Cost of Capital of Real Estate Entities1

Thomas Hamilton


In Chapter 40, we discussed the development of the cost of capital for direct real property investments. An equity investment in real estate can also be made indirectly by purchasing shares of a company or partnership holding real property interests. In this chapter, we discuss the development and application of the cost of capital for real estate entities that own real property interests to produce income. This chapter is an introduction to the subject; it is not intended to cover all the issues that an analyst might encounter in the process of estimating the cost of capital for real estate entities.

This chapter focuses on real ...

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