Ground Lease Residual Value Calculator
Ground leases (99-year or longer) separate ownership of land from improvements. At lease end, the landowner reclaims everything — building and land. Calculate the present value of that reversion to price the ground lease correctly.
What Is A Ground Lease
Ground leases separate ownership of land from improvements. The landowner retains title to the dirt; the leaseholder owns the building for the lease term (typically 50-99 years). At lease end, everything reverts to the landowner. Common in major cities (NYC, San Francisco, Honolulu) where land is scarce.
Why Lease Length Matters
99-year leases have minimal practical impact on building value — the reversion is so far away its PV is near zero. 50-60 year leases have substantial residual value to landowner, making the leasehold harder to sell or finance. Banks won't finance leaseholds with less than 30 years remaining unless extension is automatic.
Pricing The Ground Rent
Annual ground rent typically targets 5-8% of land value, with periodic resets (every 25-30 years) to fair market value. Resets create financing risk — if land value tripled, ground rent triples, potentially making the property unprofitable. Always model worst-case rent resets when buying leasehold.
Source: Urban Land Institute ground lease guidelines, Real Capital Analytics ground lease data, BOMA International ground lease comparables. Last updated: May 2026.