Cost of Capital
Cost of capital represents the minimum return a company must earn on its investments to justify the expenditure. REIT glossaries describe it as a baseline hurdle concept relevant to corporate capital allocation.
- Where it applies
- Generally, not specific to New York
- When it comes up
- Corporate planning; investment committee underwriting
- Property types
- Corporate real estate owners; REITs; institutional managers
In practice
Operator models should be explicit whether "cost of capital" is used as a project discount rate, a corporate hurdle, or an incremental funding cost - these can differ.
Read more in the Knowledge Base
- Rent vs. Buy in NYC - Operator-Grade Decision Math Under Current-Rate ConditionsBuyers
- Property Documentation and Record ManagementBuyers
- Refinancing and Prepayment StrategyBuyers
- Walk-Away Threshold ModelingSellers
- Timing the Market vs. Creating the MarketSellers
Related terms
WACC (concept)hurdle rate (concept)discount rate
Investment Metrics
- Adjusted Funds From Operations (AFFO)
- EBITDAre
- Funds From Operations (FFO)
- Internal Rate of Return (IRR)
- Net Present Value (NPV)
- Total Return
General information, not legal, tax or financial advice.