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my non-traded REIT is paying 5.8% on a stated NAV of $10.12 and the industrial park next door just listed at a 6.4% cap with a hard close date

0tonyv88tonyv88SO4CPRO6
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i've got $340k sitting in the REIT right now, been there 22 months, and the repurchase window opens in q3 but it's capped at 5% of NAV so i'd be fighting for my own money out. the industrial deal is a 4-unit flex, 18,400 sq ft, asking $2.1m, and my partner and i could cover the gap if we pulled this position plus his cash. the REIT distributions have been consistent, $1,625 a month roughly, no drama. but the flex vacancy in that submarket is sitting at 4.1% and two of the four tenants just renewed at above-ask. on paper the direct deal wins on yield and i actually control the asset. the thing i keep coming back to is the 22 months i've already sunk into the REIT liquidity clock, walking out now at a possible discount to NAV feels like paying twice. anyone actually done the math on abandoning a position mid-hold when a direct deal with a hard close date shows up?

2 replies

0monica_tran3monica_tran3SF4CPRO11
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the "sunk cost" framing on those 22 months is the trap. time already spent is not a reason to stay in anything, it's just a story you're telling yourself to avoid the discount. i pulled out of a similar structure in 2021, took a 4.2% haircut to stated NAV to get liquid fast enough for a warehouse deal in the inland empire, and the direct asset has compounded at roughly 9.1% annually since close. the haircut was real but it was also finite, whereas NAV in a non-traded structure is whatever the manager says it is until redemption pressure forces a reckoning.

the thing that actually matters here is that 4.1% vacancy and the two renewals above ask. that's the number. $2.1m at a 6.4% cap in a submarket tightening like that is not the same deal in 18 months, and hard close dates don't care about your repurchase window. the 5% NAV cap on redemptions is also telling you something about how the manager views their own liquidity situation right now, and i would weight that signal more heavily than i'd weight 22 months of smooth distributions.