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No. of Recommendations: 7
MonsterFluff,

The site you linked to gives an example of a NAV calculation done by Barclays Equity Research on UDR (an apartment REIT) based on UDR's Q4 FY2010 data. The NAV calculation is on page 8 of the PDF: https://samples-breakingintowallstreet-com.s3.amazonaws.com/...

Here is the UDR 10-K for 2010: http://www.sec.gov/Archives/edgar/data/74208/000095012311017...

If you compare the NAV calculation to the numbers in the 10-K it's pretty clear what's going on. Barclay's is using forward-looking NOI and Cap Rate to determine the *market value* of the real estate operations ($7.3B). They are not using the depreciated cost basis ($5.1B) anywhere in the calculation. They add in other real estate (construction in progress and land held for development) and other assets (cash, etc.) -- all at cost basis -- to get Gross Market Value of Assets, and then they subtract debt and other claims to get NAV.

It makes sense to use a market value calculation rather than the depreciated cost basis for the real estate operations because you would expect these assets to appreciate in value.

Hope this helps.
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