Dictionary of Real Estate Terms: split-rate capitalization
split-rate capitalization
estimating the value of property using two different discount (or capitalization) rates.
Example: Property was appraised using the income approach and split-rate capitalization. A low capitalization rate was applied to the expected cash flow in the first five years of the projection period because the initial leases were for 5 years; a higher cap rate was applied to the next 5 years because of greater uncertainty with increased time.
