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A low cap rate, very good yield.
A low cap rate, very good yield, fully-leased, brand new office building.
Similar(57)
To be sure, selling off your low cap-rate investment homes and pouring the profit into REIT stocks isn't a tax-free exchange.
Low-cap rate markets are more likely to favor renters now.
To simplify: You should sell when the cap rate is low.
Now here's the unavoidable fact about real estate, especially residential: In almost any hot market, its cap rate is low.
"This is a very high interest rate and a relatively low cap – neither is particularly sustainable for growing a business".
"I mean everybody would love to have it fixed, have it at a very low interest rate, have it with a very low cap," McPherson told The Huffington Post, "but those don't all work".
At an implied cap rate of 6%, REITs are trading at the low end of the historical 5% to 10% range reported by the CCIM Institute in Chicago.
The dividend yield is low (and partially paid in stock), the multiple is high and the implied cap rate is sub-6%.
A cap rate is a real estate industry cousin to an EBITDA yield, and 7.5% seems awfully generous given that industrial properties used to trade for cap rates as low as 5.2%.
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Justyna Jupowicz-Kozak
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