (modern NAV REITs); the more frequent the appraisal, the more current and reliable the reported NAV.
Limitations & Lags
For all its usefulness, appraisal-based NAV has real limitations that investors must understand. First, NAV is an estimate, not a transaction price — it depends on appraisal judgments and, especially, on the cap-rate assumptions used to value the properties. Small changes in cap-rate assumptions can move appraised values meaningfully, so NAV carries inherent estimation uncertainty. It's a considered, independent estimate, but an estimate nonetheless.
Second, appraisals update slowly, which produces a 'smoothing' effect. Because properties are appraised only periodically and appraisers tend to move their estimates gradually, reported NAV changes more smoothly than the real market — and it can lag rapid moves. In a fast-falling (or fast-rising) real estate market, a non-traded REIT's NAV may not yet reflect the new reality, so the reported value can be higher (or lower) than what the properties would actually fetch. This lag means the smooth, stable-looking NAV can mask underlying volatility and may not capture sudden changes until subsequent valuations catch up. Leverage compounds this: debt amplifies how property-value swings affect NAV.
So NAV's limitations are real — it's an estimate sensitive to cap-rate assumptions, it updates slowly (smoothing), and it can lag fast-moving real markets, especially when leverage is involved. So don't mistake a smooth NAV for an absence of risk. Limitations and lags — NAV being an estimate sensitive to appraisal and cap-rate assumptions, appraisals updating slowly so reported NAV is 'smoothed,' and that smoothing causing NAV to lag rapid real-market moves (amplified by leverage) — are essential caveats to the valuation. A stable-looking NAV can understate real volatility. Understanding these limits keeps you from misreading NAV as certainty. NAV is an estimate sensitive to cap-rate assumptions, updates slowly (smoothing), and can lag fast-moving markets — so a smooth, stable-looking NAV doesn't mean the underlying value isn't moving or that risk is absent.
- Non-traded REITs have no market price because they aren't exchange-listed, so value is computed as an appraisal-based net asset value (NAV) per share.
- NAV is built by having independent third-party advisors appraise the properties, then adding other assets, subtracting liabilities, and dividing by shares outstanding.
- Valuation frequency ranges from roughly annual (legacy non-traded REITs) to monthly or daily (modern NAV REITs) — more frequent means more current.
- NAV is an estimate sensitive to cap-rate assumptions that updates slowly and can lag rapid market moves — so watch methodology, advisor independence, frequency, and leverage.
NAV vs. What Shares Are Really Worth
It's worth distinguishing NAV from what a non-traded REIT's shares would actually fetch in an arm's-length sale, because the two aren't always the same. NAV is the sponsor's independently supported estimate of net asset value per share, and it's the price at which the REIT issues and redeems shares. But because NAV is appraisal-based and smoothed, it may sit above or below the price the underlying real estate would command in a real transaction at a given moment — particularly during fast-moving markets when appraisals haven't caught up.
This gap matters most at the edges: if you redeem shares (subject to the redemption program's caps and any early-redemption discount), you receive a price based on NAV, which may not reflect the most current market reality. And if a non-traded REIT eventually pursues a liquidity event — a listing, merger, or wind-down — the price realized then reflects actual market conditions and buyer demand, which can differ from the last reported NAV. So NAV is the operative price for ongoing transactions, but it's an estimate that can diverge from realizable value, especially under stress.
So NAV is the price you transact at, but it's an appraisal-based estimate that can differ from what shares would truly realize in a sale — a distinction worth keeping in mind. So treat NAV as an informed estimate, not a guaranteed value. NAV versus what shares are really worth — NAV being the appraisal-based, smoothed estimate at which the REIT issues and redeems shares, which can sit above or below the price the underlying real estate would actually command (especially in fast markets), with the gap mattering most at redemption or a liquidity event — is a distinction every investor should hold in mind. NAV is the operative price, not a guaranteed realizable value. Understanding the gap prevents overconfidence in a smooth NAV. NAV is the price you transact at, but as an appraisal-based, smoothed estimate it can diverge from what shares would actually realize in a sale — most visibly at redemption or a liquidity event.
The NAV on your statement is the price you can transact at today — but it's an estimate, and the price your shares ultimately realize in a sale or liquidity event may be higher or lower.
What Investors Should Watch
Because NAV is an estimate with real limitations, there are specific things investors should watch when evaluating a non-traded REIT's valuation. First, the valuation methodology: how the properties are valued (the income approach and cap-rate assumptions), how often, and what other assets and liabilities feed into NAV. Second, the independence of the valuation advisors: NAV is more credible when independent third-party advisors — not just the sponsor — drive the appraisals, since the sponsor has a conflict of interest in valuing assets it manages and earns fees on.
