Why do Class B properties generally sell at higher going-in cap rates than Class A properties?

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Why do Class B properties generally sell at higher going-in cap rates than Class A properties?

 

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Relative to class A properties, class B properties are more risky and/or are expected to produce smaller rental increases over time.  Both effects reduce the amount a rational investor is willing to pay today per dollar of current income.  When values/prices fall relative to current net rental income, cap rates increase.

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