Cap Rate이란 수익용 부동산의 수익률을 나타내는 지표로, 구입 가격에 대한 연수익을 나타낸다.
이때 연수익은 연간 받게되는 렌트비에서 각종 expense를 제외한 Annual net income으로 계산된다. 즉,
Cap Rate = Annual net income / Purchase Price
Expense에는 여러가지가 포함되는데 이는 다음과 같다.
1) Tax : 새로 구입하는 가격을 기준으로 해당 tax rate 을 적용해야 오차를 줄일수 있다.
2) Insurance
3) Maintenance : 건물에 따라 HOA 가 있을수도 있고 청소나 repair 에 대한 부분 확인해야 한다.
4) Utilities : 물, 전기, 가스, trash, landscape 등
건물에 있는 Meter 수를 확인하여 landlord가 tenant가 부담할지 정해야한다.
5) 기타 : management fee 등
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The rate is calculated in a simple fashion as follows:
Explanatory Examples[edit]
For example, if a building is purchased for $1,000,000 sale price and it produces $100,000 in positive net operating income (the amount left over after fixed costs and variable costs is subtracted from gross lease income) during one year, then:
- $100,000 / $1,000,000 = 0.10 = 10%
The asset's capitalization rate is ten percent; one-tenth of the building's cost is paid by the year's net proceeds.
If the owner bought the building twenty years ago for $200,000, his cap rate is
- $100,000 / $200,000 = 0.50 = 50%.
However, the investor must take into account the opportunity cost of keeping his money tied up in this investment. By keeping this building, he is losing the opportunity of investing $1,000,000 (by selling the building at its market value and investing the proceeds). As shown above, if a building worth a million dollars brings in a net of one hundred thousand dollars a year, then the cap rate is ten percent. The current value of the investment, not the actual initial investment, should be used in the cap rate calculation. Thus, for the owner of the building who bought it twenty years ago for $200,000, the real cap rate is ten percent, not fifty percent, and he has a million dollars invested, not two hundred thousand.
As another example of why the current value should be used, consider the case of a building that is given away (as an inheritance or charitable gift). The new owner divides his annual net income by his initial cost, say,
- $100,000 (income)/ 0 (cost) = UNDEFINED
Anybody who invests any amount of money at an undefined rate of return very quickly has an undefined percent return on his investment.
From this, we see that as the value of an asset increases, the amount of income it produces should also increase (at the same rate), in order to maintain the cap rate.
Capitalization rates are an indirect measure of how fast an investment will pay for itself. In the example above, the purchased building will be fully capitalized (pay for itself) after ten years (100% divided by 10%). If the capitalization rate were 5%, the payback period would be twenty years. Note that a real estate appraisal in the U.S. uses net operating income. Cash flow equals net operating income minus debt service. Where sufficiently detailed information is not available, the capitalization rate will be derived or estimated from net operating income to determine cost, value or required annual income. An investor views his money as a "capital asset". As such, he expects his money to produce more money. Taking into account risk and how much interest is available on investments in other assets, an investor arrives at a personal rate of return he expects from his money. This is the cap rate he expects. If an apartment building is offered to him for $100,000, and he expects to make at least 8 percent on his real estate investments, then he would multiply the $100,000 investment by 8% and determine that if the apartments will generate $8000, or more, a year, after operating expenses, then the apartment building is a viable investment to pursue.
Use for valuation[edit]
In real estate investment, real property is often valued according to projected capitalization rates used as investment criteria. This is done by algebraic manipulation of the formula below:
- Capital Cost (asset price) = Net Operating Income/ Capitalization Rate
For example, in valuing the projected sale price of an apartment building that produces a net operating income of $10,000, if we set a projected capitalization rate at 7%, then the asset value (or price we would pay to own it) is $142,857 (142,857 = 10,000 / .07).
This is often referred to as direct capitalization, and is commonly used for valuing income generating property in a real estate appraisal.
One advantage of capitalization rate valuation is that it is separate from a "market-comparables" approach to an appraisal (which compares 3 valuations: what other similar properties have sold for based on a comparison of physical, location and economic characteristics, actual replacement cost to re-build the structure in addition to the cost of the land and capitalization rates). Given the inefficiency of real estate markets, multiple approaches are generally preferred when valuing a real estate asset. Capitalization rates for similar properties, and particularly for "pure" income properties, are usually compared to ensure that estimated revenue is being properly valued.
