ABSTRACT
Chapter 6 turns the attention to the inflection points of value from an income perspective. Firstly, the various cap rate derivation models are reviewed in light of the subjectivity of value. Secondly, discount rates are discussed in terms of their importance and how an investor might estimate a reasonable rate for the current market situation. Lastly, the chapter discussion focuses on the subjectivity associated with the debt yield loan performance metric. The market vignette for chapter 6 demonstrates how a cap rate can be derived based on a conversation amongst market participants and their tolerance for risk and expectations of profit.
