Implied NOI Growth
The level of future net operating income growth that current property pricing requires to deliver a market-clearing return. When cap rates compress below long-run historical spread norms, the difference is either rising implied growth expectations (sustainable if growth materializes) or falling risk premiums (vulnerable to a sentiment reversal) -- the cap rate decomposition framework attributes the compression to one or the other. The investor exercise on any compressed-cap-rate market is to test whether the implied growth required to justify the price is achievable.
Related terms
Absorption Rate · AFFO per Share · Allowed Return on Equity · Alternative Investments · Anchor Tenant · Assets Under Management
Open this term in the app → — no account needed; browse the full glossary while you research.