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Overview: A Disciplined Approach

NAV-Based Pricing Model Explained

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Disciplined Approach Toward Stock Selection

A Key Driver of Success

The Green Street NAV-based pricing model is designed to assess the valuation of any REIT relative to sector-level peers. The discipline and rigor the model embodies have played a pivotal role in the two-decade-long success of our recommendation track record...

Why Use NAV?

Because We Can

Most equity investors focus a great deal of attention on P/E multiples and/or yields, so it is fair to question why NAV should be the primary valuation benchmark for REITs. The short answer is that investors elsewhere would use NAV if they could, but the concept doesn't translate well to companies that are not in the business of owning hard assets...

What is NAV?

Mark It to Market

An NAV-based valuation methodology is only as good as the underlying estimate of NAV. High-quality estimates of marked-to-market asset value require a great deal of effort and resources, but the estimate can be reasonably precise when done properly...

A Simplified Example

Calculating NAV - A Simplified Example

More on Operating Real Estate

Calculating NAV - More on Operating Real Estate

Where Do Green Street NAVs Come From?

Hard Work

Green Street takes its NAVs very seriously. We devote a great deal of resources toward deriving the best possible estimates of NAV because it has always been the driver of our valuation conclusions...

Warranted Premiums to NAV

NAV Plus or Minus?

Prospective future total returns for any REIT are a function of how its real estate portfolio is likely to perform, as well as the value that its management team is likely to add or detract. Our Pricing Model provides a systematic assessment of the four key variables - franchise value, corporate governance, balance sheet risk, and overhead - that typically distinguish REITs that deliver "real estate plus" returns from those in the "real estate minus" camp...

The Influence of Property Sectors

A Normal World

The starting point in calculating the warranted premium for any REIT is the sector-average premium ascribed by the market at current share prices. An assumption is made that the dispersion of observed premiums for the entirety of our coverage universe serves as a good indicator of how premiums should be dispersed in any given sector. REITs that stack up better in the Pricing Model relative to their sector peers are then ascribed better-than-average warranted premiums, and vice versa...

Franchise Value
Balance Sheet Risk
Corporate Governance

Overview: A Disciplined Approach