A sponsor with an appraisal already in hand asks the same thing every time: can you just use ours? Sometimes yes, and it saves weeks. But the answer turns on what the report values, not on whose name is on the cover.
It has to value the current plan. Development deals change. A garage comes out of scope, a unit count moves, a use gets rezoned. An appraisal built on last year's plan values a project that is no longer being built.
It has to carry a real-estate-only allocation. This is the one that catches people. A going-concern value on a hotel or a seniors asset includes the operating business and the FF&E. A ground lease buyer is buying dirt. If the proceeds are capped at a percentage of appraised value — ours are capped at 35% — that percentage has to be measured against the real estate, not against a number that has an operating business baked into it. A going-concern figure will overstate the base and produce a number nobody can actually fund.
When the scope is wrong, the instinct is to order a fresh appraisal from a new firm. That is the slowest and most expensive option available.
The appraiser who wrote the original already holds the inspection, the comparables, the rent survey and the file. Asking that firm for a scope update, or for a letter of extraordinary assumption covering the current plan with a real-estate allocation, is materially faster and cheaper than a new engagement. Same file, narrower question. Often days rather than weeks.
Ask the appraiser directly what they can do before anybody orders anything. The three possible answers — recertification is enough, a scope update works, or a new report is genuinely required — have very different timelines, and the sponsor usually assumes the worst one.
A proceeds cap tied to appraised value is not a negotiating position. It is what keeps the leasehold financeable. If the land purchase is too large a share of value, the rent is too large a share of NOI, coverage falls, and the leasehold lender declines. Capping at a share of the real estate keeps coverage in the 3–4× range that makes a leasehold loan ordinary rather than exotic.
Which is why the allocation matters more than the headline number. An appraisal that produces a big going-concern value and no real-estate allocation gives a sponsor false comfort about proceeds that will not survive the lender's review.
If the report already values the current plan and breaks out a real-estate-only allocation, yes, and that is the fast answer. If it does not do both, re-addressing changes nothing about the problem.
It includes the operating business and personal property. A ground lease buys land. A proceeds cap measured against going concern overstates the base and produces a number that will not clear the leasehold lender's coverage test.
Usually not. Ask the original appraiser for a scope update or a letter of extraordinary assumption covering the current plan with a real-estate allocation. They hold the file already.
On our deals the expense deposit covers third-party costs including appraisal work, applied as incurred. Ask before ordering anything so it is not duplicated.
A scope update from the existing appraiser is typically days to two weeks. A new report from a new firm is commonly four to six weeks and is the single most common reason a ground lease closing slips.
We will tell you within a day whether what you have works, needs a scope update, or needs to be redone. Most of the time it is not the expensive answer.
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