Capitalization Rate and Discount Rate
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There is not much posited on the discount rate used in CRE financial analysis, says Ori.
WALNUT CREEK, CA—“CRE practitioners frequently discuss the calculation and application of capitalization rates in making investments, however, there is not much posited on the discount rate used in CRE financial analysis.” That is according to Joseph Ori, executive managing director of Paramount Capital Corp., who discussed the subject in the exclusive commentary below. “As you recall, the capitalization rate is determined by two methods; the net operating income divided by property value or by a formula.”
The views expressed in this column below are the author’s own…
