Yield construction Flashcards
1
Q
Yield Construction
A
y = c + p - g
Where:
- y = ARY
- c = risk free rate
- p = risk premium
- g = prospects for rental growth
2
Q
Covenant strength
A
Tenant’s ability to comply with and observe the covenants (agreements) outlined in their lease
3
Q
Risk Premium
A
The additional return on top of the risk free rate that an investor requires on average to take on the risk of loss
4
Q
Risk free rate
A
the theoretical rate of return received on zero-risk assets
5
Q
Yield analysis
A
Deriving the yield based on what others are paying (comparable)
