The land under your deal is capital you're carrying as expensive equity. A ground lease turns it into the cheapest non-dilutive layer in the stack — non-amortizing, no maturity wall — and replaces your most expensive money while you keep the building and 100% of the upside.
Every layer above senior debt costs more and usually takes something — your cash flow, your promote, or your ownership. The ground lease slots in as the cheapest non-dilutive layer, and it's the one that lets you retire the expensive ones.
| Capital layer | Rough cost | Dilutive? | Amortizing? | Keeps your upside & promote? |
|---|---|---|---|---|
| Senior debt | ~6–7% | No | Usually | Yes — but limited proceeds, plus covenants / recourse |
| Ground lease (your land) | ~6–6.75%, non-amortizing | No | No | Yes — keep the building and 100% |
| C-PACE | ~9–11% constant | No | Yes | Yes — but a super-priority lien that can block your refinance |
| Mezzanine / preferred equity | ~12–15%+ | Partially | Often | No — pref return ahead of you, promote crunch |
| Common / JV equity | 18–20%+ target IRR | Yes | No | No — dilutes your ownership and your promote |
The land is commonly 30–40% of total basis — a big slice you're financing with the most expensive capital in the stack. Monetize it with a ground lease and you fund the equity injection, retire the pref or mezzanine, or close the gap, at a cost that sits next to senior debt — without giving up a point of the upside. The honest tradeoff: you're selling the land's slow appreciation, and the ground rent is a senior, fixed obligation your income has to cover — typically by 3–4×. Where the land value and the coverage are there, it's the cheapest money in the room.
A bifurcation splits the deal into the fee (the land) and the leasehold (the building). Here's who plays which role — and why you only ever deal with us.
You keep and operate the building on a long-term (99-year) leasehold. The value-add, the cash flow, and 100% of the upside and promote stay with you.
Buys the fee and becomes your ground lessor. That's Valor as principal, or an institutional ground-lease investor we arrange — a 1031/DST fund, life company, or REIT.
Finances your building on the smaller, post-monetization basis — including agency leasehold financing on multifamily. We place it as part of the structure.
We buy the fee and arrange the leasehold financing — one counterparty for the whole stack.
On cost, yes — by a wide margin. Ground rent prices around 6–6.75% and never amortizes, versus 12–15%+ for preferred or mezzanine and an 18–20%+ target return for common equity. And unlike equity it's non-dilutive: you keep 100% of the upside and the promote.
You trade the land's slow appreciation for a large slug of cheap, non-dilutive capital today — and you keep all of the building's appreciation and operating upside, which is where most of the value-add return lives. Many sponsors also keep an eye on reacquiring the fee over time.
No. The ground rent is non-amortizing with no balloon and no maturity wall, and the land isn't your collateral — so it doesn't create the takeout problem that an amortizing loan or a super-priority C-PACE lien can.
Valor, as principal, or an institutional ground-lease buyer we arrange (a 1031/DST fund, life company, or REIT). Either way you work with one counterparty: we buy the fee and arrange the leasehold financing for the whole stack.
If you're filling an equity gap, taking out a pref, or recapitalizing — send the address, the as-complete stabilized NOI, and total project cost. We return an indicative land value in 48 hours, as principal or arranged capital, and show you exactly where it sits in your stack.
Email us the deal