A ground lease is a long term lease, often 50 to 99 years, in which a tenant leases land and owns or builds improvements on it. The landowner keeps title to the ground, while the tenant controls the building for the lease term. At expiration, the improvements usually revert to the landowner unless the lease is renewed.
Financing a ground leased property means lending against the leasehold interest rather than a fee simple estate. Lenders look closely at the remaining lease term, since a loan must fully amortize or mature well before the lease ends. A short remaining term can make financing difficult or impossible.
Ground leases are common in dense urban markets and on institutional land holdings. They lower the upfront cost of controlling a site, but the tenant does not build equity in the land and faces rent escalations and eventual reversion, all of which shape both value and financing.