Exit Cap Rate Shock Table Calculator

Exit cap swings value. This calculator measures.

Exit year NOI

Expected exit cap %

+50 bps scenario

+100 bps scenario

Base exit value

$33,846,154

Value at +50 bps

$31,428,571

Value at +100 bps

$29,333,333

How the math works

Base = NOI / cap. +50 bps = NOI / stressed cap. Each 50 bps = ~7-8% value shift.

$2.2M NOI / 6.5% = $33.8M base. At 7%: $31.4M (-7.1%). At 7.5%: $29.3M (-13.3%). Cap rate expansion punishes exit value — underwrite conservatively.

How to Use

Enter exit year NOI.
Enter expected exit cap rate.
Enter +50 bps sensitivity.
Enter +100 bps sensitivity.
Read sale value under each.

Frequently Asked Questions

Exit cap assumption?

Expected exit cap = entry cap + 25-50 bps (conservative adjust for future rate environment). Value-add: entry at higher cap, exit at same or slightly tighter cap. Development: exit cap market-based. Never assume compression; if it happens, bonus.

Stress to upside?

If rates fall: cap rates fall (compress). Value inflates. Bonus to returns but not underwriting driver. Underwrite to cap rate expansion (50-100 bps stress). Many 2020-22 deals underpriced this risk — 2023-24 values fell 20-30%.

Hold period impact?

5-year hold: cap rate matters a lot (exit value). 15-year hold: less important (cash flow dominates). Short holds super-sensitive to exit cap. Factor into strategy — don't commit to short hold without strong conviction on exit market.