A contraction of the rate of capitalization, the rate of hat is the yield assumed on an investment in real estate. The rate of hat is generally employed in the evaluation of the advertising property of film and investment because it directly binds the value to the income produced by the property.

To determine the value of a good of particular real estate, divide the income Net or the flow of net cash on the capital by the assumed rate of hat. In fact, this evaluates the real estate like perpetuity.

An alternative use of the concept must take the income Net or the flows of net cash, and divides it by the purchase price of purchase in a transaction of sales, to determine the implicit rate of hat. Used this fa4con, the rate of hat indicates the demand of rise or for fall of the investments of real estate.

Note that a higher rate of hat has like consequence a lower value. Thus, of newer properties in sectors of upscale will tend to show lower rates of hat than their less desirable counterparts.