Ground Lease Calculator

Ground leases produce contractual rent annuities — usually long term (50-99 years) with periodic escalation. Value equals PV of the rent stream at the investor's target yield. This calculator rolls escalations through remaining term and computes PV plus current yield if acquired at PV.

Current ground rent (annual)

Escalation / period

Escalation period (years)

Remaining term (years)

Discount / cap rate

Present value of ground rent stream

$3,371,652

Total rent over remaining term

$10,292,299

Average annual rent

$257,307

Final-period rent

$350,769

Current yield if acquired at PV

0.05%

How the math works

Ground leases produce a rent annuity escalating at fixed steps (e.g., 10% every 5 years). PV of the rent stream — discounted at the investor's target yield — is what ground leases trade for. Credit-tenant ground leases (NNN pad sites) are nearly bond-like and trade at tight yields.

Some ground leases are re-appraised at mid-term (year 15 or 20) to reset rent to then-current market. Unadjusted fixed escalations can under- or over-pay over a 50+ year term.

How to Use

Enter current annual ground rent.
Enter escalation percent per period and period length in years.
Enter remaining term in years and your target yield.
Read PV and average annual rent.

Frequently Asked Questions

Credit-tenant vs non-credit?

Investment-grade credit (McDonald's, CVS, Walgreens) ground leases trade 4-6% cap. Non-credit or local tenants: 6-8%. Unrated or risky tenants can be 8-10%. Credit is the single largest yield driver.

Fee simple vs leasehold?

Fee simple ground lease ownership is what trades. The leasehold (the tenant's position) is a wasting asset — gets less valuable as lease approaches end. Building owners aim to renew or extend.

Appraisal reset clauses?

Mid-term resets (year 20 of a 50-year lease) protect the landlord from a 30+ year fixed rent that falls behind market. Resets are typically 'fair market ground rent' determined by appraisal.