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Jun 27

Real Estate Insights: Hedge Your Risk by Leasing the Land

Reduce Costs and Risks By Leasing Rather Than Buying

Instead of buying a property outright, which is more costly, savvy developers are using a ground lease or leasehold strategy to lease the land from the owner for 99 years, resulting in significant savings.

Here’s an example of how we’ve helped a client leverage the land in a deal.

The Deal

$38MM Groundlease refinance in Brooklyn
Loan Policy – $71,231
Title Fees – $1,000+
Mortgage Tax – $1,064,000
Recording Fees – $1,000+
 

Cornerstone Insight

A ground lease or leasehold agreement reduces risk and financial exposure for the developer and reduces risk for construction lenders as well. The tricky part is valuing the lease and calculating the amount of title insurance required for the deal. Cornerstone works with professionals who have significant experience and expertise in providing analysis for this type of deal structure.

If you have any questions about leasehold agreements and real estate or other potential title issues, or if you would like to discuss an upcoming or potential transaction, please contact us.

If you have any questions about hotel deals or potential title issues, or if you would like to discuss an upcoming or prospective transaction, please contact us.