The capitalization rate for a leased fee estate should always be lower than the capitalization rate for a fee simple estate.

Question

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The capitalization rate for a leased fee estate may or may not be lower than the capitalization rate for a fee simple estate, as it depends on the specific terms and conditions of the lease. Factors such as the length of the lease and the creditworthiness of the tenant can affect the capitalization rate.

The Capitalization Rate for a Leased Fee Estate Should Always