Net asset value (NAV) is widely seen as the key real estate investment trust (Reit) performance metric. The logic is simple enough. Reits own buildings and when the value of those buildings goes up – or slumps, as is the case in the current downturn – investors have a simple way of assessing how fortunes are changing. At the moment, some might be tempted to sell Reits whose NAVs are falling and buy the small number whose NAVs are rising, once relative share price discounts or premiums to NAV are taken into account.
Yet there are arguments that this narrow focus does not fairly measure the performance of a Reit. As the NAVs of Reits continue to struggle, there are those such as Custodian Reit (CREI) (see boxout) eager to point to other metrics. Some of this may simply be an attempt to ignore bad news, but even so, there is plenty of worthy analysis of the sector that can be discovered by looking beyond NAV.