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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.

Editorial noteMaintained by EveryCalc - Reviewed June 2026

EveryCalc calculators are designed for fast, practical estimates with transparent inputs and no required account. We use plain formulas, visible assumptions, and related tools so visitors can check the result from more than one angle.

Results are informational only. For financial, tax, legal, medical, construction, or other high-impact decisions, verify the output against primary sources or a qualified professional.

Learn more about our review process on the EveryCalc methodology page.

How this calculator works

What this page estimates

This Ground Lease Buyout Calculator is built to give a quick, browser-based estimate for ground lease buyout. 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. The inputs stay on the page during normal use, and the result should be treated as an estimate for planning, comparison, or education rather than professional advice.

Calculation approach

The calculator applies the standard relationship implied by the inputs, then formats the answer so it can be checked and reused. For finance tools, the most important step is using consistent units, rates, time periods, and assumptions before comparing the result with another calculator or outside quote.

Example workflow

For example, start with a realistic value you already know, change one input at a time, and watch how the answer moves. That makes it easier to tell whether the result is being driven by the main amount, the rate, the time period, or a unit conversion.

Practical checks

Use current, real-world numbers when the result affects money, health, tax, or legal decisions.
Run a low, base, and high case when the inputs are estimates.
Check the related calculators below when the next decision depends on a different assumption.

How to interpret the ground lease buyout result

Best use

Use the result as a planning number for comparing payments, rates, returns, tax reserves, or cash-flow choices before you request a quote or make a commitment.

Cross-check

Compare the answer with the contract, lender estimate, tax form, brokerage statement, payroll record, or invoice that will control the real-world outcome.

Watch for

Do not rely on a single optimistic rate, return, or fee assumption. Money pages work best when you run low, base, and high cases and keep professional advice separate from the estimate.

This page belongs to the Finance calculator library, so the answer should be read in the context of the decision you are modeling rather than as a universal rule.

Before relying on this ground lease buyout estimate

Most calculator mistakes come from the inputs, not the arithmetic. Use this short audit before you reuse the answer in a spreadsheet, quote, application, or important conversation.

Confirm source numbers

Match balances, rates, fees, taxes, income, and payment dates against the lender quote, payroll record, tax form, statement, invoice, or contract.

Separate cash flow from total cost

A lower monthly payment can still cost more over time if fees, interest, taxes, or a longer term are hidden in the structure.

Run conservative cases

Test at least one higher-cost or lower-return case before using the output for a purchase, refinance, investment, loan, or tax decision.

Rerun this page when the rate, price, term, fee, tax rule, income, expense, or expected holding period changes.

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.