Gain insight into ground leases and the creation of estates.
In a typical space lease, even if the space includes entire building, the landlord is the owner of both the building and all improvements, with the exception of the tenant’s personal property. In a space lease, some or all of the buildout of tenant’s space may have been financed or performed by the landlord (or in some instances by the tenant), but other than personality, any improvements that are affixed to the realty, are landlord’s property, regardless of who paid for it. In contrast, in a ground lease, either the tenant constructs the improvements with its own funds or that of a leasehold mortgagee or has purchased the improvements erected on an improved property, thereby separating the estates in the property into a fee estate, which includes a right of the landlord to receive the rent over the term and to the return of the improvements at the end of that long term and a tenant’s leasehold estate, in which the tenant has both the right to occupy the ground and owns the improvements located on it. The purpose of this white paper is to explain the unique nature of a financeable ground lease. In order to do so, the author highlights some of the differences between a space lease and a ground lease.
Stephen E. Friedberg
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
- More than 40 years of experience in the practice of commercial real estate law, both nationally and locally
- Depth of experience provides him with the ability to provide solutions to complex problems his clients encounter in their transactions
- Focuses on sale/leaseback structuring and implementation; ground lease structuring and negotiation from both landlord and tenant perspectives; development construction and leasing of data centers, distribution centers, high-rise residential buildings and shopping centers; sales, acquisitions and financings of commercial properties; retail, office and industrial property leasing; structuring and utilization of public, private partnership transactions in the development or improvement of real estate properties; and financial restructurings for developers and other property owners
- Co-head of the firm’s interdisciplinary sale/leaseback practice, including both single and large scale sale/leaseback transactions and has worked on transactions as large as 600 properties
- Leads the firm’s ground lease practice, having worked on creating and implementing ground lease programs for a number of institutional and private company clients, as well as drafting and negotiating ground leases for both landlords and tenants, across multiple classes of properties
- Extensive experience in the shopping center industry, having served as in-house counsel to a major shopping center developer in the acquisition, sales, development, and leasing of numerous shopping center properties
- Has particular expertise in the interdisciplinary practice area defined by the intersection of real estate and communications law, which includes the acquisition, disposition, development, financing and leasing of data centers, switch facilities, colocation facilities, radio and television broadcast antennas, distributed and in-building antenna systems, rooftop antennas, and wiring of buildings for broadband communications access
- Has lectured on various issues concerning sale/leasebacks, ground and office leasing, data centers, and a number of topics regarding shopping center financing, development, and leasing
- J.D. degree, Case Western Reserve University; B.A. degree, Michigan State University
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