Section 2.2.1–2.2.3 introduces annuities and perpetuities, which describe real-world cash flows that occur at regular intervals and often grow at a constant rate. These patterns are common in real estate, including mortgages, leases, and long-term rental income. Using the geometric series formula, we derive simplified valuation tools that allow us to price these multi-period cash flows more efficiently. This section also applies these concepts to practical real estate problems, such as valuing long-term leases and analyzing trade-offs between rent levels, lease terms, and growth rates. A key application is the level annuity in arrears, which forms the basis of most mortgage payments made at the end of each period. We also distinguish between payments made in arrears and in advance, which is especially important for lease structures where rent is typically paid at the beginning of each period. This episode was developed and produced by Nicole Jordan and Emma Chang. Content was 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 

This episode includes AI-generated content.