Commercial Ground Lease Structure
Commercial ground leases are structured as net leases with 50-99 year terms, periodic rent escalations, comprehensive financing provisions, and detailed improvement requirements to justify the tenant's construction investment.
Structure Elements
- Net lease (tenant pays taxes, insurance, maintenance)
- 50-99 year term for construction amortization
- Ground rent with periodic escalations
- Leasehold mortgage provisions with lender protections
- Minimum improvement investment and construction timeline
- Sophisticated default, notice, and cure provisions
Rent Reset Methods
- CPI: Annual Consumer Price Index adjustment
- Fixed %: 2-4% annual increase
- FMV reset: Reappraisal every 10-25 years (highest risk)
- Floor and ceiling provisions protect both parties
Financing Impact
Higher rates (0.25-0.75% premium), shorter amortization, lower LTV, limited lender pool. Lease must be "financeable" to attract capital.
Related Terms
- Estate for Years — Leasehold interest
- Encumbrance — Leasehold mortgage
- Contract — Ground lease agreements
Barnes Walker Commercial Real Estate
Barnes Walker's attorneys structure financeable commercial ground leases for Florida development projects. Request a legal inquiry for assistance.
Florida Law Reference
Fla. Stat. Ch. 83, Part II
The Florida Residential Landlord and Tenant Act governs lease agreements, security deposits, maintenance obligations, and the eviction process.
Reviewed by the attorneys at Barnes Walker, Goethe, Shea & Robinson, PLLC