Where the Overall Cap Rate Meets the Discount Rate (Property Valuation‪)‬

abstract This article explores the relationship between the overall capitalization rate ([R.sub.0]) and the discount rate ([Y.sub.0]). It illustrates how value equivalency can be achieved between direct capitalization and yield capitalization (i.e., discounted cash flow) when the anticipated percentage change in annual net operating income (NOI) is made to correspond to the spread between a uniquely paired [R.sub.0] and [Y.sub.0]. A number of investor survey simulations are performed as further support for the premise that each uniquely paired [R.sub.0] and [Y.sub.0] is linked by the corresponding income-growth factor, and illustrates that investor surveys can be reliably used as a source for uniquely paired [R.sub.0]s and [Y.sub.0]s in the application of the income capitalization approach.