Valuing Illiquid Real Property: The Pitfalls of Yield Capitalization

The Journal of Property Tax Management, Vol 6, Issue 4, Pages 43-56, 1995

Posted: 20 May 2014

See all articles by Grant Richard McQueen

Grant Richard McQueen

Brigham Young University - Department of Business Management

Maxwell Miller

Independent

Date Written: Spring 1995

Abstract

Yield capitalization is frequently used to value illiquid real assets. Among other assumptions, it assumes securities have liquidity and risk profiles similar to tangible real assets. This allows using the CAPM to determine capitalization rates. However, the CAPM method of estimating cap rates has numerous problems, even when dealing with liquid securities. However, when estimating the cap rates required for valuing illiquid and unsecuritized real property, additional adjustments are needed.

Keywords: real assets, CAPM, capitalization rate

Suggested Citation

McQueen, Grant R. and Miller, Maxwell, Valuing Illiquid Real Property: The Pitfalls of Yield Capitalization (Spring 1995). The Journal of Property Tax Management, Vol 6, Issue 4, Pages 43-56, 1995, Available at SSRN: https://ssrn.com/abstract=2438848

Grant R. McQueen (Contact Author)

Brigham Young University - Department of Business Management ( email )

TNRB 636
Provo, UT 84602
United States
801-422-3017 (Phone)

Maxwell Miller

Independent ( email )

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