What does the term “yield capitalization” emphasize compared to direct capitalization?

Yield capitalization emphasizes the analysis of cash flows over multiple years, which distinguishes it from direct capitalization. Direct capitalization typically considers only the initial year’s income and applies a capitalization rate to determine value based on that single year's performance. In contrast, yield capitalization takes a more comprehensive approach, factoring in the expected income over a specified holding period, often considering varying income and expenses throughout those years. This method is particularly important for properties where cash flow is expected to change, providing a more nuanced understanding of value based on future performance rather than a snapshot of current income.

While the other choices touch on aspects related to property valuation, they do not accurately represent the broader perspective of yield capitalization, which fundamentally relies on recognizing and projecting cash flow over time rather than focusing solely on immediate or fixed metrics.