NAV - or Net Asset Value - is a calculation that provides investors with a view into how the unit price of the property may perform over time based on fundamentals. NAV per Unit can be used to determine the value per share (“Unit”) compared to the current market price and help investors forecast future value.
NAV per Unit is determined using four key variables: valuation, principal balance of existing debt, interest in the operating company, and the total number of shares outstanding.
On May 18, 2022, TESLU filed an SEC 1-U to announce the status of its recent public offering, its assessment of NAV per Unit, and its expected distribution for the fiscal second quarter ending June 30, 2022. Let’s use this filing to better understand the concept of NAV.
Estimated Valuation & Corresponding Net Asset Value (NAV) for 286 Lenox Ave
286 Lenox Ave was valued by management at $11.3 Million at the time of the IPO. This valuation was determined using an independent third-party appraisal of the property, as well as a valuation analysis based on market conditions and comparable sales.
Let’s say we want to find the NAV per Unit as of the end of Q1 2022.
NAV per Unit is calculated by taking this valuation, less the outstanding principal balance of the property’s existing indebtedness, multiplied by the interest in the operating company, and then divided by the total number of Units outstanding as of March 31, 2022, the last day of the quarter.
Here’s the back of the napkin math:
$11,300,000 (Valuation of the property)
Less (-) $6,754,724 (outstanding debt principal as of March 31, 2022)
NAV = $4,545,276
Multiplied (X) by 40.65% (the Interest in the operating company)
Divided (/) by 7,134 (the total number of outstanding units at the quarter-end)
NAV per Unit = $258.99
NAV per Unit over time
As the operating company continues to meet its loan payment obligations, the outstanding principal balance of the debt will decrease, and the NAV per Unit will correspondingly increase, assuming no change in valuation.
To read the 1-U filing for TESLU please visit the research tab of our property page.
Providing Investors With The Tools They Need
Single asset investment - especially via the LEX platform - is a new concept, and it’s important to help investors understand each investment opportunity.
Owners with properties on the LEX platform provide periodic updates to investors about the underlying financials of each asset. Owners may file additional updates, such as the 1-U filing for TESLU, to provide investors with the information they need to make informed investment decisions.
We always love speaking with customers. You can schedule a time to meet with a member of our Investor Solutions team and discuss any questions you may have here.
LEX Markets does not provide tax, legal or accounting advice. Potential investors are encouraged to consult with professional tax, legal, and financial advisors before making any investment into a securities offering. This investment may not be suitable for all investors. Distributions and liquidity not guaranteed. Property performance and performance of property tenants not guaranteed. Diversification does not eliminate the risk of experiencing investment loss.
November 15, 2022
The Landing at One Chestnut is owned and operated by Manzo Freeman Development (MFD). The MFD team brings over 40 years of expertise in managing and developing industrial properties in the New England submarket.