When land and building are split, one property becomes two appraisals: the leased fee (the land and its rent stream) and the leasehold (everything above it). Both are only as good as the income assumptions underneath — and that is where deals go wrong.
A healthy structure shows a leased fee worth 20–35% of total value with rent covered 3× or better, and a leasehold whose value survives even at in-place income. Warning signs: rent above a third of NOI without reserves behind it, leasehold value that only exists in the stabilized scenario, or a ground cap rate borrowed from a different asset class. The split does not create value from nothing — it prices two different risks correctly, and correct pricing is where the capital efficiency comes from.
It moves with asset class, market, coverage, and lease terms — student housing, hotels, and multifamily each price differently. The honest answer is a range until the lease terms are set, which is why we quote rent and price together.
Usually because the appraiser used in-place income against a rent sized off stabilized projections. Reserves and milestone structures close exactly that gap — it is a structuring problem, not a value problem.
Formally yes; practically it is a rounding error at 99 years. Anyone paying materially for the reversion is mispricing the paper.
Send both appraisals, or just the operating statements. We will show you what the income actually supports, on both sides of the split.
Email us the property