Ground Net Leases (“GNLs”) represent ownership of the land underlying commercial real estate projects. The land is leased on a long-term basis by the fee owner of the land (“Landlord”) to the owners/operators of the real estate projects built thereon (“Tenant” or “Leaseholder”).

GNLs are typically “triple net” leases, meaning that the tenant is responsible for development costs, capital expenditures and all property operating expenses, such as maintenance, real estate taxes and insurance.

Key features of a typical GNL:

  1. Tenant has use of the land to operate any buildings and improvements on the land on a “triple net” lease basis
  2. Landlord (SAFE) collects ground rent payments, including contractual escalations and/or percentage rent payments during the lease term
  3. At lease expiration, or upon a Tenant default, the land and all buildings and improvements on the land revert to the Landlord (SAFE) for no additional consideration

Typical GNL Lease Terms

Lease Term Base term up to 99 years
Rent Escalators Fixed bumps, CPI-based increases, revenue participation
Property Expenses No Landlord obligations
Capital Expenditures No Landlord obligations
Tenant Repair and Maintenance Tenant obligated to maintain the underlying property in the same condition as it was as the start of the lease
Remedies Upon Tenant Default Landlord (SAFE) entitled to terminate the lease, regain control of the land and take ownership of the improvements
Reversion Right at Lease Expiration Control of the land and ownership of the buildings and improvements on the land revert to Landlord (SAFE) for no consideration