Valuation and transactions
Valuation and transactions covers how a commercial property or fund interest is priced and bought. Appraisals, offering memoranda, lender term sheets and quarterly statements are the working documents.
Readers settle practical questions here. They can work out how a capitalization rate shifts when Treasury yields move, and why an appraisal trails the prices buyers are actually paying. They can see how a fund calculates net asset value from appraisals and debt balances. Downside cases matter too. A sponsor can test a deal against a debt service coverage ratio, a loan to value covenant, a rent decline and a higher exit capitalization rate before signing a purchase agreement. Lenders and investors can see where a maturing loan stops refinancing and how concentration in a market raises portfolio risk.
- Buying in Distressed and Downturn Markets
How investors find opportunity in distressed markets: separating income from pricing, reading seller pressure and stress testing the deal with worked numbers. - Capital Availability, Property Pricing and Deal Volume
Capital availability sets what buyers can fund, which drives prices and deal volume. See how debt sizing and equity gaps change bids, with a worked example. - Comparing Cap Rates Across Sales and Surveys
How to compare cap rates from closed sales, appraisal averages and survey responses by matching income periods, expense definitions and price bases. - Diversification and Location Risk in Property Portfolios
How location and concentration shape commercial property portfolio risk, with a worked refinancing stress test comparing a concentrated and a spread portfolio. - Hold or Sell Decisions for Existing Properties
Hold or sell an existing property: how net sale proceeds set the hold test, how refinancing gaps limit the hold period, and what weak buyer interest changes. - How Interest Rates Affect Commercial Property Values
Rates move commercial property values through cap rates and borrowing costs, and a worked example shows the arithmetic of a refinancing gap step by step. - How NOI and Cap Rates Determine Property Value
Commercial property value equals annual NOI divided by the cap rate. A worked example shows how NOI growth and a higher rate combine to move indicated value. - How Private Real Estate Fund NAV Is Calculated
How private real estate fund NAV is built from fair value, debt & waterfalls into a per-unit price, with a worked example and reporting tests for veterans. - How Thin Transaction Volume Affects Price Discovery
Thin transaction volume leaves fewer completed sales to test a value, so marks lean on older data and a few closings can reset an appraisal range quickly. - Leases and tenant credit
How lease terms and tenant credit shape a property’s income and its value. - Real Estate Cycles: Effect on Valuation and Returns
Real estate cycles move property income and the cap rate separately. A hypothetical example works through the effect on property value and equity returns. - Refinancing Risk When Property Values Fall
When a property is worth less than its loan, refinancing calls for fresh equity. See how value and cash flow tests set the gap, with a worked example. - Stress Testing a Commercial Real Estate Acquisition
A guide to stress testing a commercial real estate acquisition: cash break-even, covenants, rate resets, exit caps and refinance gaps, with a worked example. - The Bid Ask Gap and Stalled Transaction Markets
A bid ask gap forms when buyer debt capacity and entry yields reset faster than seller pricing, cutting deal volume. A worked example shows the arithmetic. - Why Private CRE Valuations Lag the Market
Private CRE valuations lag because appraisals rest on completed sales that thin out when trading slows. A worked example shows what the lag does to equity.