Cash flow defined[edit]
The capitalization rate is calculated using a measure of cash flow called net operating income (NOI), not net income. Generally, NOI is defined as income (earnings) before depreciation and interest expenses:
- Net Operating Income (NOI) = Net income – operating expenses (i.e. tax write-offs. depreciation and mortgage interest are not factored into NOI); whereas Cash Flow = Net Operating Income (NOI) – Debt service
Depreciation in the tax and accounting sense is excluded from the valuation of the asset, because it does not directly affect the cash generated by the asset. To arrive at a more careful and realistic definition, however, estimated annual maintenance expenses or capital expenditures will be included in the non-interest expenses.
Although NOI is the generally accepted figure used for calculating cap rates (financing and depreciation are ignored), this is often referred to under various terms, including simply income.
Use for comparison[edit]
Capitalization rates, or cap rates, provide a tool for investors to use for roughly valuing a property based on its Net Operating Income. For example, if a real estate investment provides $160,000 a year in Net Operating Income and similar properties have sold based on 8% cap rates, the subject property can be roughly valued at $2,000,000 because $160,000 divided by 8% (0.08) equals $2,000,000. A comparatively higher cap rate for a property would indicate less risk associated with the investment (increasing demand for the product), and a comparatively lower cap rate for a property might indicate more risk (reduced demand for the product). Some factors considered in assessing risk include creditworthiness of a tenant, term of lease, quality and location of property, and general volatility of the market.
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Occupancy, ADR, RevPAR(호텔 객실상품 판매의 성과측정)
호텔의 주상품인 객실의 판매실적에 대한 성과를 측정하는 방식이 전세계 호텔산업에서 공통으로 사용되고 있다. 이들이 바로 Occupancy(객실점유율), ADR(Average Daily Rate:평균객실단가), RevPAR(Revenue per Available Room 혹은 Yield)이다.
Occupancy는 얼마나 많은 객실을 판매하였는가를 측정하는 것이 목적이다.Occupancy 구하는 식은 다음과 같다. Occupancy가 높으면 객실을 많이 판매한 것임으로 100%에 가까울수록 좋다고 하겠다.
*Occupancy = (판매된 객실 수/판매가능 객실수)X100
ADR은 얼마에 객실을 판매하였는가를 측정하는 것이다. 즉, 얼마나 좋은 가격으로 객실을 판매하였는가를 알아보는 것이다. ADR을 구하는 등식은 다음과 같다.
*ADR = 객실수입액/판매된 객실 수
본인이 컨설팅현장에서 경험한 바로는 위에 소개한 Occupancy나 ADR은 대부분 호텔직원들이 익히 알고 있었으나 의외로 RevPAR는 많은 직원들이 그 뜻을 파악하지 못하고 있다. 한때 호텔업에서는 Occupancy가 높으면 경영성과가 좋은 것으로 여겼다. 그리고 또 일부는 ADR이 클수록 경영성과가 좋다고 판단하였다. 그러나 Occupancy 혹은 ADR 한쪽만을 강조하는 것은 의미가 별로 중요하지 않다고 할 수 있다.
예를 들어, A호텔은 Occupancy는 80%이고 ADR은 10만원이라고 하고, B호텔은 Occupancy는 70%이며 ADR은 17만원이라고 하면 과연 어느 호텔이 더 효과적으로 객실을 판매하고 있는가? RevPAR를 구하는 등식은 다음과 같다.
*RevPAR = 객실수입액/판매가능 객실수 혹은 RevPAR = Occupancy X ADR
대부분의 성공적인 호텔들은 Occupancy 혹은 ADR어느 한쪽만을 강조하지 않고 조화된 측정치인 RevPAR가 최대화 되도록 노력한다. 그리고 실제로 특정시장에서 RevPAR가 높은 호텔들이 낮은 호텔보다 더욱 고급스럽고 성공적인 호텔경영을 하는 것으로 나타나고 있다. 물론 이것은 객실판매만을 한정하고 하는 얘기이다.
서울지역 특1급 호텔이 현황을 살펴보면 역시 대부분 RevPAR가 높은 호텔들의 객실 경영성과가 낮은 호텔들에 비해 훨씬 좋다는 사실을 알 수 있다. 다시 한번 강조하지만 Occupancy, ADR, RevPAR는 세계 공통으로 이용되는 호텔객실상품의 판매생산성을 측정하는 지표이므로 반드시 이해하고 숙지해야 할 것이다.