A practical guide to valuing options for leased space.(Asset Management): An article from: Journal of Property Management
Book Details
Author(s)Stephen M. Schwab
PublisherInstitute of Real Estate Management
ISBN / ASINB00093OA2W
ISBN-13978B00093OA26
AvailabilityAvailable for download now
Sales Rank14,494,830
MarketplaceUnited States 🇺🇸
Description
This digital document is an article from Journal of Property Management, published by Institute of Real Estate Management on July 1, 1995. The length of the article is 2848 words. The page length shown above is based on a typical 300-word page. The article is delivered in HTML format and is available in your Amazon.com Digital Locker immediately after purchase. You can view it with any web browser.
From the supplier: Tenants who lease office spaces are usually given options to renew their lease, increase space to their lease, subtract space away from their lease, end their lease at an early time or combine any of the benefits. Office-building owners are aware of the value of these options and are hesitant to offer them to their tenants. Nevertheless, tenants end up enjoying these options, with the owner usually getting no compensation at all. To value these options, landlords may simply apply the Put-Call Parity Theorem to the options. For example, if a tenant requests an option to renew a lease at a market rate, the landlord should require the tenant to pay today for the full term of the renewal lease, lend money to the tenant to pay for the future lease term, compel the tenant to prepay all the interest on the loan at present and sell an option to the tenant to end the prepaid lease at a price equal to the borrowed amount from the owner.
Citation Details
Title: A practical guide to valuing options for leased space.(Asset Management)
Author: Stephen M. Schwab
Publication:Journal of Property Management (Refereed)
Date: July 1, 1995
Publisher: Institute of Real Estate Management
Volume: v60 Issue: n4 Page: p52(4)
Distributed by Thomson Gale
From the supplier: Tenants who lease office spaces are usually given options to renew their lease, increase space to their lease, subtract space away from their lease, end their lease at an early time or combine any of the benefits. Office-building owners are aware of the value of these options and are hesitant to offer them to their tenants. Nevertheless, tenants end up enjoying these options, with the owner usually getting no compensation at all. To value these options, landlords may simply apply the Put-Call Parity Theorem to the options. For example, if a tenant requests an option to renew a lease at a market rate, the landlord should require the tenant to pay today for the full term of the renewal lease, lend money to the tenant to pay for the future lease term, compel the tenant to prepay all the interest on the loan at present and sell an option to the tenant to end the prepaid lease at a price equal to the borrowed amount from the owner.
Citation Details
Title: A practical guide to valuing options for leased space.(Asset Management)
Author: Stephen M. Schwab
Publication:Journal of Property Management (Refereed)
Date: July 1, 1995
Publisher: Institute of Real Estate Management
Volume: v60 Issue: n4 Page: p52(4)
Distributed by Thomson Gale
