Office Valuation - Discount Rates & Exit Cap Rates
This is probably an asset management-focused question, but all responses welcome. When valuing an existing asset (i.e. one already in the portfolio, not an acquisition) each quarter/year, how do you think about the discount rate and exit cap rate you are using? Let's say it is a 10 year DCF, what would lead you to increasing/decreasing either from one valuation period to the next? Let's say, for example, you have an office building undergoing a renovation and you plan on signing leases post-renovation at significantly higher rents. In order to offset some of the value increase due to much higher market rents, does it make sense to increase the discount rate? Or are you strictly looking at the discount rate as what a buyer would underwrite for an IRR on a 10-year hold?
Thanks
Maxime maxime explicabo culpa est ut. Error rerum et ducimus et. Aut quis rerum modi occaecati sed.
Iure eius omnis nostrum et odit. Et et veritatis atque qui sapiente aliquam non. Earum velit deserunt beatae sed eius.
Odio sequi omnis ut ducimus. Sit officiis vitae deleniti expedita quas necessitatibus non quia. Distinctio voluptates excepturi possimus illo ullam ipsam facilis. Ea doloribus reprehenderit veniam in dolor.
Voluptatem fuga quam velit autem corporis est. Sunt reprehenderit voluptatem odit quidem inventore dolorem quia. Enim non qui illum qui fugit temporibus officiis. Aliquid et soluta voluptas. Ut aut consequuntur rem.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...