They replaced the valuation advisor and NAV moved 3.1% the same month
Been holding a position in a public non-traded REIT for four years, funded out of retained earnings from the service business. Nothing dramatic, it's the part of the balance sheet I don't want to think about, which is exactly why what I'm reading now bothers me.
The sponsor filed a change in the independent valuation advisor engaged to review the monthly NAV. New firm effective at the start of a quarter. That same month the NAV per share moved up 3.1% against a trailing twelve months where monthly moves had been in the 0.2 to 0.6 range in either direction. Property-level appraisals are on a rolling annual cycle, so in any given month most of the portfolio is carried at a value that's somewhere between one and eleven months old, adjusted by the sponsor's own capitalization rate assumptions between full appraisals.
What I can pull from the filings: cap rate assumptions on the industrial sleeve came down about 25 basis points across the same period, which the sponsor attributes to observed transaction comps. That alone would move the whole NAV by roughly the amount I'm seeing, so the arithmetic is internally consistent. It doesn't tell me whether the assumption changed because the market changed or because the reviewing firm changed.
Why I care beyond curiosity. The performance fee crystallizes off NAV total return, and I hold about 38% of my position in shares purchased in the last eighteen months, which means the appraisal-driven step-up is a cost to me and income to the sponsor in the same month. My redemption value also comes off the same number, so it cuts both directions and I can't say which way I'm net.
What I'm doing about it: pulling the last three annual valuation methodology disclosures side by side to see whether the discount rate ranges and terminal cap ranges disclosed for each sector moved, and whether the advisor change is described anywhere as a scope change or purely a firm change. If the disclosed ranges are unchanged and only the point estimates within them moved, that's a different conversation than if the ranges themselves widened.
What I don't have a good method for: judging whether one month's outlier is signal at all. Four years of monthly NAVs is 48 data points and I'm treating one of them as meaningful, which is thin. Open to being told I'm reading tea leaves.