Cap Rate
Capitalization rate — net operating income divided by property value, used mainly when real estate is part of the deal.
Last updated September 5, 2026
Cap rate expresses a real-estate return: NOI divided by purchase price or value, shown as a percentage. It is a property metric, not a substitute for an SDE multiple on the operating business. When a sale includes both business and real estate, advisors often value the going concern and the real estate on different bases. Higher cap rates imply a lower price for the same income, and vice versa, before considering condition and lease risk.