Does Cap Rate include Capex?

[Cori Chekhovskiy]

Just want to check my understanding. When people discuss Cap Rates, I think it subtracts off for all cash expenses EXCEPT Capex. Is that right? Is there a measure that subtracts off for Capex?

[Roy N.]

@Cori Chekhovskiy

CAPEx is not an expense.  It is a reinvestment of capital.

It is often acquired by setting aside a portion of retained earnings in a reserve.  However, it could just as easily be acquired through a contribution of new capital by stakeholders (shareowners).