Economics Cap Rate Question
Question Description
Can you help me understand this Economics question?
go to Mr. Sobelmans web site at http://www.netleaseadvisor.com/ (Links to an external site.) and select at least two companies that you are familiar with (click on the various company names in the left column). These should be somewhat similar companies (i.e., auto parts stores, banks, convenience stores, drug stores, restaurants, etc.) but with notably different cap rates. There should also be differences in credit ratings and lease terms. Make sure that the companies you choose have a cap rate, credit rating and average lease term. Although the first component of real estate location is specific to individual stores, consider the factors of credit and lease term. Realize that these are averages for all company locations.
Explain the differences in your two companies with regard to their credit rating and lease term. Which of these two factors do you think has the greatest impact on the average cap rate that properties (with these companies as tenants) sell for? If you had to assign percentages of the degree of impact on the cap rate, what would it be? If you were a developer, which company would you seek out as a tenant? Why? Discuss this.
Explanation & Answer:
200 words
Tags:
economics
credit rating
Lease term
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