In Practice: NAV Facilities To PERE Funds

This In Practice article looks at the key features of net asset value facilities (NAV facilities) for private equity real estate funds and discusses some of the points of difference when compared to NAV facilities for private equity buyout funds.

Net asset value facilities (NAV facilities) are facilities provided to a private capital fund (or, more commonly, to an aggregator vehicle directly below the fund) which "look down" to the fund's investments, with the lender having security over – and recourse to – the net asset value of those investments and the cashflows they generate.

NAV facilities originated in the secondaries space as a form of acquisition finance to purchase and leverage portfolios of secondary interests. NAV facilities have subsequently been adopted by fund managers across asset strategies, and that has been particularly true for private equity buyout funds (PE Funds) and private equity real estate funds (PERE Funds) over the last few years,