Equivalent Yield in property development finance UK is a valuation metric expressing the blended return from both the current rental income and the anticipated future rental value of a property. It combines the initial yield with the reversionary yield, weighted by time and income, to give a single percentage return figure. Lenders, valuers and property developers use Equivalent Yield to compare investment returns across assets and assess project viability. It is especially relevant where passing rents are below or above market levels, ensuring a more balanced reflection of investment performance.
This sits beneath Yield Metrics, introducing a more specific variant of the measure without changing its core interpretation. It is commonly considered alongside WAULT/WALE (if income exit), as both are closely related measures used to assess similar aspects of performance or risk. In funding terms, Equivalent Yield is most commonly encountered in connection with Fixed Return, No Accrual within the property development capital stack.
View glossary entry