NAV Versus DCF For REITs

This problem tests your understanding of why net asset value is often especially relevant for real estate investment trusts and how it differs from a cash flow based valuation. It focuses on the logic of marking owned properties to market using comparable property values and cap rate assumptions, rather than relying only on projected operating cash flows. Interviewers ask this because they want to see whether you understand when a valuation method matches the economics of the business, and why asset based analysis can be more informative for property owning companies than a standard DCF.