[SOLVED] 编程代考 Leasehold property

Leasehold property
 Leasehold valuations
 Lessee interest
 Lessor interest

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 Valuation methodology
Bundle of Rights Theory
 Property ownership can be likened to a bundle of sticks with each stick representing a separate right of ownership
 Solving a valuation problem requires knowing how large or small the bundle of sticks is!
 A combination of regulations and statutory restrictions – limit unrestricted use and ownership

Leasehold interests
 Lease contracts can create separately saleable interests
 Long term leases without regular rent reviews are likely to create separately saleable interests
 Share or interest in a property less than full fee simple ownership
Leasehold interest
 Give less control of the realty
 Usually difficult to sell
 Usually sell at a discount to the fee simple interest

Lessee’s interest
 What creates lessee saleable interest?
 Contract rent less than market rent
 Obtain value through ongoing right to occupy
 Value of lessee improvements
 The lessee is running a business, which is analogous to a sale and lease back of land arrangement.
 For residential leasehold homeowners, what they are buying?
Lessor’s interest
 What creates lessor saleable interest?
 Right to receive rent
 Right of reversion on lease expiry
 Right to resell or release
 The lessor is buying an investment

Leasehold interest
 What is the market value?
 Factors to be investigated and considered:
 Type of property
 Lease documents
 Size into which it is separated
 Can it be sold
 Market sales evidence
 Statutory valuation, case law precedent?
Leasehold interest valuations
 Mathematical approaches
 Sales analysis
 Discounted cash flow
 Leasehold creates additional risk
 Reference: Ground lease valuation and Analysis,
M Namara, 2020
https://static1.squarespace.com/static/5c6b7b35e8ba449a332dd7db/t/5e44518607ae 104424e40085/1581535685299/Ground+Lease+Valuation+and+Analysis+Jan+20.pdf

Valuing the benefit of the right of renewal
Way to analyse sales: Sale Price less
 1. Improvements
 2. Benefit rent
 3. Leaving a lump sum which represents the right of renewal/other benefits if any. In some cases this can be nothing.
 4. This lump sum is then divided into the freehold land value to show a percentage.
Lessee’s interest
Benefit from rent
 Current market rent $77,000 @ 6.2% pa
Less existing rent Lessee’s annual benefit PV for 3 yrs @ 10.5%
$4,774 $ 878 $3,896 $9,604

Sale price
Ground rent paid under lease now
Ground rent %
Current land value
Current ground rent as if reviewed (c x d)
Benefit rent (e – b)
Paid in advance every 1/2 year
Length to run (yrs)
Payment semi annually in advance
Total payments (i x h)
Investors required return
PV of annuity (l x g)
Improvements
As a % of land value
Valuing the benefit rental
Fee simple land value: 200,000
Ground rental @ 6%
Current land rental
Benefit rent therefore
We use the formula 1-(1 + i) –n
i i = interest rate
n = number of periods
$12,000 $8,000 $4,000

Valuing the benefit rental
Years to run = 3
Interest rate = 10.5%
1-(1 + .105)^ –3 = 2.4651 .105
2.4651 x $4,000 = $9860.49
 Lessor’s + Lessee’s interest = Freehold interest?
 Not necessarily
 Subject to different market influences
 Depends on the lease
 Need to be assessed independently
 Should not subtract one from the freehold value to derive the other

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