


Study with the several resources on Docsity
Earn points by helping other students or get them with a premium plan
Prepare for your exams
Study with the several resources on Docsity
Earn points to download
Earn points by helping other students or get them with a premium plan
Community
Ask the community for help and clear up your study doubts
Discover the best universities in your country according to Docsity users
Free resources
Download our free guides on studying techniques, anxiety management strategies, and thesis advice from Docsity tutors
Examples and questions related to valuing leasehold interests and subleases in corporate real estate. It covers situations where market rents have changed, and the lessee is considering buying out the lease or moving to new space. The document also discusses user alternatives in sublease analysis.
Typology: Exercises
1 / 4
This page cannot be seen from the preview
Don't miss anything!
a) Consider the following situation: Three years ago you entered into a 10-year lease for 25,000 sf at $8.50 psf gross. Now market rent for this space is $10.00 psf. What is the value of your leasehold interest if your cost of capital is 10%?
Suppose your landlord wants to buy you out of your lease so that he can tear down the building and redevelop the land. How much must you be paid to be willing to give up this lease?
b) Suppose instead that current market rents are $8.00 psf.
What is the value of your leasehold interest in this case?
Suppose you would like to move to new space and terminate your lease. How much would the landlord insist on being paid to let you out of the lease?
What is the most you would be willing to pay?
What are non-financial factors that will affect your decision?
User alternatives in sublease analysis:
Alternatives: User Wants to Move Contract lower than market rent
Contract higher than market rent Owner
User
Alternatives: User Wants to Stay Contract lower than market rent
Contract higher than market rent Owner
User