Valuation of Commercial Property and Ground Lease
In a scenario where a purchaser is considering buying the fee-simple interest and a short term lease-interest (30-years with no additional extensions) of an operating hotel, what is the appropriate way to value the deal from a fee-simple (only), lease-interest (only), and a deal (as a whole) perspective.
I have underwritten this deal as if I were purchasing the building outright with no ground lease payments; however, I am having issues allocating the value of the fee-simple and leased-fee interest.
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