Underwater Financing/Negative NAV
If the loan amount is very high or the property value low, then net asset value could be extremely low or negative, and would not be meaningful. An unusual balance sheet could cause the same problem. If you have tried this, you will have received a warning notice and further action will have been blocked, since negative NAV cannot be accommodated. Instead, it will be necessary to create a proxy net asset value, postulating that the situation (say, short-term real estate value impairment due to a recession) will be cured at a future time. The future stabilized value can then be grown in reverse using a long-term growth rate to create a hypothetical value for the real estate. That value can be used instead of the property’s current fair market value. See more on this here and here.
This is not likely to be the whole story, though, since such a situation could have several outcomes besides value recovery: the underwater condition might be cured by other means; the situation could end in foreclosure; or the loan could be forgiven, in which case it could generate phantom income for the partners. These other conditions would need to be analyzed separately from PVX. The conclusion of PVX for an eventual recovery can then be weighted along with the outcomes of each of these other scenarios according to their likelihood of occurring, and the weighted average of the outcomes will be your value conclusion. You can read more about this here.