- A REIT is more liquid that a property itself. As such, a "premium" or value should be placed on this added liquidity as compared to a real property. An investor in a REIT can basically liquidate his holdings in the stock market as compared to holding a real property which requires time ...
Net Asset Value or NAV is one of the factors to consider when investing in REITs. The NAV is basically the sum of all the REITs' assets (usually property and cash) minus away its liabilities (e.g. bank loans). Investors often look at the price of the REIT and its NAV to see whether a bargain exists when a REIT is trading at significant discount to its NAV.
Should a REIT trade above NAV or below NAV?
A common argument is that REITs should actually trade above their NAV. Why so? There are a few reasons given:
