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What is an Exit Cap Rate?

An exit cap rate is the capitalization rate used to estimate a property's value when it is sold at the end of an investment holding period.

How Is It Applied?

  • Used in discounted cash flow analysis.
  • Estimates future resale value.
  • Reflects market conditions.
  • Influences return projections.

Why Is It Important?

  • Affects investment valuations.
  • Helps assess risk.
  • Supports acquisition decisions.
  • Guides financial forecasting.

An exit cap rate helps investors estimate a property's future sale price and overall investment returns. It is a key assumption in real estate valuation and financial modeling.

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