Model Ground Lease Term Sheet printable pdf download

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

Premises

______________________

Landlord

___________, or its wholly owned single-purpose entity.

Tenant

___________, or its wholly owned single-purpose entity.

Lease Term

___ years, starting when parties have signed the Lease and Landlord has delivered

possession (“Commencement Date”).

Options

__________________

Expenses

“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-

Premises

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.

FMV

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.

Participation

Landlord shall receive ___% of _________________.

Financing

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

Model Ground Lease Term Sheet

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