Section 2.2.7 – Long-Term Leases & the Perpetuity of Successive Annuities

In this episode of CRE Explained, Alex and Lily explore Section 2.2.7 and the valuation of properties with long-term leases. They explain how a signed lease creates a predictable stream of cash flows and introduce the concept of a “perpetuity of successive annuities,” where a property's value is viewed as a series of lease periods continuing over time. The episode also examines the difference between the lower-risk cash flows within a current lease and the more uncertain cash flows between leases, highlighting why different discount and growth rates may be used. By connecting these ideas to the geometric series formula, Alex and Lily show how seemingly complex valuation problems can be broken down into a few key variables. The episode concludes by previewing the transition from present value to future value in the next section. This episode was developed and produced by Nicole Jordan. Audio generated using Wondercraft AI. © 2026 CRE Explained Podcast Team. Based on Commercial Real Estate Analysis for Investment, Finance, and Development (4th Edition) by David M. Geltner, Norman G. Miller, Alex van de Minne, Piet Eichholtz, Thies Lindenthal, and Lily Shen. Developed through Clemson University Creative Inquiry (CI) 4980, under the supervision of Dr. Lily Shen. Reference Material: Commercial Real Estate Resources | CREBook.net