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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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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