What is development spread?
Yield-on-cost minus the market cap rate, the value development creates over buying a stabilized asset. A positive spread must be large enough to compensate for entitlement, construction, financing, lease-up, and exit risk.
Where you will use it: this term comes up in the Real Estate Finance course, and the full course glossary collects every term in one place.
Related terms
From the free Real Estate Finance course by Devon Coombs, CPA, MBA.