Direct capitalization definition

Direct capitalization means a method used to convert a single year's income expectancy into an estimate of value. This conversion is accomplished by dividing the income by the appropriate capitalization rate.
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Direct capitalization means capitalization of the net operating income, that was developed using the owner's income and stabilized operating expenses based on an actual history of the property, when available, and an altered capitalization rate.
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Direct capitalization. This technique employs the use of an overall rate. This is an annual percentage rate that expresses the relationship between net operating income and the present worth of the property. The term overall rate reflects the fact that the rate incorporates capital appreciation or depreciation along with a return on net income. The overall rate must represent what informed, prudent and rational investors are requiring and obtaining for similar, competitive properties in the current market.
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Examples of Direct capitalization in a sentence

  • Direct capitalization is further inhibited by the numerous variables that exist with multi-tenant office buildings, i.e., multiple leases, with staggered lease terms and varying lease structures; the lease-up of vacant space; and differing tenant finish allowances, depending upon whether the space is in a shell or second generation state.

  • PV Income Loss 7,120 0 Cumulative Total 7,120 ========================================================================================================= DIRECT CAPITALIZATION Direct capitalization is a method used to convert a single year's income estimate into a value indication.

  • Direct capitalization is particularly appropriate in the instance of an apartment complex where occupancy is stabile and both market rental rates and occupancy levels are easily sup▇▇▇▇▇▇▇e.