Your IRR computation requires assumptions regarding the initial investment cost and spin off price. If the initial investment cost is "market value", your high IRR expectation will require a corresponding high level of appreciation over the 10 year hold. If your initial investment is the BTS cost (land + development cost) and is below "market value", a high level of appreciation may not be required to achieve you IRR expectation. The cap rate can be used to measure both "market value" and the spin off price. Both market value and spin off price should reflect cap rates derived from competitive property investments.
Since you are not buying or selling, the IRR is likely the more crucial to your investment criteria. However, as noted above, the IRR computation incorporates assumptions directly related to cap rates.
Nov 15, 2015