Asset Class Expertise
Seattle Ground Lease Acquisition Advisory
Owning the land under a ground lease, rather than the building on it, offers a different risk and return profile than a typical fee simple acquisition, one built on contractual rent resets and eventual reversion rather than building depreciation. We examine rent reset clauses, reversion value, and tenant credit to position ground lease investments in Seattle, WA for predictable, long-duration returns that still qualify as like-kind replacement property.
What You Get
Key Outcomes
Model rent resets and any consumer price index adjustments built into the lease term
Evaluate tenant credit quality and the strength of assignment and subletting rights
Forecast reversion value at lease expiration under a range of land value assumptions
Confirm the lease term, including renewal options, is long enough to qualify as like-kind real property
Deliverables
What We Deliver
- A ground lease rent schedule mapping every reset date and adjustment mechanism through the term
- A tenant credit summary covering financial strength and assignment history
- A reversion and exit scenario analysis modeling land value at multiple future dates
- A casualty and insurance provision review protecting the fee owner's interest
Process
Execution Timeline
Week 1: Collect and review the ground lease and any recorded easements or covenants
Week 2: Deliver rent reset and tenant credit analysis
Week 3: Present reversion and long-term exit strategy
Week 4: Finalize identification support materials referencing the completed analysis
Common Questions
Frequently Asked
How do you evaluate reversion value in Seattle, WA?
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We analyze the underlying land value trajectory, zoning entitlements, and any improvements the tenant has constructed, since those improvements typically revert to the landowner at lease expiration under most ground lease structures, to estimate what the site will be worth when the ground lease eventually ends.
Do you review insurance and casualty provisions?
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Yes. We confirm casualty, rebuild, and insurance requirements protect the fee simple owner's interest in the underlying land and any reversionary improvements, while also confirming those provisions align with what your lender will require to finance the acquisition.
Can you analyze sublease structures?
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Yes. We review sublease rights, landlord consent requirements, and any rent participation the fee owner is entitled to from sublease income, since these terms materially affect both current cash flow and how much control you retain over the site during the lease term.
Does a ground lease qualify as like-kind property for a 1031 exchange?
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A leasehold interest in real property with a remaining term of thirty years or more, counting renewal options, is treated as real property eligible for a 1031 exchange. A fee simple ownership interest in land subject to a ground lease you granted to a tenant also qualifies, since you are exchanging real property for real property either way. We confirm which side of the transaction you hold before treating any ground lease structure as qualifying.
What happens to my depreciation if I own only the land under a ground lease?
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Land itself is not depreciable, so if you own fee simple land subject to a ground lease and the tenant owns the improvements, your income is largely ground rent with no depreciation deduction against it. This changes the return profile compared with owning a depreciable building, and we walk through that trade-off explicitly before recommending a ground lease acquisition.
Are ground lease rent resets typically favorable to the landowner over time?
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It depends entirely on the reset mechanism in the specific lease. Fixed-percentage bumps can fall behind market appreciation over a long term, while periodic fair-market-value resets or appraisal-based mechanisms tend to track the market more closely but introduce negotiation risk at each reset date. We model both scenarios so you understand the range of outcomes before committing.
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