Investor Information

Exploiting REIT pricing anomalies

Exploiting REIT pricing anomalies

    REIT Net Asset Value (NAV) is calculated by dividing its operating profit by an attributable capitalisation rate (cap rate). A higher (or lower) applied cap rate results in a lower (or higher) estimated NAV for a given level of operating profit.

    The computation of an applicable cap rate is part science and part art. However, this should not detract from the ultimate objective of NAV calculations – being the derivation of the price an asset should fetch in the market.