Model Ground Lease Term Sheet


Model Ground Lease Term Sheet
The following represents a nonbinding summary of the basic terms and conditions of the proposed
ground lease, which Tenant’s counsel will prepare. No party is to be bound in any way unless and until
final documents have been agreed upon and exchanged.1
___________, or its wholly owned single-purpose entity.
___________, or its wholly owned single-purpose entity.
Lease Term
___ years, starting when parties have signed the Lease and Landlord has delivered
possession (“Commencement Date”).
“Triple net” lease. Tenant pays all taxes, insurance, and repairs, and bears all other
risks, expenses, and responsibilities, with a few exclusions related to ownership of the fee. Tenant
controls all operations, leasing, tax protests, etc.
Condition of
As is at Commencement Date. No representations or war-
ranties. Landlord may remove any improvements or personalty at any time before
Commencement Date.
Interim Rent
From Commencement Date until the day before the Base Rent Commencement Date,
“Interim Rent” of $______ per month.
Base Rent
Starting on the day ____ after Commencement Date (the “Base Rent Commencement
Date”), Tenant shall pay annual base rent (the “Base Rent”) of $______ per year, abated as follows.
Lease Year 1: 75% abated
Lease Year 2: 50% abated
Lease Year 3: 50% abated
Lease Year 4: 25% abated
Fixed Adjustments On the ____ anniversary of the Base Rent
to Base Rent
Commencement Date and every ___ years thereafter (except at the time of any FMV-
based reset), Base Rent shall rise by ___% of the Base Rent (before any abatement) in Lease Year 1.
Base Rent Re-Set
On the first day of every ____ Lease Year, Base Rent shall reset to equal the
Pricing Factor times the Land FMV. At each reset date, the “Pricing Factor” shall be [___%] [the sum of
(a) current yield to maturity for U.S. Treasury obligations having a remaining term of ___ years; plus (b)
___% per annum]. The reset Base Rent shall, however, never fall below the Base Rent in the Lease Year
just before the reset date.
Land FMV shall consider the Land as vacant, unimproved, and unencumbered by the
Lease, and shall include all development rights owned by Landlord and demised to Tenant on
Commencement Date. FMV shall reflect the maximum FAR at Commencement Date, except as follows.
If, after Commencement Date, the Land is downzoned and thereafter subject to a casualty after which
Tenant cannot legally restore, then the FMV shall reflect the downzoning. Insurance proceeds shall be
distributed accordingly. If, after Commencement Date, the Land is upzoned or its highest and best use
changes, then FMV shall reflect such upzoning or change only to the extent the improvements actually
use it. Any dispute over Land FMV shall be resolved through “baseball” arbitration.
Landlord shall receive ___% of _________________.
The Lease shall be prior to all fee mortgages. Landlord shall have no obligation to join
in any leasehold mortgages or to “subordinate the fee.”
No limit on leasehold mortgages. Institutional leasehold mortgagees receive notice;
opportunity to cure (but no need to cure “personal” defaults such as bankruptcy); control of amendments,
modifications, terminations, and certain Tenant rights under the lease; right to a “new lease” if the lease


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