A rise in market yields (cap rates), which lowers asset values for the same income; typically driven by rising interest rates or perceived risk.
Related terms
- Yield on cost (development yield)
Stabilised net operating income divided by total development cost; compared against the market cap rate to judge whether building creates value over buying.
- Blended return
A single return figure combining differently-priced tranches or investments — for example weighting senior debt and equity — to express the overall economics o…
- Blind pool
A fund that raises capital before its specific assets are identified, so LPs commit based on the sponsor's track record and strategy rather than a known portfo…
- Capital call
A formal notice requiring an LP to wire a portion of its committed capital by a set date; missing one triggers default penalties that can dilute or forfeit the…
- Capital contribution
Money an investor actually pays into a fund or deal against its total commitment, usually made in instalments as the sponsor draws it down.
- Capital growth
The portion of total return from an increase in an asset's value over time, independent of the income it produces.
- Capitalisation rate (cap rate)
The ratio of net operating income to value; a lower cap rate implies a higher price for the same income.
- Cash-on-cash return
Annual pre-tax cash flow divided by the equity invested.