English Lesson · 05
Capitalization Rate (Cap Rate)
A compact relationship between a property's income and its price—not a complete return forecast.
Definition
The capitalization rate is a property's annual NOI divided by its price or value. If a property has $100,000 of NOI and sells for $2,000,000, its cap rate is 5%. The inverse relationship is also used for valuation: value equals NOI divided by the selected cap rate.
Beginner Explanation
Think of a cap rate as a quick income-to-price comparison. If two buildings each produce $100,000, but one costs $2 million and the other costs $2.5 million, the first has a higher cap rate. That does not automatically make it better. The second may have stronger tenants, a better location, or lower future risk.
Professional Explanation
A cap rate reflects the market's pricing of current income, growth expectations, asset quality, liquidity, and risk at a point in time. It is not the mortgage rate, cash-on-cash return, or total return. Analysts must also identify which NOI is being capitalized: trailing, in-place, forward, or stabilized. Using an optimistic future NOI with a low cap rate can double-count improvement.
Why It Matters
Cap rates help compare transactions and translate income into an indication of value. They also reveal assumptions. A lower cap rate produces a higher indicated value for the same NOI; a higher cap rate produces a lower value. The selected rate should come from relevant market evidence and asset-specific judgment, not from a universal rule.
Real-World Example
At $300,000 NOI, a 5% cap rate implies $6 million of value; a 6% cap rate implies $5 million. Nothing inside the building needs to change for required returns to change the indicated value.
Common Mistakes
- Calling cap rate the investor's total return.
- Comparing cap rates based on different NOI definitions.
- Assuming a high cap rate always means a bargain.
Related Concepts
- NOI
- Yield
- Discount rate
- Comparable sales
- Risk premium
How the Industry Says It
- Wall Street
- Entry cap and exit cap
- Broker
- Going-in cap rate
- Interview
- Cap rate is a market-derived income-to-value ratio, not a complete return measure.
Frequently Used Abbreviations
- Cap Rate — Capitalization Rate
- bps — Basis Points
Practical Exercise
Calculate value for $240,000 of NOI at 4.5%, 5.5%, and 6.5%. Explain why the range is meaningful.
Recommended Next Topic
Cash Flow and Cash-on-Cash Return
中文
中文课程 · 05
资本化率（Cap Rate）
资本化率连接物业收入与价格，但并不等于完整的回报预测。
定义
资本化率等于物业年度 NOI 除以价格或价值。如果一项物业 NOI 为 10 万美元，成交价为 200 万美元，资本化率就是 5%。估值时也可反向使用：价值等于 NOI 除以选定的资本化率。
先用简单语言理解
可以把资本化率理解为收入与价格之间的快速比较。两栋楼都产生 10 万美元 NOI，一栋售价 200 万，另一栋售价 250 万，前者资本化率更高。但这不代表前者一定更好；后者可能拥有更优质租户、更好区位或更低未来风险。
专业解释
资本化率反映市场在某一时点如何为当前收入、增长预期、资产质量、流动性和风险定价。它不是按揭利率、现金回报率或总回报率。分析人员还必须确认使用的是过去 NOI、当前 NOI、未来 NOI 还是稳定化 NOI。用乐观的未来 NOI 再配合偏低资本化率，可能重复计算改善价值。
为什么重要
资本化率能够比较交易，并把收入转化为价值指示，也能揭示模型中的假设。在相同 NOI 下，较低资本化率产生较高估值，较高资本化率产生较低估值。选取资本化率应依据相关市场证据和具体资产判断，而不是套用统一规则。
实际案例
当 NOI 为 30 万美元时，5% 资本化率对应 600 万美元估值，6% 则对应 500 万美元。即使建筑内部没有变化，必要回报率变化也会改变价值。
常见错误
- 把资本化率称为投资人的总回报。
- 用不同 NOI 口径比较资本化率。
- 认为高资本化率必然代表便宜。
相关概念
- NOI
- Yield
- Discount rate
- Comparable sales
- Risk premium
行业表达
- Wall Street
- 买入资本化率与退出资本化率
- Broker
- 买入时资本化率
- Interview
- 资本化率是市场形成的收入价值比率，并不是完整回报指标。
常用缩写
- Cap Rate — Capitalization Rate
- bps — Basis Points
练习
分别用 4.5%、5.5% 和 6.5% 为 24 万美元 NOI 估值，并解释这一估值区间为何重要。
下一课
现金流与现金回报率