Capitalization Rate

Capitalization rate is property net operating income divided by property value or purchase price, using a stated trailing or forward NOI convention.

Why this matters to income investors

The relationship between property income and value helps assess whether a REIT buys or sells at attractive economics.

How to use capitalization rate in your research

Check the company’s assumptions and the period used for the comparison. Compare the expected property income with financing and operating costs before treating a transaction or valuation change as dividend support.

This material is general education and information, not individualized investment, tax, or legal advice.