Ground Lease Buyout Calculator

A ground lease buyout converts leased fee into fee simple — tenant pays the landlord to extinguish the lease. Price = PV of remaining rent + PV of land reversion the landlord would have received at lease end. This calculator computes both legs and shows the multiple of current rent the buyout represents.

Current ground rent

Remaining term (years)

Escalation / period

Escalation period (years)

Buyer's discount rate

Land FMV (if bought outright)

Buyout price (PV + reversion)

$3,218,353

PV of ground rent stream

$2,796,870

PV of land reversion

$421,483

Implied cap rate on current rent

0.06%

Buyout multiple of current rent

17.9

How the math works

Ground lease buyout = PV of remaining rent stream + PV of reversion (landlord gets land back). Tenants often push for buyout when they want to sell the building with fee simple land — removes the wasting-asset problem for the buyer.

Landlords ask for 15-22x current rent on creditworthy deals. Tenants counter at 12-15x using higher discount rate. Sweet spot is usually in the 16-18x range on middle-credit tenants with mid-term remaining.

How to Use

Enter current rent, remaining term, and escalation terms.
Enter the buyer's discount rate.
Enter land FMV if purchased outright.
Read PV of rent, reversion value, and total buyout price.

Frequently Asked Questions

Why buy out?

Sell a building with fee simple land (easier to finance, more buyers). Refinance at lower rate (leasehold loans price 50-150 bps wider than fee). Tenant improvements simpler to fund without landlord consent.

Discount rate range?

Creditworthy corporate tenant: 5-6%. Small business tenant: 7-9%. High-risk / short term: 10-12%+. The tenant's discount rate (usually higher than landlord's) is what they use to decide if buyout is worth doing.

Reversion at FMV or contractual?

Landlord typically values reversion at estimated FMV at lease end — which requires projecting land appreciation. Conservative: use current FMV. Aggressive: compound land value at 2-3% per year.