In April 2012 Bill Nichols, a financial analyst in the real estate investment firm Koenig Capital, was going to enter a unique lease renegotiation.One of Koenig's tenants, had around sixteen years left its long-term lease of the Kelley Building, a 165,000-square-foot office apartment in Cleveland.The lease included a clause giving Hasperat the option to buy the Kelley Building from Koenig.
When Nichols attempted to keep a mortgage on the property to make the most of low interest rates, he learned the existence of this option in the lease contract preventing lenders from offering Koenig their lowest rates. As a result, Nichols had been tasked with renegotiating the lease. This abrupt occasion offered Nichols the possibility to utilize his financial skills. Bill needed to calculate the reasonable value of the purchase option to be able to justify to his superiors, how much they should compensate Hasperat. Pupils use actual options modeling techniques to value the purchase option in Hasperat's lease and will step into the role of Bill Nichols.
PUBLICATION DATE: September 26, 2014 PRODUCT #: KEL819-HCB-ENG
The Right of Acquisition Options in Commercial Real Estate Case Study Solution
This is just an excerpt. This case is about FINANCE & ACCOUNTING
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