All of the following are arguments against using leverage, except:

The NOI for a property in the current year is $596,000 and is expected to grow by 3.5% next year. The trailing cap rate is at a 3% premium to the risk-free rate and capital appreciation is 5.5% p.a. What is the current value of the property using direct capitalization? Government bonds are yielding 4.30%. Ignore tax.

A property has a market value of $12,680,000, and it is expected to grow at 3.5% per year. The property is currently leased with a net operating income (NOI) of $357,000, and the NOI is expected to grow at the same rate. What will be the most appropriate discount rate if a multi-year DCF model is used to value the property investment?

At time of purchase, a property investment is funded 60% through interest-only debt and 40% through equity. Over time, as the value of property increases, which of the following can be appropriate to describe the impact on property WACC and the discount rate?