Nobody lists “the land under my building” for sale. A ground lease is made. Someone finds the owner who needs capital, sizes a rent the building can carry, writes a lease that lenders will accept, and brings the investor who wants to own land for a very long time. That is the work we do. Here is how it goes.
| Step | What happens | What you see |
|---|---|---|
| 1. Two numbers | Stabilized income and total cost or price, plus the address | A yes or no on fit, usually within a day or two |
| 2. Sizing | Rent set as a share of the building’s income, checked against coverage and against the value of the whole property | A land price, the rent and what it does to your equity, in dollars |
| 3. The land investor | The position is matched to an investor whose box it fits, before anything is signed | Nothing yet. This is our work, and it is why the next step is real |
| 4. Letter of intent | Price, rent, the lease terms that matter, exclusivity, and a deposit toward third-party costs | A short document you can show your lender and partners |
| 5. Diligence | Appraisal, title, survey, environmental, and a review of your numbers | A request list and a calendar |
| 6. The lease | A 99-year lease, never subordinated, with fixed rent steps and the protections a leasehold lender requires | A draft your counsel and your lender’s counsel review together |
| 7. The building’s loan | Your lender approves the lease, or we introduce lenders who already finance ground-leased property | Loan terms sized on income after ground rent |
| 8. Closing | The land is bought and the lease is signed at the same table as your loan | Proceeds on the settlement statement |
What the first number looks like is on the indicative land bid. What the letter of intent says is on letters of intent, deposits and exclusivity.
| Party | Its job | What it cares about most |
|---|---|---|
| The owner or developer | Owns and runs the building, pays the rent | Proceeds, and a lease the building can be financed and sold on |
| The land investor | Buys the land and receives the rent | That the building earns several times the rent, every year |
| The building’s lender | Lends against the building and the lease | Notice, time to cure, and a lease that cannot be ended underneath it |
| Valor | Finds the deal, sizes it, writes it, and brings the parties to the table | That the same lease works for all three |
We buy the land as a principal with our capital partners. We arrange the loan on the building when asked. We never make that loan ourselves, and the land is never pledged to it.
The building cannot carry the rent. If income covers the rent too thinly, the land investor says no and so does the lender. We test this in step 2, before you spend anything.
The lender will not finance a ground-leased building. Some will not. The public standard that most do accept is laid out in what leasehold lenders require.
An existing loan needs consent. Selling the land under a building with a loan on it requires that lender’s agreement or a payoff.
A public agency has its own rules. Tax credit agencies, city lenders and federal loan programs each treat leased land differently. Find out before the documents start.
Sizing takes days. The letter of intent takes as long as you take to decide. After that the pace is set by the appraisal, the title work and your lender’s review of the lease. On a new development we time the land closing to your construction loan closing, so the land comes out of your equity on the day you need it to.
The land, on a 99-year lease: nothing to manage, senior to the building’s lender, low yield because the buyer is buying the right to not pay the tax. The building above it: higher yield, paid monthly, depreciable. Both are replacement property. Both close on a date we control, which is the part that matters on day 140.
1031 SolutionsWorking with an intermediary? The standby sheet for line 3 of the identification form.
An owner sells the land under a building or project to a land investor and leases it back, usually for 99 years. Someone has to size the rent, write a lease the building's lender will accept, and bring the investor. The land sale and the lease are signed at the same closing.
Two numbers and an address: the stabilized income of the building and its total cost or price. That is enough to tell you whether the deal fits and roughly what the land could raise.
A long-term investor who wants to own land under a 99-year lease. We match each position to an investor before a letter of intent is signed, and we buy as a principal with our capital partners.
No. We arrange that loan with independent lenders when asked. We never hold it, and the land is never pledged to it.
A building that cannot comfortably cover the rent, a lender that will not finance ground-leased property, an existing loan that needs consent, or a public agency rule on leased land. All four can be checked at the start.
Stabilized income and total cost or price, with the address. We will tell you whether it fits and what the land could raise.