FactLot

Direct capitalization value and implied cap rate

calc_direct_cap

Read-onlyIdempotent

Value by direct capitalization: (NOI − capital reserve) ÷ cap rate, then below-the-line deductions for lease-up costs, free-rent burn-off, and other adjustments to an as-is value (optionally rounded); and the cap rate a price implies, before and after reserves and all-in after the below-the-line costs. Records the NOI basis (trailing, forward, stabilized). Deterministic: use this instead of doing the math yourself; cite formula calc.direct_cap@1 and the returned steps, and surface any warnings.

Tool call template

Replace each placeholder with a value matching the input schema. Only required parameters are included; add optional parameters as needed.

{
  "id": 1,
  "jsonrpc": "2.0",
  "method": "tools/call",
  "params": {
    "arguments": {
      "noi": "<noi>"
    },
    "name": "calc_direct_cap"
  }
}

Input Schema

Name	Required	Description
`noi`	Yes	Net operating income to capitalize, USD/yr, before capital reserves (they are deducted separately below).
`price`	No	Purchase or asking price, USD. Gives the implied cap rate. Provide cap_rate, price, or both.
`area_sf`	No	Rentable area in SF, for value per SF. Optional.
`cap_rate`	No	Capitalization rate as a decimal, e.g. 0.065 for 6.5%. Gives the value. Provide cap_rate, price, or both.
`noi_basis`	No	What the NOI is: trailing 12 months (T-12), forward 12 months (year 1 of a pro forma), or stabilized. The cap rate must be on the same basis; this is recorded in the steps, not checked.
`lease_up_costs`	No	One-time costs to reach the stabilized NOI (TI, leasing commissions, lost rent during lease-up), USD, deducted from the capitalized value.
`round_value_to`	No	Also report the as-is value rounded to this increment (half away from zero), e.g. 100000 as appraisers round. Optional.
`other_adjustments`	No	Further below-the-line value adjustments, applied after capitalizing.
`free_rent_burn_off`	No	Free rent still to be given under signed leases (rent the stabilized NOI assumes but the owner will not collect), USD, deducted from the capitalized value.
`capex_reserve_annual`	No	Annual capital (replacement) reserve deducted from NOI before capitalizing, USD/yr. 0 if the NOI is already after reserves.

Schema Changelog

Changes observed during successful MCP inspections.

AddedNov 4, 2026

TDQS

A4.3/5.0

Behavior4/5

Does the description disclose side effects, auth requirements, rate limits, or destructive behavior?

Annotations already cover safety (readOnly, idempotent, non-destructive, closed-world), and the description adds real behavior: the order of operations (reserve deducted before capitalizing, adjustments applied after), the half-away-from-zero rounding convention, that the NOI basis is recorded rather than validated, and that steps and warnings are returned. It does not spell out the response shape, which matters since there is no output schema.

Agents need to know what a tool does to the world before calling it. Descriptions should go beyond structured annotations to explain consequences.

Conciseness4/5

Is the description appropriately sized, front-loaded, and free of redundancy?

The formula is front-loaded in the first clause and the second sentence carries the determinism and citation requirement. The first sentence is long and chains several clauses with semicolons, which costs some readability but no sentence is filler.

Shorter descriptions cost fewer tokens and are easier for agents to parse. Every sentence should earn its place.

Completeness4/5

Given the tool's complexity, does the description cover enough for an agent to succeed on first attempt?

For a 10-parameter calculation tool with no output schema, the description adequately covers the computation flow, the deduction ordering, rounding, and the presence of returned steps and warnings. A brief note on what the result object contains would close the remaining gap.

Complex tools with many parameters or behaviors need more documentation. Simple tools need less. This dimension scales expectations accordingly.

Parameters4/5

Does the description clarify parameter syntax, constraints, interactions, or defaults beyond what the schema provides?

Schema coverage is 100%, so the baseline is 3, but the description adds computational meaning the schema cannot: it clarifies that the reserve is deducted from NOI before capitalizing while lease-up costs, free-rent burn-off and other adjustments are below-the-line, and that the cap rate is reported before reserves, after reserves, and all-in.

Input schemas describe structure but not intent. Descriptions should explain non-obvious parameter relationships and valid value ranges.

Purpose5/5

Does the description clearly state what the tool does and how it differs from similar tools?

The description names the specific method (direct capitalization), gives the exact formula '(NOI − capital reserve) ÷ cap rate', and states the two outputs: as-is value with below-the-line deductions and the implied cap rate. That is enough to separate it from calc_dcf_pro_forma or calc_irr without opening a schema.

Agents choose between tools based on descriptions. A clear purpose with a specific verb and resource helps agents select the right tool.

Usage Guidelines4/5

Does the description explain when to use this tool, when not to, or what alternatives exist?

It gives an explicit use directive: 'Deterministic: use this instead of doing the math yourself', plus a requirement to cite 'calc.direct_cap@1' and surface warnings. It does not name a sibling alternative (e.g. multi-year DCF) or state when not to use it, so it stops short of a full routing rule.

Agents often have multiple tools that could apply. Explicit usage guidance like "use X instead of Y when Z" prevents misuse.

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