Why Private-Asset Valuations Matter for Metrics Real Estate Multi-Strategy Fund (ASX:MRE) and CD Private Equity Fund III (ASX:CD3) Beyond the S&P/ASX 200

On 19 August 2026, CD Private Equity Fund III (ASX:CD3) lifted its 31 July net Tangible Asset backing from $1.42 to $1.52 a unit after tax. Nothing had been bought or sold. A US private equity manager had simply delivered its 30 June valuation report.

That episode explains why private-asset valuations matter so much for CD3 and for Metrics Real Estate Multi-Strategy Fund (ASX:MRE). Both hold Assets with no daily market price, so their reported net asset values rest on periodic appraisals, and both units have recently traded well below those values.

Two listed trusts, two kinds of private assets

MRE is a stapled vehicle: one listed unit combines a Passive Trust, which lends to Commercial Real Estate projects, and an Active Trust, which takes equity stakes in developments. The Trust Company (RE Services) is the Responsible Entity and Metrics Credit Partners is the manager, according to the August 2026 monthly report. The fund listed on 16 October 2024 and targets a net total return of 10 to 12 per cent a year.

CD3 is a registered managed Investment scheme with K2 Asset Management as responsible entity. It holds a 71.22 per cent interest in U.S. Select Private Opportunities Fund III, which invests with smaller US private equity managers. The June 2026 quarterly update lists 13 underlying managers with 2015–2018 vintages, 55 active portfolio companies and 83 exits since inception.

Neither is an operating company. Each earns returns from what it owns: interest and development profits for MRE, company sales and listings for CD3.

Where MRE's valuation sensitivity sits

The Appendix 4E for the year to 30 June 2026 shows the Passive Trust held $151.3 million of financial assets, 98 per cent senior-ranking loans across 168 Debt assets with a weighted average loan-to-value ratio of 72 per cent. The Active Trust held $278.7 million across 16 equity assets, 77 per cent residential by sector.

By our calculation, the Active Trust therefore represented about 65 per cent of the two trusts' combined financial assets. Loans repay at Face Value if borrowers perform; development equity is marked to fair value, so estimates of land and project worth drive much of the reported result.

That shows in the numbers. MRE reported FY26 net profit of $70.6 million, while declared distributions, paid only by the Passive Trust, totalled 10.48 cents a unit, or $15.9 million. Net asset value (NAV, the fund's assets minus liabilities, per unit) rose from $2.17 to $2.53. By our calculation, that is a rise of about 17 per cent, and profit was roughly 47 cents a unit, mostly retained.

The June 2026 quarterly portfolio report says an international accounting firm reviews the underlying Loan valuations monthly. It does not set out the valuation method for the equity assets, and the Active Trust is concentrated: Orchard Hills North accounts for 22 per cent of committed equity and Scotch Hill Gardens 13 per cent.

CD3's valuation lag in practice

CD3 relies on marks supplied by its underlying general partners, and those arrive a quarter late. Its June quarterly update says limited Partnership values were based on 31 March 2026 valuations.

The revised NTA announcement attributed the July upgrade to Trive Capital Fund II's 30 June report, driven by Lyntris Corporation (formerly Vitesse Systems). By our calculation the revision added about 7 per cent to post-tax NTA. The fund cautioned that its adopted valuation should not be read as a predictor of any IPO price.

Lyntris then listed on the NYSE on 19 August 2026, with the underlying partnership receiving US$1.01 million plus 528,323 shares. Even so, post-tax NTA fell to $1.451 at 31 August from $1.521, partly on foreign-exchange losses as the Australian dollar strengthened to US$0.7167. Being US-dollar assets, CD3's holdings lose Australian-dollar value when the local currency rises.

Discounts tell a similar story

MRE reported a discount of 32.8 per cent at the end of August, on a Market Value of $260 million against NAV of $387 million. A year earlier the gap was far narrower: Market Index shows a 30 June 2025 close of $1.99, roughly 8 per cent below that date's $2.17 NAV by our calculation. The market has not followed the valuation uplift.

For CD3, ASX market data showed a last price of $0.77 on 26 September. Against August's post-tax NTA of $1.451, that is a discount of about 47 per cent by our calculation; at 30 June the gap was about 44 per cent. Dates differ, so the comparison is indicative.

Fees, Liquidity and the limits of comparison

MRE's Quarterly Report discloses management fees and costs of 1.57 per cent and a performance fee of 15.38 per cent above a 10 per cent hurdle. CD3's documents describe management fees within underlying partnership capital calls without stating a rate, so a like-for-like fee comparison is not possible from those sources.

The funds also sit at different life stages. MRE is still recycling capital, making four new loans in August. CD3 is in its harvest phase: it has distributed $2.299 a unit since 2016 against a $1.60 original unit price, a 1.44x return of capital from distributions alone, and paid $0.12 in August.

Their reporting dates differ too. MRE's NAV is struck monthly, while CD3's NTA can jump when late valuation reports arrive. Neither sits in the S&P/ASX 200; Market Index lists CD3 outside the major indices.

Indicators to follow

For MRE, the useful signals are further development settlements, such as the Helensvale Business Park stage one completion noted in the June quarter, and whether sales prices support Active Trust carrying values. The audited FY26 accounts, flagged as due in September, may add valuation detail.

For CD3, watch whether the Lyntris shares are sold or distributed, remaining 30 June and later 30 September manager valuations, AUD/USD moves, and the pace of remaining exits. In both cases, the gap between price and NAV reflects how far the market trusts those private marks.