Prerequisites and entity map
Complete the NOI, cap-rate, NAV, and debt guides before this workshop. The task requires a separate row for each legal ownership layer, not merely a company-wide cap rate. All figures are hypothetical millions of dollars. Assume plain proportional common ownership, no promote waterfalls, no guarantees, and debt valued at par. Our REIT owns one portfolio outright, 40% of an unconsolidated venture, and 60% of a controlled consolidated venture. Consolidation determines financial-statement presentation; it does not grant common shareholders 100% of every consolidated asset's economics. Build the ownership map before assigning values.
Value the wholly owned and unconsolidated assets
The wholly owned portfolio has NOI of 48 and an assumed 6% cap rate, producing gross property value of 800. Its property debt is 250, so net equity is 550. The unconsolidated venture has total NOI of 30, a 7.5% cap rate, debt of 180, and cash of 10. Its full property value is 400 and total equity is 400 + 10 − 180 = 230. Our 40% share is 92. The equivalent proportionate bridge is 160 of property value plus 4 of cash minus 72 of debt. Both routes must agree.
Remove outside ownership from consolidated property
The controlled venture has total NOI of 20, an 8% cap rate, debt of 100, and no other assets or liabilities. Its full property value is 250, leaving equity of 150. The parent's 60% interest is worth 90 under these assumptions; outside holders own the remaining 40%, worth 60 million. A consolidated bridge can include property value of 250 and debt of 100, then subtract 60 of noncontrolling equity. A proportionate bridge can instead include 150 of property value and 60 of debt. Do not use the proportionate bridge and subtract the outside equity again.
Complete the common-equity bridge
At the parent level, add cash of 30, subtract corporate debt of 200, preferred equity of 40, and other liabilities of 20. These amounts are separate from the property and venture debt above. Common NAV is 550 + 92 + 90 + 30 − 200 − 40 − 20 = 502. With 50 million diluted common-equivalent shares, NAV is $10.04 per share. If the balance sheet also records an investment carrying value for the unconsolidated venture, replace it with the modeled 92; do not add both. This model values the underlying interest, not two different assets.
Competing interpretations and a cap-rate stress
The proportionate method highlights economic exposure, while a legal-entity perspective emphasizes where creditors can enforce claims and where cash is trapped. Both matter: proportional debt is an analytical convention, not necessarily a parent's legal repayment obligation. Stress the unconsolidated venture's cap rate from 7.5% to 9%, holding NOI fixed. Full property value becomes 333.333, and the parent's equity interest becomes 40% × (333.333 + 10 − 180) = 65.333. Total NAV falls to 475.333, or approximately $9.507 per share. A financing covenant or distribution restriction could matter before the modeled equity value reaches zero.
Verify the model and disclose omissions
Use venture notes, ownership tables, property-income definitions, debt footnotes, and noncontrolling-interest disclosures to reconcile every row. Prologis's primary reporting illustrates why company-share and full-venture measures must be distinguished; its real figures are not used here. Check fee businesses separately and avoid capitalizing income already embedded in property earnings. Real ventures can contain preferred returns, promote arrangements, guarantees, taxes, transfer restrictions, and capital calls that defeat simple percentage multiplication. Where terms are unavailable, state that proportional NAV is a simplifying scenario. Assumed cap rates and debt values are not sale offers or guaranteed liquidation proceeds.
Hypothetical case: Independent control total: two routes to $502 million
On a proportionate basis, assets total 800 + 160 + 4 + 150 + 30 = 1,144. Deductions total 250 + 72 + 60 + 200 + 40 + 20 = 642. Their difference is 502, matching the entity-equity route. For the controlled venture alone, the full consolidation route gives 250 − 100 − 60 = 90, matching 150 − 60 = 90 on a proportionate basis. These cross-checks catch ownership mistakes before more elaborate sensitivities make the spreadsheet look authoritative.
Test your reasoning
If the parent owned only 30% of the unconsolidated venture in the base case, with every other assumption unchanged, what would common NAV per share be?
Reveal the worked answer
The venture contribution would be 30% × 230 = 69, replacing 92. Common NAV would be 502 − 23 = 479, and NAV per share would be 479 / 50 = $9.58.
A common mistake
Combining 100% venture NOI with only proportionate debt overstates equity; adding an investment carrying amount after valuing its underlying assets counts the same interest twice.
What to check in the disclosures
- Map legal entities, ownership, and consolidation treatment.
- Match every income stream to the same share of assets and debt.
- Replace investment book values rather than adding duplicate interests.
- Reconcile entity-equity and proportionate-asset totals.
- Disclose waterfalls, guarantees, trapped cash, and valuation assumptions.
Sources & scope
This guide focuses on US REITs. Examples are hypothetical unless explicitly attributed. Definitions and issuer disclosures can change; use the current source and the issuer's own reconciliation.
- Nareit: Net Asset Value ↗
- Prologis 2025 results: company-share and venture disclosures ↗
- Prologis supplemental results: proportionate ownership definitions ↗
Educational material, not a recommendation or personalized investment advice. How these guides are prepared · Report a correction