Real Estate & Property Law

Valuing Leases

By Alan Ackerman

Dallas News

Meanwhile, McClain's daughter, Carolyn McClain, appears to be sitting on the better end of what might be the city's most lopsided lease.

Written by Little for a term of 99 years, the lease guarantees that Folsom or his estate will pay the McClain family tens of thousands of dollars a year for what is, by itself, an all but useless piece of land.

"That's a tough lease," Little said, "and it was drawn that way because ... [Hazel McClain] wanted to protect herself. She had many, many chances over the years to sell along with other properties. She was just not ever a seller."

Newt Walker, a well-known Dallas real estate broker who has been closely involved with deals involving the hotel land, called the lease highly unusual because it tied Folsom and his estate personally into payments for nearly a century.    

When one reads the above article in totality, they may ascertain what happened in this situation is that she is asking for all 99 years of rent commitments rather than the capitalized value of the leases.  The article misapprehends that rents are to be capitalized rather than to be added together to determine property value.

Full post as published by National Eminent Domain Blog on January 25, 2010 (boomark / email).