Ground Lease

Ground Leasing Financing (GLF) offers property owners and developers an opportunity to add leverage and increase returns in their investments. Ground Lease Financing can reduce equity capital requirements with efficient construction or permanent capital.

With a ground lease, the lender (Investor) purchases the land underneath an existing building or a planned development and leases the use of the ground back over a 99-year term. The property owner (Sponsor) ownership and operational rights to their current or future improvements while making ground lease payments to the Investor.

This allows the Sponsor to receive a lump sum payment, equal to 30-35% of the As Stabilized Value, which can be used to fund construction costs or reposition existing assets. Ground leases are nonrecourse after construction completion and up to 36 months of rent payments can be capitalized.

The Grace Capital difference – the Bridge Ground Lease (BGL)

The Investor takes a new approach to help you build a better capital stack by providing ground lease financing with optionality.

With flexible repurchase options as soon as year four, the Investor offers the Developer Sponsor (DS) all of the short-term benefits of ground lease capital without the long-term commitment. DS’s have the peace of mind knowing that they can use ground lease financing to construct and stabilize their properties with the option to buy the land back from the Investor within a few years and at a fixed, predetermined price.

How can this benefit you?

Ground lease financing provides efficient capital that acts like interest-only debt for the duration of the ground lease. On construction projects, this means reduced equity requirements and improved investor yields. On distressed assets, ground lease capital can provide the needed cash injection to spark recovery.

The Investor finances ground leases in all 50 states across all asset classes including:

• Hotels
• Multifamily
• Senior Housing
• Student Housing
• Office
• Retail
• Industrial
• Self-Storage
• Special Uses: Renewable Energy Projects (Solar/Wind/Water), Oil Refineries, Municipal Infrastructure
  Whether it’s a new construction project, rehab, acquisition or a recapitalization of an existing asset (including distressed), we provide creative capital solutions with a track record of success.

Learn more about Ground Lease Financing