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Valuing options to renew at future market value the case of commercial property leases

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Main Authors: Jenny Jing, Wang, Jianfu, Shen, Frederik, Pretorius
Format: Book
Language:English
Published: Springer 2023
Subjects:
maturity date
model integrates decision
Online Access:https://link.springer.com/article/10.1186/s40854-023-00479-1
https://dlib.phenikaa-uni.edu.vn/handle/PNK/7758
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spelling oai:localhost:PNK-77582023-04-11T04:04:42Z Valuing options to renew at future market value the case of commercial property leases Jenny Jing, Wang Jianfu, Shen Frederik, Pretorius maturity date model integrates decision CC By In this study, we develop and empirically test a valuation model for a commonly encountered option in office leases: a tenant’s option to renew at future market rent (a fair market value) with lease termination as the maturity date. The model integrates decision analysis with real options analysis and market risk with private risks. “Option value” is defined as the private value of the option to either party pre-contract, while “option price” assumes a fair agreement between transacting parties and can be positive (rental premium paid) or negative (rental discount offered). Without manifest expectations, an analysis of a sample of office leases supports the model’s logic with price estimates in a practical range. The tenants’ option price/value is shown to have a negative relationship with the original/renewal lease term; conversely, the landlords’ option value is positively related to the original/renewal term. 2023-04-11T04:04:42Z 2023-04-11T04:04:42Z 2023 Book https://link.springer.com/article/10.1186/s40854-023-00479-1 https://dlib.phenikaa-uni.edu.vn/handle/PNK/7758 en application/pdf Springer
institution Digital Phenikaa
collection Digital Phenikaa
language English
topic maturity date
model integrates decision
spellingShingle maturity date
model integrates decision
Jenny Jing, Wang
Jianfu, Shen
Frederik, Pretorius
Valuing options to renew at future market value the case of commercial property leases
description CC By
format Book
author Jenny Jing, Wang
Jianfu, Shen
Frederik, Pretorius
author_facet Jenny Jing, Wang
Jianfu, Shen
Frederik, Pretorius
author_sort Jenny Jing, Wang
title Valuing options to renew at future market value the case of commercial property leases
title_short Valuing options to renew at future market value the case of commercial property leases
title_full Valuing options to renew at future market value the case of commercial property leases
title_fullStr Valuing options to renew at future market value the case of commercial property leases
title_full_unstemmed Valuing options to renew at future market value the case of commercial property leases
title_sort valuing options to renew at future market value the case of commercial property leases
publisher Springer
publishDate 2023
url https://link.springer.com/article/10.1186/s40854-023-00479-1
https://dlib.phenikaa-uni.edu.vn/handle/PNK/7758
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score 8.891787

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