Exit Cap Rate

Exit Cap Rate or Terminal  Capitalization Rate – Is the rate used to estimate the resale value of a property at the end of the holding period.  It’s calculated by dividing the projected NOI of the last year (exit year)  by the sale price.

It’s always safe practice to nudge the exit cap rate up a bit 5 to 10 bps per holding year.

Exit Cap Rate = NOI of last holding period / sale price

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