Risk and Reasonableness for Nonmarket Occupancy

摘要

Properties may have income that is different from otherwise comparable properties due to above- or below-market leases or below-market occupancy. A common approach to valuing such properties is to begin with the value as if the property were stabilized at market rents. This value must then be adjusted for the present value of the rent differential actually realized by the property. Should this rent differential be discounted at a higher or lower rate than a property at stabilized market rents? As this article will illustrate, the answer is that it depends.