RERC Real Estate Report - REDI-net.com

RERC © REAL ESTATE REPORT - THE NATIONAL REAL ESTATE AUTHORITY
West Investment Criteria
28 WWW.RERC.COM
Regional Investment Criteria - 4Q 2011 | Second-Tier 1 Investment Properties
Office Industrial Retail
CBD Suburban Warehouse R&D Flex
Regional
Mall
Power
Center
Neigh/Comm
WINTER 2012 | VOL 40 | NO 4
Apartment Hotel
Pre-tax Yield (IRR) (%)
Range 6.5 - 13.0 6.5 - 15.0 6.5 - 12.2 7.5 - 13.0 7.5 - 12.0 6.0 - 14.0 6.0 - 13.0 6.5 - 15.0 5.0 - 13.0 7.5 - 13.5
Average 10.0 10.3 9.9 10.1 10.3 10.1 10.2 10.4 8.8 11.2
Going-In Cap Rate (%)
Range 6.0 - 10.5 6.5 - 10.5 5.8 - 10.0 6.3 - 10.0 6.5 - 10.0 6.0 - 11.0 6.5 - 10.0 6.0 - 10.5 5.0 - 9.0 7.0 - 12.0
Average 8.1 8.5 8.2 8.4 8.5 8.2 8.3 8.4 7.0 9.4
Terminal Cap Rate (%)
Range 6.5 - 11.0 7.0 - 11.0 6.5 - 11.0 6.8 - 11.0 6.8 - 11.0 6.8 - 12.0 7.0 - 11.0 6.3 - 11.0 6.0 - 10.0 7.5 - 12.0
Average 8.7 9.0 8.7 8.8 9.0 8.9 8.9 9.0 7.8 9.9
Midwest Investment Criteria
Pre-tax Yield (IRR) (%)
Range 6.0 - 13.0 6.0 - 13.0 6.0 - 13.0 6.0 - 13.0 6.0 - 13.0 6.0 - 13.0 6.0 - 13.0 6.0 - 13.0 6.0 - 14.0 6.0 - 15.0
Average 10.3 10.4 10.2 10.3 10.4 10.1 10.0 10.2 9.3 10.8
Going-In Cap Rate (%)
Range 6.0 - 13.0 6.0 - 13.0 6.0 - 13.0 6.0 - 11.0 6.0 - 11.0 6.5 - 11.0 6.8 - 11.0 7.0 - 12.0 5.5 - 12.0 7.0 - 13.0
Average 9.1 9.2 9.1 9.2 9.3 9.1 9.1 9.2 8.1 10.1
Terminal Cap Rate (%)
Range 6.5 - 12.5 7.5 - 12.0 7.0 - 12.0 7.8 - 13.0 8.0 - 13.0 6.5 - 13.0 6.8 - 13.0 7.0 - 13.5 6.0 - 13.0 8.0 - 14.0
Average 9.7 9.7 9.6 9.8 9.8 9.7 9.7 9.9 8.7 10.8
South Investment Criteria
Pre-tax Yield (IRR) (%)
Range 8.5 - 13.0 9.0 - 13.0 8.5 - 13.0 9.0 - 13.0 9.0 - 13.0 8.5 - 13.0 8.5 - 13.0 9.0 - 14.0 8.0 - 13.0 9.3 - 14.0
Average 10.5 10.6 10.5 10.8 10.9 10.6 10.6 10.9 9.8 11.6
Going-In Cap Rate (%)
Range 7.0 - 10.0 7.5 - 9.8 7.0 - 11.0 7.0 - 10.5 7.3 - 10.5 6.5 - 11.0 7.3 - 10.5 7.0 - 11.0 6.0 - 10.0 7.5 - 11.0
Average 8.6 8.8 8.8 9.0 9.1 8.7 8.8 9.0 7.8 9.5
Terminal Cap Rate (%)
Range 7.0 - 11.0 7.5 - 11.0 7.0 - 12.0 6.5 - 11.0 7.0 - 11.0 6.8 - 11.0 8.0 - 11.0 7.8 - 11.0 6.0 - 11.0 8.0 - 12.0
Average 9.2 9.4 9.4 9.5 9.7 9.3 9.4 9.6 8.4 10.2
East Investment Criteria
Pre-tax Yield (IRR) (%)
Range 6.0 - 14.0 7.0 - 13.0 6.5 - 12.0 6.0 - 15.0 6.0 - 13.0 6.0 - 12.0 7.0 - 13.0 6.0 - 14.0 6.8 - 12.0 9.0 - 14.0
Average 9.6 9.9 9.7 10.2 9.9 9.6 9.8 10.0 8.6 11.4
Going-In Cap Rate (%)
Range 5.0 - 12.0 6.5 - 12.0 5.0 - 12.0 7.3 - 12.0 7.0 - 12.0 6.0 - 11.0 6.0 - 11.0 6.8 - 12.0 5.3 - 10.0 8.0 - 12.0
Average 8.1 8.7 8.6 9.0 8.9 8.4 8.5 8.5 7.3 9.9
Terminal Cap Rate (%)
Range 6.5 - 14.0 7.0 - 12.0 7.0 - 12.0 6.5 - 14.0 6.5 - 12.0 6.5 - 12.0 7.0 - 12.0 7.0 - 12.0 6.0 - 10.5 7.0 - 14.0
Average 8.9 9.4 9.4 9.7 9.5 9.2 9.2 9.1 7.9 10.6
1 Second-tier investment properties are defined as aging, former first-tier properties, in good to average locations.
A list of RERC Defined Regions is located in the back of this report in the “Scope and Methodology” section.
© 2012 REAL ESTATE RESEARCH CORPORATION. ALL RIGHTS RESERVED.