Exit Yield
Exit yield is the projected cap rate at which the property will be sold at the end of the holding period, critical for terminal value calculation in DCF analysis.
| Determination Method | Approach |
| Current market cap rate | Assume stable market conditions |
| Historical average | Revert to long-term market mean |
| Premium for age | Add 0.5% to 1% for older property |
| Conservative assumption | Use higher cap rate (lower value) |
| Exit Yield vs Entry Yield | Impact on Returns |
| Exit higher than entry | Property value declines, lower returns |
| Exit equals entry | Value stable, returns from cash flow |
| Exit lower than entry | Value appreciation, enhanced returns |
| Typical spread assumption | Exit 0.25% to 0.5% higher than entry |
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