Reversion
The future return of property rights — the landlord's repossession at lease end, or the projected sale proceeds at the end of a holding period in a discounted cash flow analysis. Reversion value is discounted to present value in yield capitalization.
Related Terms
Discounted Cash Flow Analysis (DCF)
DCFA yield capitalization technique that estimates property value by projecting future cash flows (income minus expenses) over a holding period and discounting them to present value using a market-derived discount rate..
Leased Fee Interest
The landlord's interest in a leased property: the right to receive contract rent during the lease term plus the reversion of the property when the lease ends.
Discount Rate (Yield Rate)
The rate of return required by an investor to attract investment in a particular property, used in DCF analysis to convert future cash flows into present value.
More in Income Approach
View allCapitalization Rate (Cap Rate)
Cap RateThe ratio of a property's net operating income to its market value or sale price, expressed as a percentage.
Gross Rent Multiplier (GRM)
GRMThe ratio of a property's sale price to its gross monthly (or annual) rental income.
Net Operating Income (NOI)
NOIThe annual income remaining after deducting all operating expenses from effective gross income, but before deducting debt service (mortgage payments) and income taxes.
Effective Gross Income (EGI)
EGIPotential gross income minus vacancy and collection losses, plus other income (laundry, parking, late fees).