NAV per share

A NAV per share is built bottom up. Capitalise net operating income at a market yield, segment by segment rather than for the portfolio as a whole, add cash and other assets, subtract debt and other net liabilities, subtract deferred tax that would crystallise on a sale where the regime charges it, and divide by diluted shares.

Property is one of the few sectors where this is meaningful, because the assets are individually identifiable and individually tradeable. A sum of the parts on a conglomerate is an estimate of what divisions might fetch. A property NAV is an estimate of what specific buildings would fetch, with comparable transactions to test it against.

The market quotes a premium or discount to it rather than a multiple, and the European convention for the denominator is EPRA net tangible assets rather than statutory net assets. A discount is information rather than an automatic opportunity: it can reflect doubt about the valuations, the cost and constraint of the corporate wrapper, leverage, or an expectation that rents fall.

The thing to hold onto is that it is a chain of estimates, not a fact. The yield, the passing rent against market rent, the treatment of developments and the deferred tax assumption are all arguable, and the yield alone is enough to move the answer by more than most people expect. Quote the assumptions alongside the number.