Question

A particular city had only three industrial property sales in the most recent quarter, as shown in the table below. What is the average market capitalization rate?

Property Address	Sale Price	Net Operating Income
20 Industry Way	3,175,000	127,000
11 Airport Corridor	13,636,000	600,000
359 Distribution Circle	8,086,900	372,000

Question 9 options:

A)	4.33
B)	8,299,440
C)	5.5
D)	366,333
E)	4.50

Answer 1

We know, for a property,

Market Capitalization Rate = Net Operating Income / Current Market Value

Property Address	Net Operating Income	Current Market Value	Market Capitalization Rate
20 Industry Way	127,000	3,175,000	0.04
11 Airport Corridor	600,000	13,636,000	0.044
359 Distribution Circle	372,000	8,086,900	0.046
TOTAL			0.13

Hence, Average Market Capitalization Rate = 0.13 / 3 = 0.04333

                                                                                     = 4.33%

Answer)

A)

4.33