Ground Lease
A long-term lease of land only, with the tenant constructing and owning the improvements during the term. Ground leases split the real estate into a leased fee (land) and a leasehold (improvements) — each valued separately.
Related Terms
Ground Rent
The rent paid for the use of land under a ground lease.
Leasehold Interest
The tenant's interest in a leased property — the right to occupy and use it for the lease term.
Leased Fee Interest
The landlord's interest in a leased property: the right to receive contract rent during the lease term plus the reversion of the property when the lease ends.
More in Income Approach
View allCapitalization Rate (Cap Rate)
Cap RateThe ratio of a property's net operating income to its market value or sale price, expressed as a percentage.
Gross Rent Multiplier (GRM)
GRMThe ratio of a property's sale price to its gross monthly (or annual) rental income.
Net Operating Income (NOI)
NOIThe annual income remaining after deducting all operating expenses from effective gross income, but before deducting debt service (mortgage payments) and income taxes.
Effective Gross Income (EGI)
EGIPotential gross income minus vacancy and collection losses, plus other income (laundry, parking, late fees).