Coca Cola Building – Real Estate as an Intangible and Tangible Asset Example
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The Coca-Cola Company said that it had purchased the leasehold to the New York City headquarters building of Columbia Pictures Industries from 711 Fifth Avenue Associates for an undisclosed amount. Columbia Pictures, a major tenant in the midtown Manhattan building, is a subsidiary of the Coca-Cola Company.
The Atlanta-based diversified soft drink company said that Tri-Star Pictures, its joint venture with CBS Inc. and Home Box Office Inc., would be a tenant in the building. Columbia Pictures previously owned the office building at 711 Fifth Avenue and sold it in 1977 for $14 million to the real estate developer Larry Silverstein. The sale of the property to Coca-Cola has been estimated at $57 million, including the assumption of an $11.5 million mortgage.
Assignment:
In an excel document, what would the present value of the beneficial leasehold be from 1983 to 2020. Assume a weighted average cost of capital of 8% and 10%.
In the document, explain how the lease fee interest, the leasehold interest, and then the future fee simple interest when the fixed lease expires in 2020 and how all that fits together.
