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Ground lease vs. sale-leaseback

Keep the building. Sell only the dirt.

Both unlock long-term capital from real estate you own — but a sale-leaseback sells the whole asset and surrenders 100% of the upside, while a ground lease monetizes only the land. We buy the land; you keep the building, the operations, and all of the appreciation and promote.

A sale-leaseback sells everything. A ground lease sells the land underneath it.
~30–40%
Of basis is land · that's all a ground lease sells
vs
100%
Of the asset · what a sale-leaseback sells
A sale-leaseback can raise more total cash up front — but you become a tenant on your own building and hand over 100% of the future appreciation, refinancing upside, and promote. A ground lease keeps all of that with you, with ground rent at roughly 25% of NOI — covered about 3–4x.
Side by side

Ground lease vs. sale-leaseback, line by line.

Valor ground lease Sale-leaseback
What you sell Only the land — roughly 30–40% of basis. You keep the building (the leasehold). The entire asset — land and building together. You own nothing afterward.
Who owns the improvements You do. You hold the leasehold estate, operate it, and control it. The buyer. You hold only a tenant lease on space you used to own.
Future upside & appreciation 100% stays with you — appreciation, refinancing upside, and the developer promote. Surrendered. Appreciation and residual value go to the new owner, not to you.
What you pay ~6–6.75% non-amortizing ground rent on the land only — about 25% of NOI, covered ~3–4x. Rent on the full asset value — a larger annual obligation on a much larger base.
Cash raised The land value — usually enough to recap, fund the equity gap, or take chips off the table. More total cash up front — because you're selling everything, not just the dirt.
Control of the business Unchanged. You run the operations and make the capital decisions. Constrained by a tenant lease — use, alterations, and renewals are the landlord's call.
Balance sheet Can be structured off-balance-sheet; ground rent is deductible operating rent. Also commonly off-balance-sheet — but the asset is gone from it entirely.
Amortization / maturity Non-amortizing, no balloon — the ground rent doesn't mature against you. No debt to amortize — but no residual asset either; the value is realized once, at sale.

The trade in one line: a sale-leaseback gives you the most cash but you surrender the asset and its appreciation; a ground lease keeps control and 100% of the upside while monetizing the single most overlooked line on your balance sheet — the land · one principal counterparty for the land and the leasehold financing.

Questions, answered

Ground lease vs. sale-leaseback — FAQ.

What is the difference between a ground lease and a sale-leaseback?

A sale-leaseback sells the entire asset, land and building, and you stay on as a tenant. A ground lease sells only the land, which is typically about 30 to 40 percent of basis, and you keep the building as the leasehold owner. With a ground lease you keep control and 100 percent of the future upside; with a sale-leaseback you surrender both.

Which one raises more cash?

A sale-leaseback usually raises more total cash up front, because you are selling everything rather than just the land. The trade is that you give up ownership of the building and 100 percent of its future appreciation and promote. A ground lease raises less, but you keep the asset and all of the upside.

Do I keep the appreciation and the promote with a ground lease?

Yes. You hold the leasehold estate, so the building, the operations, the refinancing upside, and the developer promote all stay with you. We buy only the land and lease it back on a long-term, typically 99-year, basis. In a sale-leaseback that appreciation belongs to the new owner.

Is the ground rent cheaper than sale-leaseback rent?

The ground rent is charged on the land only, at a non-amortizing rate of roughly 6 to 6.75 percent and about 25 percent of NOI, covered around 3 to 4 times. Sale-leaseback rent is charged on the full asset value, so it is a larger obligation on a much larger base. The ground rent is also non-amortizing, with no balloon and no maturity wall.

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We move on real numbers.

Land-heavy, hotel, or mixed-use deals — especially where you want to recap or fund an equity gap without selling the asset or giving up the upside. Send the address, the as-complete stabilized NOI, and total project cost — we return an indicative land value in 48 hours, as principal or arranged capital.

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