Cap Rate Spread
The difference between a real estate cap rate and the matched-maturity Treasury yield. The cap rate spread is a compact measure of how much real-estate-specific premium investors are demanding over the risk-free rate. Spreads compress in environments where capital is plentiful and risk appetite is high; spreads widen in environments where capital is scarce and risk appetite is low. Comparing current spreads to long-run historical norms for the relevant property subsector is a standard tool for assessing whether real estate is rich or cheap relative to capital-markets norms.
Related terms
Absorption Rate · AFFO per Share · Allowed Return on Equity · Alternative Investments · Anchor Tenant · Assets Under Management
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