Hotels carry the widest yields in commercial real estate — so the spread over a ground cap unlocks the most land value relative to total value. We buy the land under your hotel and lease it back, turning it into capital to fund the PIP, retire a C-PACE loan, fill the acquisition equity, or take out a pref. You keep the building, the flag, and 100% of the upside.
A hotel's NOI is capitalized at a high yield, but the land beneath it is a safe, senior position that prices at a low ground cap. That spread is exactly what a ground lease monetizes — which is why hotels free the most land value of any asset class.
A flag-required property improvement plan is a capital call you can't avoid. Monetize the land and fund the PIP without an expensive mezz piece or a capital call to your LPs.
If a C-PACE assessment is sitting on the hotel — and blocking your conventional or agency takeout — the ground-lease proceeds can retire it and clear the path. See ground lease vs C-PACE →
Buying the hotel? Bid the land under your own purchase. The ground-lease proceeds offset the equity you'd otherwise inject, so you close with far less of your own cash in the deal.
Replace a 12–15% pref or a grinding mezzanine piece with non-amortizing ground rent that prices near senior debt — and stop sharing your promote.
Situations we solve on hotels: acquisitions · PIP and conversion capital · construction-to-stabilization · C-PACE and construction-loan maturities · pref / JV-equity takeouts · recapitalizations · mild distress.
Illustrative, on a stabilized-NOI basis — the same engine we run on every deal.
| Ground rent (≈25% of NOI) | ≈ $850,000 / yr |
| Ground cap | ≈ 6.5% |
| Coverage of the ground rent by NOI | ≈ 4× |
| Ground-lease proceeds (the land) | ≈ $13M |
That's roughly a third of basis turned into permanent, interest-only, non-recourse capital — enough to fund the PIP and retire an expensive layer of the stack, while the in-place income covers the ground rent about four times over. See the full method →
The bifurcation sits below your operating business. We own the land; you keep the building (the leasehold), the franchise or management agreement, the flag, the key money, and 100% of the upside and promote. The ground lease is structured with the recognition, notice, and cure protections your leasehold lender needs — so the financing holds up and nothing about running the hotel changes.
Yes — hotels are the highest-impact use of the structure. Because hotel NOI is capitalized at a wide yield while the land prices at a low ground cap, a hotel frees more land value relative to total value than any other asset class.
Yes. The ground-lease proceeds are non-amortizing, interest-only capital you can use for the PIP, a brand conversion, or construction-to-stabilization — without a capital call or an expensive mezzanine piece.
No. The franchise or management agreement and the flag stay with your operating entity on the leasehold. We own only the land; you keep running the hotel exactly as you do today.
Yes. A ground lease can retire a C-PACE assessment that's blocking a takeout, and it pairs with SBA 7(a)/504 and USDA B&I leasehold financing on the smaller basis. It doesn't conflict with those programs.
As a rule of thumb: roughly a quarter of stabilized NOI as ground rent, divided by a ~6.5–6.75% ground cap. On a $40M hotel with ~$3.4M NOI that's about $13M. Send the as-complete NOI and we'll return an indicative number in 48 hours.
Send the flag, the address, the as-complete stabilized NOI, and total project cost (plus the PIP or C-PACE balance if there is one). We return an indicative ground value in 48 hours — as principal or arranged capital — and show you exactly how it nets out.
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