The REIT-to-private valuation gap and what would actually make me believe it closes

The convergence argument shows up everywhere: public REITs trading at a discount to both broader equities and to private real estate marks, with the private gap described as the longest stretch since the early 2000s. I understand the mechanics of why it can persist. Private funds mark quarterly using appraisals and those appraisals lag transactions, so a gap can be partly an artifact of who is doing the pricing rather than a genuine mispricing.

What I'm chewing on is what would actually confirm the gap is real and closing rather than just being slowly appraised away. Three things I'd watch. First, transaction cap rates in the actual private market moving toward where public implied cap rates already sit, which resolves the gap downward on the private side instead of upward on the public side. Second, REITs using their currency to buy assets, which only works if the shares aren't the cheap side of the trade. Third, take-privates and M&A, where private capital pays a premium to public trading levels, which is the cleanest evidence the discount was real.

The uncomfortable version is that all three happen at once and the gap closes without public shareholders getting much of the upside, because private marks come down to meet the public price. Two decades of roughly 9 percent annualized total return on the all-equity index came with plenty of periods where the discount stayed a discount for longer than anyone's patience.

Has anyone worked out how they'd tell the difference in advance, or is this only legible after the fact? I keep landing on the second answer.