In court cases involving real estate, experts are hired to estimate the value of properties. The estimate will vary depending on the method of valuation applied. Research on valuation methods for single-tenant properties was published in The Appraisal Journal (Summer 2019). One method examines the ratio of net operating income to property asset value – called the capitalization rate. The research focused on 80 tenants of properties owned by the Boulder Group consulting firm. Data on S&P credit ratings and capitalization rates for the 13 Boulder Group tenants of retail properties are shown in the table (next page). Capitalization rates are provided for tenants with 5, 10, 15, and 20 years remaining on the lease.

a. What is the experimental unit for this study?

b. Describe the variables measured in the study. Do these variables produce quantitative or qualitative data?

c. Do the 13 tenants in the table represent a population or a sample?

d. If the 13 tenants represent a representative sample from a population, describe the population.

e. One inference derived from the data is that “capitalization rates increase . . . as the remaining lease term decreases.” Do you agree?

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Tenant Best Buy BJ's Warehouse Dollar General Dollar Tree Family Dollar Kohl's Kroger Lowe's Sherwin-Williams The Home Depot United Rentals Walmart Whole Foods Market S&P Credit Rating 5-Year 10-Year 15-Year 20-Year BBB 8.25 7.25 B 7.40 6.85 BBB- 8.45 7.75 BBB- 7.50 6.85 BBB- 8.50 7.50 BBB- 7.25 BBB 6.75 6.10 5.90 6.00 BBB+ 6.70 BBB A BB Capitalization Rate (%) 8.50 7.25 AA AA- 6.75 6.75 8.15 7.25 6.75 5.90 5.50 5.15 N/A 6.40 6.90 N/A N/A 6.50 6.25 5.45 N/A 5.40 N/A 5.50 4.60 N/A 6.00 N/A N/A N/A 6.35 6.00 5.00 N/A 5.00 N/A 5.15 4.25