Ground Leases – A Basic Primer for Landlords and Tenants

What Is It: A long term lease (e.g. 30 – 999 years) of: un-improved lands; or previously improved lands in need of major re-development at significant capital expense where the tenant gets rights/benefits and liabilities/obligations as if it was the landowner BUT is not the landowner. Some examples include the Empire State Building, New York, First Canadian Place, Toronto, Pinewood Studios, Toronto and the Colonnade on Bloor St., Toronto.

Some Advantages:

Landlord Perspective:

• 
  The landlord does not want to sell its lands and wants to avoid the risk in land development.
• 
  It frees up “trapped cash” where the landlord does not want to sell or cannot afford or have the experience to develop.
• The landlord may own adjacent lands and as ground leased lands are developed, the remaining land values increase for the benefit of the landlord.
• If the landlord is a municipality, ground leasing lands may spur the development of other municipal lands in the vicinity e.g. City of Toronto Economic Development Corporation’s ground leases to Toronto Film Studios (now Pinewood Studios) and to Corus Entertainment in Toronto’s Port Lands (the author represented the landlord on the finalization of each lease).

For the complete article view the document below.