Ground Lease Sandwich Calculator

GL sandwiches create spread. This calculator sizes.

Ground rent annual

Improvements rent annual

Spread years remaining

Cap rate %

Sandwich value

$7,500,000

Annual spread

$600,000

Spread / impr rent %

70.59%

How the math works

Spread = improvements − ground rent. Value = spread / cap rate.

$850k − $250k = $600k spread / 8% = $7.5M sandwich value. Valuable intermediate position — tradeable to buyer seeking operating control without land ownership.

How to Use

Enter ground rent annual.
Enter improvements rent annual.
Enter spread years.
Enter cap rate.
Read sandwich spread value.

Frequently Asked Questions

Sandwich structure?

Ground lessee pays ground rent to landowner. Ground lessee leases improvements to tenant for higher rent. Spread = ground lessee's profit. Classic long-term structure on development deals: owner leases land 50-99 years; developer builds and subleases.

Why spread grows?

Ground rent typically fixed or inflation-indexed. Improvements rent market-driven. Over time, market rent exceeds ground rent growth. Ground lessee captures widening gap. Compounds over 50-99 year term.

Reversion?

At lease end, improvements revert to landowner. Massive wealth transfer to landowner. Ground lessee must refinance or let property revert. Strategic decisions: buy land, sell ground leasehold, extend term.

What documentation matters here?

Written leases, move-in/move-out inspections with photographs, ledger entries showing every payment and charge, served notices with proof of service, and contemporaneous emails or texts. Courts weigh written evidence heavily; informal understandings rarely stand. Institutional operators run a monthly file audit to catch gaps before they matter. Good paper trails recover most of what's owed.