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Last year, as executives at StarPoint Properties considered the purchase of Parkview Terrace, an apartment building in Los Angeles, many factors went into the $79-million purchase price it would eventually pay. This included the terminal cap rate—the cap rate the building would trade at if StarPoint were to sell it within the next five years. And that number was? An eyepopping—in some people's opinion—100 to 150 basis points higher than today's.

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