For my acquisition pros out there or even debt origination folks, what are you guys using as a discount rate to value properties via DCF method?
No right or wrong answer. Just looking to get insight into today’s market.
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Depends on the specific investor, property type, location, projected hold period, business model, type of deal etc...
Without that information, you should get responses somewhere between 6% and 20%.
OP here. That’s the point. I want to generate a wide array of answers. Therefore, I don’t want to give a specific profile.
Last week, I had reports come across my desk with 8%, 14%, 12%, 12%, 20%, 9%, 18%, 10% and 12%. We have current clients who are only looking at deals >12% and others who are still using 8% in their modeling. Not all of those deals are in this hemisphere so take that with a grain - rather a shaker of salt.
just slap an 8% and move on
Bro no one uses DCF except appraisers.
It’s pretty useful for office rn.
Agree. Been using dcf for office and any vacant lease up
Why is that? Asking as someone who is not yet working in industry and still in school. What is used?
I would highly disagree. DCF is useful when sales comps are limited or not fully trustworthy/reasonable.
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