help with this question would be much appreciated!
John Robin holds a building lease with 61 years remaining at a fixed ground rent of $8000 per year from freeholder Peter Childs. Six years ago he let the property, an office building, to Paton & Paton on a 12 year full repairing and insuring lease without rent review at a rent of $55,000 per year. Paton & Paton sublet the premises one year ago to Keenan Industries on a 7 year full repairing and insuring lease without rent review at an annual rent of $75,000. The current market rent for similar properties is $80,000 per year and those properties show a yield of 8%. Keenan Industries would like to redevelop the site and want to purchase all other interests in the property.
Could you please give me some advise on how much to offer to John Robin, Paton & Paton and Peter Childs. I know the dual rate tax method to value leaseholds with a 5% safe rate and 40% tax rate. HELP please!!!
Thank you so much jennifer smith 
Quote:Could you please give me some advise on how much to offer to John Robin, Paton & Paton and Peter Childs.
Please forgive me for being flip, but the intuitively obvious answer is to offer what makes the best business sense for the company, leaving room for further negotiations.
I admit that elements of this discussion are out of my depth, but I don't see this as an income tax question, but rather a basic business issue.[ Edited by DaveT on Date 06/25/2003 ]