Question

In: Economics

TRUE OR FALSE In calculating NAV, Green Street Advisors uses an “Economic Cap Rate” that is...

TRUE OR FALSE

In calculating NAV, Green Street Advisors uses an “Economic Cap Rate” that is different from capitalization rates used by appraisers, in that the cap rate is applied to NOI after deducting a reserve for recurring capital expenses.

Solutions

Expert Solution

Answer- The statement is TRUE.

Explanation-A cap rate is the yield generated by a property or group of properties. Cap rate is the net operating income (rents minus expenses), or “NOI,” expressed as a percentage of a property’s value. Cap rates have an inverse relationship to asset value, so when asset values rise, cap rates fall, and vice-versa.

Net operating income (NOI),can be calculated including or excluding capital expenditure. Capital expenditures are the costs associated with the long-term ownership of commercial real estate that are capitalized, not expensed. Green Street Advisors uses the cap rate is applied to NOI after deducting a reserve for recurring capital expenses. They call these expenses cap-ex or contingencies.


Related Solutions

Titmuss uses blood donation to show that ethics must come before economic interests. True or false?
Titmuss uses blood donation to show that ethics must come before economic interests. True or false?
Cap-and-trade policy in effect makes the right to pollute a tradable good. True or False
Cap-and-trade policy in effect makes the right to pollute a tradable good. True or False
True or False: "The goal of an economic system should be to create as much economic...
True or False: "The goal of an economic system should be to create as much economic growth as fast as possible." Identify if you believe this statement is True or False. Provide a supporting explanation to your answer. Your explanation should include a graph. Make sure to define any concepts from the section that you use in your explanation.
Please find 2 articles on Market Failure (Cap and Trade, Green Credits). Do an Economic Analysis...
Please find 2 articles on Market Failure (Cap and Trade, Green Credits). Do an Economic Analysis (see below for format) I. Summary ( couple sentences) II. Economic Analysis (1-2 paragraph) a. explain possible outcomes of policies you encountered b. is this a good way to control market failure and why *I dont care if you agree or disagree with the article or the policies, as long as you back it up with your own thoughts.**
True or False. In order to use results from the Central Limit Theorem for calculating that...
True or False. In order to use results from the Central Limit Theorem for calculating that the sample mean is greater than some number, the population you are sampling from must have a normal distribution. If a variable has a binomial distribution with the probability of success equal to 0.82, then the distribution is skewed to the left. For calculating the probability that a sample mean is greater than some given value, in solving this problem, one of the first...
1. True or false? Briefly explain. a Suppose that you open The Wall Street Journal and...
1. True or false? Briefly explain. a Suppose that you open The Wall Street Journal and find that the 30-year Treasury bond has a yield-to- maturity of 7.5%. This is an example of a nominal interest rate. b. friend asks to borrow $10,000 from you for a year. Inflation is expected to be 2% during the next year, so she offers to repay you $10,200 at the end of the year to compensate for the price increase. Assume that your...
According to the President's Council of Economic Advisors, the labor force participation rate has significantly declined...
According to the President's Council of Economic Advisors, the labor force participation rate has significantly declined since the year 2000, due primarily to retiring baby boomers and the severity of the 2007-2009 recession. However, over the past couple of years, the labor force participation rate has held fairly steady, indicating that previously discouraged workers may be reentering the labor market. In June 2017, the labor force participation rate was 62.8%, roughly the same as it was a month earlier. Source:...
C++ Questions: 1. True/False: an int uses 4 bytes in memory on all systems. 2. True/False:...
C++ Questions: 1. True/False: an int uses 4 bytes in memory on all systems. 2. True/False: a double typically offers better precision than a float. 3. True/False: The following two statements are equivalent assuming isPair is a variable of type bool: if (isPair) if (isPair == true) 4. Provide a value we could put in the blank so that the value of x will be 20 after the code snippet. int x = _____; x *= 4; 5. Provide a...
1. Chlamydomonas is a green alga that produces isogametes. True False 2. The difficulties of replicating...
1. Chlamydomonas is a green alga that produces isogametes. True False 2. The difficulties of replicating the ends of a linear DNA molecule are solved by the enzyme called Telomere DNA polymerase RNA polymerase Telomerase
Unrestrained economic growth will have some desirable consequences. True False
Unrestrained economic growth will have some desirable consequences. True False
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT