Cap rates rise 50 bps from 5.0% to 5.5% on a property with $10M NOI. What happens to value?

How to answer

Value = NOI / Cap Rate. At 5.0%: $10M / 0.05 = $200M. At 5.5%: $10M / 0.055 = ~$181.8M. That's a ~$18.2M (~-9%) decline from a 50 bps move with NOI flat — illustrating why rising rates (which push cap rates up) compress values. Small cap-rate moves swing value meaningfully.

Key idea: Recompute NOI / cap at each rate, then take the percentage change.