Exit Cap Rate Sensitivity Calculator

Institutional underwriting always includes exit-cap sensitivity. This calculator shows exit value across low/base/high cap scenarios so you can see the IRR impact of being wrong.

Exit-year NOI

Base cap rate

Sensitivity band (bps)

Base exit value

$4,800,000

Low-cap (bullish) value

$5,454,545

High-cap (bearish) value

$4,285,714

Low cap

5.50%

High cap

7.00%

Value range (bull − bear)

$1,168,831

How the math works

Exit cap rate is exogenous — markets move it, not the sponsor. Good underwriting shows three scenarios: bullish (cap compressed), base (flat or +spread), bearish (cap expanded).

A wide value range means reversion-dependent returns. A narrow range means cash-flow-driven returns. Institutional investors prefer cash-flow-driven deals because they don't depend on market timing.

How to Use

Enter exit-year NOI.
Enter base case cap rate.
Enter sensitivity band (bps up/down).
Read low / base / high exit values.

Frequently Asked Questions

Typical sensitivity range?

±50-100bps is standard. For stress, institutional LPs want ±100-150bps to see tail risk. If IRR drops below 12% at high-cap stress, deal is too tight.

What cap change breaks the deal?

Calculate the break-even cap where equity multiple = 1.0x (or IRR = 0%). If that's within 100bps of base, you have thin margin.

Does the same apply to lower-cap markets?

Yes, and more so — cap rate moves have disproportionately bigger value impact at lower base caps. A 25bps move at 4% cap = 6.25% value change; at 8% cap = 3.1%.