Property Valuation
What is 'sensitivity analysis' in commercial real estate investment evaluation?
AAn analysis of how sensitive neighboring properties are to noise from the subject property
BA financial modeling technique that tests how changes in key assumptions (cap rate, vacancy, rent growth) affect investment returns✓ Correct
CAn appraisal methodology required by Illinois law for properties over $5 million
DA lender's analysis of the borrower's sensitivity to interest rate changes
Explanation
Sensitivity analysis in commercial real estate models how investment returns change when key assumptions vary. For example, an investor might test how a deal looks if vacancy increases 5%, rents grow 3% slower, or the exit cap rate is 100 bps higher.
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