Property A is a self storage facility with a going cap rate of 6.0%. Property B is an office building with a going cap rate of 6.0%. If both properties produce the same NOI, which property is worth more ... ?

Question

Diamond Thornton

Business

11 February, 01:39

Property A is a self storage facility with a going cap rate of 6.0%. Property B is an office building with a going cap rate of 6.0%. If both properties produce the same NOI, which property is worth more ... ?

+1

Answers (1)

Know the Answer?

Raine · Answer 1

Worth of both the property will be same.

Explanation:

Data provided in the question:

Cap rate for the Property A which is a self storage capacity = 6%

Cap rate for the Property B which is an office building = 6%

NOI of both the buildings are equal

Now,

Mathematically,

Cap rate is given as = [ NOI ] : [ Worth of the property ]

or

Worth of the property = [ NOI ] : [ Cap rate ]

Since, the NOI and cap rate for both the buildings are same

Therefore,

Worth of both the property will be same.