Third, the valuation frequency: monthly or daily NAV (modern structures) gives a fresher picture than roughly annual valuation (legacy structures), so check how current the reported NAV is. Fourth, leverage: more debt amplifies how property-value changes flow through to NAV, increasing both upside and downside, so understand the REIT's leverage level. And throughout, remember the smoothing-and-lag caveat — don't read a stable NAV as proof of stability, especially in volatile markets. Reviewing these factors helps you judge how much confidence the reported NAV deserves.
So investors should watch the valuation methodology, the independence of the valuation advisors, the valuation frequency, and the REIT's leverage — and keep the smoothing-and-lag limitation in mind. So these checks tell you how much to trust the NAV. What investors should watch — the valuation methodology (income approach, cap-rate assumptions, inputs), the independence of the third-party valuation advisors (a check on sponsor conflicts), the valuation frequency (monthly/daily versus annual), and the REIT's leverage (which amplifies NAV swings), all while remembering NAV is smoothed and can lag — are the keys to judging a non-traded REIT's reported value. These checks calibrate your confidence in NAV. Understanding what to watch turns NAV from a number into something you can evaluate. Watch the valuation methodology, the independence of the valuation advisors, the valuation frequency, and the leverage — and remember NAV is smoothed and can lag — to judge how much confidence a non-traded REIT's reported NAV deserves.
How Baker 1031 Helps You Understand REIT Valuation
Baker 1031 Investments helps investors understand how non-traded REITs are valued — why there's no market price, the appraisal-based NAV process, the valuation frequency, the limitations and lags of NAV, and what to watch — so you can interpret a non-traded REIT's reported NAV accurately and judge how much confidence it deserves, when a non-traded REIT is suitable.
Non-traded-REIT interests and related securities are offered through the broker-dealer, Aurora Securities, Inc. (member FINRA/SIPC), and any recommendation follows a suitability review — non-traded REITs typically require accredited or otherwise suitable investors and are illiquid. We help you understand the appraisal-based NAV process, evaluate the valuation methodology and the independence of the valuation advisors, check how frequently NAV is updated, and weigh the effect of leverage and the smoothing-and-lag limitation — so you read NAV as the informed estimate it is rather than as a guaranteed value. Baker 1031 does not provide tax or legal advice; your CPA handles how distributions and any sale are taxed in your situation. We're candid that NAV is an estimate that can lag real markets, that non-traded REITs are illiquid, and that values can fall — neither yields nor returns are promised, and past performance doesn't guarantee future results. Our role is to help you understand non-traded REIT valuation clearly and invest only when suitable for your goals.
Frequently Asked Questions
How are non-traded REITs valued?
Non-traded REITs are valued using an appraisal-based net asset value (NAV), because they aren't listed on an exchange and therefore have no continuous market price. Periodically, the sponsor engages independent third-party valuation advisors to appraise the REIT's properties — primarily by capitalizing each property's net operating income at an appropriate cap rate, supported by comparable-sales and replacement-cost analyses. The sponsor then takes the appraised value of the real estate, adds cash and other assets, subtracts liabilities and debt, and divides by the number of shares outstanding to arrive at NAV per share. That NAV becomes the price at which the REIT issues and redeems shares. So the value is calculated from the REIT's assets rather than discovered by a market. NAV is a considered, independent estimate, but it's still an estimate — sensitive to appraisal and cap-rate assumptions and updated only periodically. So understanding the NAV process is essential to interpreting a non-traded REIT's reported value correctly.
Why doesn't a non-traded REIT have a market price?
A non-traded REIT has no market price because its shares aren't listed on a stock exchange. A publicly traded REIT's price is set continuously by buyers and sellers transacting on an exchange — supply and demand produce a live, observable price that reflects investor sentiment, interest-rate expectations, and the perceived value of the underlying real estate in real time. A non-traded REIT has no such marketplace: there's no exchange continuously quoting a price, so the value can't be observed. Instead, it has to be calculated from the value of what the REIT owns — its real estate (the dominant asset), plus cash and other assets, minus its liabilities — producing a net asset value (NAV) per share. That NAV serves as the price at which the REIT sells and redeems shares. So the absence of a listing is exactly why the appraisal-based NAV process is necessary: with no market to discover a price, the REIT must compute one. This is the structural starting point for understanding non-traded REIT valuation.
