This is a quote from a July Cole Real Estate Investments' press release describing its $310 million acquisition of a building leased to Microsoft:
Cole expects the average capitalization rate for this property over Microsoft’s remaining initial lease term to be approximately 7.70%.Average capitalization rate over the term of the lease? That's a new one. A cap rate is a property's first year net operating income divided by the purchase price. Period. The use of "average" tells me that Cole is afraid to tell us that the actual cap rate is low, probably lower than the Cole REIT's dividend (and the Cole REIT did cut its dividend by a small amount late in the year). Don't insult us with made up terms. Instead, tell us that while the Microsoft property was expensive, it will likely outperform all the other real estate in the portfolio. Forward any other worthy quotes.