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17 November, 21:40

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 ... ?

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  1. 18 November, 01:31
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    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.
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