Reversion is the expected sale proceeds at the end of a hold period, calculated as future NOI divided by exit cap rate, minus estimated selling costs. Used in DCF and hold-period models.
Reversion value often represents 60–80% of total projected returns in a 5–10 year hold period model. Because it's so significant, small changes in exit cap assumption produce large swings in projected IRR.
LA multifamily reversion assumptions have become more conservative post-2023. Sophisticated underwriters model multiple reversion scenarios (base, upside, downside) rather than a single point estimate. This conservative framing has become standard in 2026.
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