Why reit market price is at discount to its nav

The REIT market price often deviates from its net asset value (NAV) due to several factors:

1. Interest Rate Sensitivity: REITs, particularly mortgage REITs, are sensitive to changes in interest rates. When interest rates rise, the cost of borrowing increases, which can impact the profitability of the REIT and lead to a discount to NAV.
2. Real Estate Market Conditions: The performance of the underlying real estate market influences REITs. Fluctuations in property values, occupancy rates, and geographic demand can impact the market price of REITs.
3. Investor Sentiment: Investor sentiment and market perception play a role in determining the market price of REITs. Factors such as macroeconomic conditions, industry trends, and investor expectations can affect the market price.
4. Dividend Distribution: Non-traded REITs may distribute income from offering proceeds and borrowings, which can reduce the value of shares and create a discount to NAV.
5. Management and Structure: The management structure and fees of REITs can impact investor confidence and market pricing. External managers and conflicts of interest can be a concern.

These factors, among others, can contribute to the discount between the market price of REITs and their net asset value. It's important for investors to consider these factors when evaluating the investment opportunity and the potential for returns.