direct capitalization

direct capitalization

Dividing the net operating income of a property by a selected capitalization rate to arrive at a value. Contrast with yield capitalization.

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FONERWA has been successful in its objective of mobilizing climate finance for Rwanda with total direct capitalization of approximately $89 million19 from DFID, the German Development Bank (KfW), the Government of Rwanda (GoR), and the Least Developed Countries Fund (LDCF) of the AfDB.
These measures included direct capitalization and the capitalization of several liabilities COFIDE had for about USD102 million.
The City's assessor testified that for the 2012 valuation she had applied a direct capitalization of income approach using mass appraisal techniques.
A second example would be Direct Capitalization (cap rate).
New York also requires properties be valued on a fee simple basis, that is, free and clear of leases or other encumbrances, and via the direct capitalization income approach--assuming the value reflected by a single year's income expectancy.
The direct capitalization of income can be calculated as a ratio between the representative level of income and a capitalization rate, or the representative level of income multiplied by an income multiple (capitalization factor).
In this case, the analyst would conclude a 10% direct capitalization rate (i.e., 14% discount rate -- 4% growth rate = 10% capitalization rate).
A direct capitalization rate can be derived from confirmed local or nearby sales and local income and expense data.
Two income methods are often used to value these properties: direct capitalization and yield capitalization.
Two methods are commonly used: the direct capitalization method and the yield capitalization method.
Fitch calculates UA using a direct capitalization approach of annualized first-quarter 2018 unencumbered NOI using a stressed 7.5% capitalization rate.
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