The direct ownership of commercial real estate produces cash flows from rental operations and, perhaps, cash flow from an eventual sale of the property. Since financial leverage and tax considerations play an important part in determining an investor's returns, the measure of investment value most relevant to investors is the present value of:

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The measure of investment value that is most relevant to investors is the present value of after-tax cash flows (ATCF), as financial leverage and tax considerations impact an investor's returns. Therefore, ATCF takes into account the effects of financing and taxes on cash flows and provides a more accurate representation of an investment's value to the investor.

The Direct Ownership of Commercial Real Estate Produces Cash Flows