What is NAV per share?
NAV per share — net asset value per share — is the calculated per-share value of a non-traded REIT, and the price at which it issues and redeems shares. It's computed by appraising the REIT's real estate (the largest input), adding cash and other assets, subtracting liabilities and debt, and dividing the result by the number of shares outstanding. In essence, NAV per share is the appraised net worth of the REIT expressed on a per-share basis. Because non-traded REITs aren't exchange-listed, NAV stands in for the market price that a publicly traded REIT would have. It's important to understand that NAV is an estimate: it depends on appraisal judgments and cap-rate assumptions, it's updated only periodically, and it tends to move smoothly, so it can lag rapid real-market changes. So NAV per share is the operative price for transacting in a non-traded REIT, but it should be read as an informed estimate of value rather than a guaranteed or continuously market-tested figure. Always note how and how often it's calculated.
Who appraises a non-traded REIT's properties?
A non-traded REIT's properties are appraised by independent third-party valuation advisors engaged by the sponsor, rather than by the sponsor alone. Using these independent advisors is meant to provide an objective check on the sponsor's own views, reducing the conflict of interest inherent in a sponsor valuing assets it manages and earns fees on. The advisors estimate each property's value using standard real estate methods — primarily an income approach that capitalizes the property's net operating income at an appropriate cap rate, supported by comparable-sales and replacement-cost analyses. Their appraisals are the largest input to the REIT's NAV. The degree of independence matters: NAV is more credible when genuinely independent advisors drive the valuations, and less so when the sponsor's influence is heavy. So when evaluating a non-traded REIT, it's worth understanding who performs the appraisals and how independent they truly are. The more independent and rigorous the valuation process, the more confidence the reported NAV deserves. Check the offering documents for details on the valuation advisors.
How often is a non-traded REIT's NAV updated?
It depends on the type of non-traded REIT. Legacy non-traded REITs historically valued their shares infrequently — often holding the offering price fixed for an initial period and then publishing an updated NAV only about once a year, which meant the reported value could be quite stale. Modern NAV REITs, by contrast, value much more frequently: commonly monthly, and in some cases daily. These perpetual-life structures are built around a regularly updated NAV that governs both new share sales and redemptions, so the price investors transact at is refreshed far more often than in the legacy model. More frequent valuation reduces (though doesn't eliminate) the staleness problem and gives a more current picture of value. So when assessing a non-traded REIT, check how often it updates NAV — roughly annual for older structures, monthly or daily for modern NAV REITs — because that frequency tells you how fresh the reported value is. A more frequently updated NAV is generally more reliable as a current measure of value.
Can a non-traded REIT's NAV be wrong or misleading?
NAV isn't 'wrong' in a fraudulent sense when properly calculated, but it is an estimate with limitations that can make it misleading if taken as exact. First, NAV depends on appraisal judgments and cap-rate assumptions — small changes in those assumptions can move appraised values meaningfully, so NAV carries inherent estimation uncertainty. Second, appraisals update slowly and appraisers tend to move estimates gradually, producing a 'smoothing' effect: reported NAV changes more smoothly than the real market and can lag rapid moves. In a fast-falling market, a REIT's NAV may not yet reflect the new reality, so it can be higher than what the properties would actually fetch (and the reverse in a fast-rising market). Leverage amplifies this, since debt magnifies how property-value swings affect NAV. So NAV can be misleading if you treat a smooth, stable-looking number as proof of stability or as a guaranteed realizable price. So read NAV as an informed estimate, understand its lag, and don't mistake smoothness for an absence of risk.
What is the smoothing effect in non-traded REIT NAV?
The 'smoothing' effect refers to the tendency of a non-traded REIT's reported NAV to change gradually and appear less volatile than the real estate market it represents. It arises because properties are appraised only periodically rather than priced continuously, and because appraisers typically move their estimates incrementally rather than in sharp jumps. The result is a NAV that looks smooth and stable — but that smoothness is largely a function of how the value is measured, not evidence that the underlying real estate isn't moving. The practical consequence is a lag: in a fast-falling or fast-rising market, reported NAV may not yet reflect the new reality, so it can sit above or below what the properties would actually command until subsequent valuations catch up. Leverage compounds the effect, since debt amplifies how property-value changes flow through to NAV. So the smoothing effect means a stable-looking NAV can mask real underlying volatility. Investors should keep this in mind and not read smoothness as safety, particularly during volatile market conditions.
Does NAV reflect what I could sell my shares for?
