- RealtyRates.com Investor Survey Indicates First Cap Rate Decline Since 1997

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RealtyRates.com Investor Survey Indicates First Cap Rate Decline Since 1997
Added: 01/12/2004 Type: Summary Viewed: 645 time(s) [ Not Rated Yet ]

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RealtyRates.com Investor Survey Indicates First Cap Rate Decline Since 1997

The latest edition of RealtyRates.com's online Investor Survey has revealed that overall capitalization rates nationwide declined during the third quarter for the first time since 1997.

According to RealtyRates.com president Robert Watts, "During the third quarter, interest rates continued to fall while equity dividend rates remained relatively stable. As a consequence, the average cap rate for all property types surveyed decreased 28 basis points or 2.6%, from 10.39% in the second quarter to 10.11%."

Capitalization rate declines were reported for nine of the ten property types tracked by RealtyRates.com with only lodging facilities reporting an increase of 11 basis points or 10.2% to 10.91%.

Leading the decliners were restaurant and special purpose properties with a decrease of 37 basis points to 10.63%, followed by self-storage facilities at 22 basis points to 10.32%.

Sectors recording the smallest declines were mobile home and RV parks and office buildings, both of which dropped 8 basis points to 9.71% and 9.70%, respectively.

Capitalization rates reflect a property's overall return to both debt and equity. They are calculated by dividing a property's net operating income by its sale price. Rates reported by RealtyRates.com are based on a nationwide survey of actual sale prices and net operating income exclusive of reserves.

Through its quarterly Investor Survey, portions of which are free online, Bradenton, FL-based RealtyRates.com (www.RealtyRates.com) tracks mortgage terms, capitalization rates, discount rates, and other investment and financial data essential to the evaluation and marketing of income producing property. Entirely Internet based, RealtyRates.com also serves as a largely free, online real estate research and resource center for appraisers, brokers, lenders, developers, investors and government agencies.

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