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Investment Performance and COVID-19: New Methods for Value Estimation

July 22, 2020


Creating implied values using estimated net operating income (NOI) and cap rates since the Great Financial Crisis (GFC) has been relatively straightforward. Since the hotel market enjoyed nearly a decade of stable, steady growth, the trailing four-quarter estimated NOI could be used as a reliable stabilized aggregate NOI. Cap rate aggregates could include some distressed properties that traded at an abnormally high cap rate, since it was likely that fortunate assets would trade for a premium. The aggregation would smooth out these aberrations and produce a rate that one could reasonably expect a typical property to garner.

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