European REITs report property at “fair value.” But appraisals lag the market 6–12 months and management clings to stale marks. This module shows you how a real analyst builds an independent NAV — and reconciles it to what the company reports.
Under IFRS (IAS 40), a European REIT carries its buildings at a valuer’s fair value, remeasured through the P&L — no depreciation. It looks authoritative. It usually isn’t: transaction evidence takes 6–12 months to filter into published appraisals, valuers anchor to prior marks, and CEOs resist write-downs to protect covenants and the equity story.
US-GAAP is, ironically, more honest — it reports cost and makes no claim to fair value, so US analysts never stopped building their own NAV. The method below is the same for both worlds. The only difference: in Europe you also get to bridge your number back to the reported one — and call out the gap.
Take cash, receivables and payables at face — but scrutinise every note (a deferred-tax liability that will never be paid isn’t a liability). Then independently value anything that drifts: investment property, developments, JVs, debt, minorities.
The US analyst presents a standalone NAV. The European analyst presents the same NAV — and a reconciliation: here’s my cap rate vs the appraiser’s, here’s my stabilised NOI vs theirs, here’s why the book is €X too high.
You don’t capitalise a transitional number. You capitalise where the asset settles once vacant space is leased and below-market rents roll up to market. Alstria’s passing rent (€9.9/m²) sits ~20% below market rent, with a ~9.9-year lease term. As leases expire and re-let, NOI grows from €89m toward €110m — a quarter of the value is embedded and invisible in a single forecast year.
A cap rate isn’t a guess; it’s a required return minus growth. Start from the risk-free swap, add the risk premium a buyer demands, and you get the unlevered return. Subtract stabilised NOI growth and you have the rate at which the market would actually transact.
This is the live NAV bridge from Alstria’s model. Capitalise the stabilised NOI into a property GAV, add developments and other assets, strip out debt and liabilities, divide by shares. The slider is the single most powerful assumption in the whole analysis — move it and see how fast “fair value” melts.
A building under construction has no stabilised income today. You value it on its completed stabilised NOI at an exit cap rate, deduct the cost left to spend, discount for time and risk, and take only your share of any joint venture.
| Development NAV walk (€m) | Ohnsorg Theater | Alte Post (JV) |
|---|---|---|
| Stabilised NOI on completion | 5.58 | 2.05 |
| Gross asset value @ exit yield | 102.8 | 37.8 |
| Less: cost outstanding | −20.0 | −10.0 |
| Discount for time & risk (8%) | −17.1 | −4.0 |
| Ownership share | 100% | 50% |
| Contribution to NAV | 62.2 | 2.6 |
Same company, same NOI, three cap rates. The appraiser’s mark implies a value the market discounts by nearly half. Your independent NAV lands within touching distance of where the shares actually trade — because the market, like you, refuses to take “fair value” at face value.