NAV Calculation Methodology*
Our advisor will calculate our daily NAV by (a) determining the net value of our operating partnership’s assets, based in part on the quarterly estimate provided by the independent valuer, by subtracting the liabilities of the operating partnership and multiplying the resulting amount by our percentage ownership interest in the operating partnership, (b) adding any assets held by the REIT and (c) subtracting any estimated accrued REIT liabilities.
Any change in our NAV will be allocated among the retail shares and the institutional shares based on each class’s percentage of the previous aggregate NAV. Following this allocation between the classes, NAV for each class is adjusted for contributions, redemptions, reinvestment of distributions and accrual of class specific expenses.
The advisor will not verify the quarterly valuations provided by the independent valuer and the methodologies used to calculate our NAV will be based on a number of judgments, assumptions and opinions about future events and may not reflect the amount that could be received in a market transaction. Therefore, the appraised value may not capture the potential realizable value which would potentially cause a discrepancy between the estimated NAV and the potential realizable NAV. All methodologies used by the independent valuer will be consistent with our valuation guidelines established by our board of directors.
Our NAV may not reflect the economic impact of certain extraordinary events on our portfolio that may have occurred since the prior quarterly valuation. If it is determined that such an event has occurred, we will make an announcement regarding such extraordinary event and our advisor will determine the appropriate adjustment to be made to our NAV. We will not however retroactively adjust NAV.
The below tables are a hypothetical calculation illustrating the factors that are likely to impact our NAV calculation for institutional shares and retail shares. This illustration assumes that the calculation occurs on a day which is not a distribution adjustment date and on which there are no reinvestments of distributions. If such hypothetical day were a distribution adjustment date, the adjustment to reflect the accrued distributions would reduce our NAV. As described above, retail shares and institutional shares will have a different NAV because of the different fees and expenses paid by each class of shares. The below tables assume that we have 66,666,666 shares issued and outstanding, comprised of 22,222,222 institutional shares and 44,444,444 retail shares, with assets of $600.0 million. The amounts shown in the table below are for illustrative purposes only and are not indicative of our current or projected financial condition or performance:
|Beginning NAV for institutional shares on Hypothetical Trading Day (per|
|institutional share)||$ 200,000,000 ($9.00)|
|Accrual of Portfolio Revenue1||35,616|
|Accrual of Asset Management Fee and Platform Fee2||(9,315)|
|Accrual of Other Expenses3||(2,466)|
|Accrual of Organizational and Offering Expenses4||(21,918)|
|Unrealized/Realized Gains (Losses) on Assets and Liabilities5||180,000|
|NAV Before Share Purchases and Redemptions (per institutional share)||200,181,917 ($9.01)|
|Ending NAV on Hypothetical Trading Day (per institutional share)||205,181,912 ($9.01)|
|Beginning NAV on Hypothetical Trading Day (per retail share)||$ 400,000,000 ($9.00)|
|Accrual of Portfolio Revenue1||71,233|
|Accrual of Asset Management Fee6||(10,959)|
|Accrual of Other Expenses3||(4,932)|
|Accrual of Organizational and Offering Expenses4||(43,836)|
|Unrealized/Realized Gains (Losses) on Assets and Liabilities5||360,000|
|NAV Before Share Purchases and Redemptions (per retail share)||400,371,506 ($9.01)|
|Ending NAV on Hypothetical Trading Day (per retail share)||410,371,496 ($9.01)|