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Ground Lease

A ground lease is a long-term lease of land only. The tenant builds and owns the improvements, which typically revert to the landowner at lease end.

In a ground lease the landowner leases only the land, and the tenant constructs or owns the building for the term. The rent is typically very stable, with long terms and escalations, and the landowner receives the improvements back at the end through reversion. Investors who own the land interest have little management responsibility. Risks include the tenant's credit, leasehold financing rules, and the length remaining, so read the lease, including any subordination terms.

Related Terms

Lease Structures

Absolute Net Lease

The most tenant-responsible NNN lease: the tenant covers taxes, insurance, and all maintenance, including roof and structure.

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Lease Structures

Holdover Tenant

A tenant that stays in possession after the lease expires, often at an elevated holdover rent.

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Lease Structures

Base Rent

The fixed minimum rent owed under a lease, before escalations, percentage rent, or expense reimbursements.

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