Not exactly — NAV is the price at which the REIT issues and redeems shares, but it's an appraisal-based estimate that can differ from what your shares would truly realize in a sale. Because NAV is smoothed and updated only periodically, it may sit above or below the price the underlying real estate would actually command at a given moment, especially in fast-moving markets when appraisals haven't caught up. If you redeem shares through the REIT's redemption program, you receive a price based on NAV — subject to the program's caps and any early-redemption discount — which may not reflect the most current market reality. And if the REIT eventually pursues a liquidity event (a listing, merger, or wind-down), the price realized then reflects actual market conditions and buyer demand, which can differ from the last reported NAV. So NAV is the operative transaction price, but treat it as an informed estimate of value rather than a guaranteed realizable price. The gap matters most at redemption and at a liquidity event.
What is a cap rate and why does it matter for NAV?
A cap rate (capitalization rate) is the ratio used to convert a property's net operating income into an estimated value — essentially, value equals net operating income divided by the cap rate. It reflects the return a buyer would require for that type of property in current market conditions. Cap rates are central to a non-traded REIT's NAV because the income approach to appraisal capitalizes each property's net operating income at an appropriate cap rate to estimate its value, and those appraised property values are the largest input to NAV. The key point is sensitivity: a small change in the cap-rate assumption can move appraised values — and therefore NAV — meaningfully, because the relationship is inverse (a higher cap rate implies a lower value, and vice versa). So when cap rates rise (often alongside rising interest rates), property values and NAV tend to fall, and when they compress, values rise. This is why cap-rate assumptions are a core thing to understand when evaluating how a non-traded REIT's NAV is derived and how sensitive it might be to changing market conditions.
How does leverage affect a non-traded REIT's NAV?
Leverage — the debt a non-traded REIT uses to finance its properties — amplifies how changes in property values flow through to NAV. Because NAV is calculated as the value of the real estate plus other assets minus liabilities (including that debt), and because the debt is relatively fixed while property values fluctuate, a given percentage change in property value produces a larger percentage change in the equity (NAV) beneath it. So if a leveraged REIT's properties rise in value, NAV rises more than proportionally; if they fall, NAV falls more than proportionally. This means higher leverage increases both the upside and the downside of NAV, making the REIT's per-share value more sensitive to real estate and cap-rate movements. Combined with the smoothing-and-lag effect, leverage can make a sudden market downturn especially impactful on NAV once appraisals catch up. So understanding a non-traded REIT's leverage level is essential to gauging how volatile its NAV could be and how much risk you're taking. Check the REIT's leverage in its offering and periodic disclosures.
Are modern NAV REITs valued differently from legacy non-traded REITs?
Yes — the main difference is valuation frequency and structure. Legacy non-traded REITs historically held a fixed offering price for an initial period and then updated NAV only about once a year, so the reported value could be stale, and they were typically oriented around a single terminal liquidity event years down the road. Modern NAV REITs are perpetual-life structures built around a regularly updated NAV — commonly monthly, and sometimes daily — that governs ongoing share sales and redemptions, rather than waiting for a one-time liquidity event. Both use the same fundamental appraisal-based approach (independent advisors appraise the properties, then assets minus liabilities divided by shares gives NAV), but modern NAV REITs refresh that calculation far more often, giving investors a more current picture and providing ongoing redemption-based liquidity. So while the valuation method is conceptually the same, modern NAV REITs value much more frequently and continuously than legacy non-traded REITs. So check which type you're considering, because the frequency materially affects how current and reliable the reported NAV is.
What should I watch when evaluating a non-traded REIT's valuation?
Focus on four things. First, the valuation methodology: how the properties are valued (the income approach and cap-rate assumptions), how often, and what assets and liabilities feed into NAV. Second, the independence of the valuation advisors: NAV is more credible when independent third-party advisors — not just the sponsor — drive the appraisals, since the sponsor has a conflict of interest in valuing assets it manages and earns fees on. Third, the valuation frequency: monthly or daily NAV gives a fresher picture than roughly annual valuation, so check how current the reported NAV is. Fourth, leverage: more debt amplifies how property-value changes flow through to NAV, increasing both upside and downside. Throughout, remember the smoothing-and-lag caveat — don't read a stable NAV as proof of stability, especially in volatile markets. So reviewing methodology, advisor independence, frequency, and leverage tells you how much confidence the reported NAV deserves. These checks turn NAV from a number into something you can actually evaluate before investing.
Is a smooth, stable NAV a sign of low risk?
