“Great explanation of the components of cap rates. I enjoyed the webinar. Very informative.”
Everybody in commercial real estate talks about cap rates, some more knowledgeably than others. One thing is certain: understanding them fully is critical!
In this free 55-minute session, we answer the following questions in plain English:
- What is a real estate cap rate (capitalization rate)?
- What composes a cap rate?
- Why do cap rates change?
- How do you calculate a cap rate?
- How do you select one when performing a property valuation?
- How do you estimate a future cap rate?
- What should you think when people quote cap rates verbally?
- Where can I find cap rates for a certain property in a certain geography?
Video Replay (55 min) (Accompanying Excel file)
This is a great video. On an extension of this topic I was wondering what it means when someone says that a stock is trading at a certain cap rate. For example, I read on http://seekingalpha.com/article/2438965-reit-focus-equity-residential-properties that “EQR is an excellently managed company with a solid portfolio of apartment assets, however, we believe that the stock price is too elevated and trading at a cap rate of approximately 4.7% and are not recommending the purchase of the stock at these levels.”
What is the 4.7% referring to in relation to the stock price?
Thanks very much.