A Review of Equity Yields and Discount Rates in a Post-COVID Environment

Katy Black | October 13, 2022

By Katy Black Equity yields and discount rates remain at or below pre-COVID levels; however, rising debt costs will result in changing investor return expectations. HVS continually tracks the discount rates and equity yields for the assets on which we consult. In the case of hotels that were sold near the date of our valuation, we were able to derive the equity yield rate and unlevered discount rate by inserting the ten-year projection, total investment (purchase price and estimated capital expenditure and/or PIP), and debt assumptions into a valuation model and solving for the equity yield. Equity yield is the rate of return that an...