Not necessarily — a smooth, stable-looking NAV can be misleading. A non-traded REIT's NAV tends to move gradually because its properties are appraised only periodically and appraisers adjust estimates incrementally, so the reported value naturally looks smoother and less volatile than a publicly traded REIT's continuously market-priced shares. But that smoothness is largely a function of how the value is measured, not evidence that the underlying real estate isn't moving or that risk is low. The same real estate carries the same fundamental risks — rents can fall, occupancy can drop, property values can decline, and cap rates can rise — regardless of how often the value is reported. The smoothing effect simply means a non-traded REIT reflects those realities with a lag rather than immediately. So a stable NAV doesn't mean low risk; it means the value isn't continuously marked to market. So judge risk by the underlying real estate, the leverage, and the structure, not by how smoothly the reported NAV moves. Treat smoothness as a measurement artifact, not a guarantee of safety.
How does Baker 1031 help me understand non-traded REIT valuation?
We help investors understand how non-traded REITs are valued — why there's no market price, the appraisal-based NAV process, the valuation frequency, the limitations and lags of NAV, and what to watch — so you can interpret a non-traded REIT's reported NAV accurately and judge how much confidence it deserves, when a non-traded REIT is suitable. Non-traded-REIT interests are offered through the broker-dealer, Aurora Securities, Inc. (member FINRA/SIPC), and any recommendation follows a suitability review; non-traded REITs typically require accredited or otherwise suitable investors and are illiquid. We help you understand the appraisal-based NAV process, evaluate the valuation methodology and advisor independence, check how frequently NAV is updated, and weigh leverage and the smoothing-and-lag limitation — so you read NAV as the informed estimate it is. Baker 1031 doesn't provide tax or legal advice; your CPA handles your tax situation. We're candid that NAV is an estimate that can lag real markets, that non-traded REITs are illiquid, and that values can fall. Neither yields nor returns are promised, and past performance doesn't guarantee future results.
Glossary
- Net Asset Value (NAV)
- The calculated per-share value at which a non-traded REIT transacts.
- Appraisal-Based NAV
- NAV derived from periodic property appraisals rather than a market price.
- Independent Valuation Advisor
- A third party engaged to appraise the REIT's properties objectively.
- Cap Rate
- The ratio converting net operating income into an estimated property value.
- Net Operating Income (NOI)
- A property's income after operating expenses, before debt service.
- Income Approach
- Valuing a property by capitalizing its net operating income.
- Smoothing Effect
- NAV's tendency to change gradually, less volatile than the real market.
- Valuation Lag
- The delay before NAV reflects rapid real-market moves.
- Valuation Frequency
- How often NAV is recalculated — annual, monthly, or daily.
- NAV REIT
- A modern perpetual-life REIT with a regularly updated NAV.
- Legacy Non-Traded REIT
- An older structure valued infrequently, often about annually.
- Leverage
- Debt that amplifies how property-value changes affect NAV.
- Shares Outstanding
- The share count NAV is divided across to get per-share value.
- Liquidity Event
- A listing, merger, or wind-down that realizes actual market value.
- Redemption Program
- The limited, NAV-priced way to exit a non-traded REIT.
- Sponsor
- The firm that manages the REIT and oversees the NAV process.
Sources & References
- U.S. Securities and Exchange Commission. Investor Bulletin: Non-Traded REITs
- U.S. Securities and Exchange Commission. Investor.gov — Real Estate Investment Trusts (REITs)
- FINRA. Real Estate Investments
- Nareit. What's a REIT (Real Estate Investment Trust)?
Disclosures
This article is published by Baker 1031 Investments, LLC for general educational purposes for accredited investors and is not an offer to sell or a solicitation of an offer to buy any security, nor is it tax, legal, accounting, or investment advice or a recommendation. Any securities offering is made solely through a sponsor’s private placement memorandum (PPM) following a suitability determination. Securities offered through Aurora Securities, Inc. (ASI), member FINRA / SIPC; Baker 1031 Investments is independent of ASI.
Oil & gas mineral and royalty interests and DST programs are speculative, illiquid securities sold only to verified accredited investors and involve substantial risk, including possible loss of principal, commodity-price and production-decline risk, lack of control, and the risk that an intended 1031 exchange fails to qualify for tax deferral. Whether a particular interest qualifies as like-kind real property is a fact-specific legal determination that varies by state and by the terms of the instrument. Tax results depend on your individual circumstances. Consult your own CPA and attorney before acting. Past performance does not guarantee future results.
