Increasing Spotlight on Private REIT NAVs in 2024
January 25, 2024
With further market volatility predicted this year, the NAVs (net asset values) of private REITs are likely to face a crescendo of heavy scrutiny.
NAV accuracy is such a pivotal barometer for measuring fund performance and tracking the value of REIT shares that the SEC regulates how and by whom it is established. Even so, given the complex calculations involved, investors can be forgiven for confusion about whose opinion to trust. Many private REIT managers continue to report inflated NAVs based on shaky internal valuations. While this strategy may have worked for a short market blip, the sustained downturn in the CRE industry brought on by the structural increase in the cost of capital has called into question the credibility of reported NAVs by both regulators and investors.
In 2024, funds that fail to provide truly unbiased third-party opinions of NAV, besides being punished by the market, will face unprecedented legal and regulatory risks. At Capright, a firm owned by its practicing partners, we provide truly independent NAV assurance free from conflicts of interest. To learn more contact Taylor Green.