The leasing of land provides an important opportunity for the owners of land to maximize the present and future value of their property and to provide an ongoing flow of income which can escalate in value over the term of the lease. The leasing of land also provides a vehicle for controlling the use of the land so that the ultimate development is environmentally sound from the viewpoint of pollution, social responsibility and community involvement.

Long term leasing of land is an effective tool to convert existing property into income producing assets to generate a source of stabile, long term, income. Long term ground leases (66 to 99 years) are particularly significant for those institutions or private owners who are interested in income and growth resulting from the appreciation in the future value in their property. Increases in value should reflect both inflation of the value of money and the future increases in the market value of the land. By leasing, instead of selling the property, the land owner is in effect investing in his own property. The sale of land fixes the value at the current market value and in addition creates the need for investment decisions for the sale proceeds.

Ground leases, which call for the ground rent to increase with increases in inflation, are in effect present valuing each yearly payment and from the point of view of the value of money each yearly payment has the same value as all other yearly payments. In addition future revaluations based on appraisals will increase the base ground rent to an amount reflecting the future market value of the property.

Since in most cases the guarantee of future payments of ground rent is the success of the development and therefore its ability to make the ground lease payments the owner of the land has a vital interest in the nature and quality of the development on the land. A definitive master plan is the instrument by which the land owner monitors and controls the development of the land.

Leasing is particularly suited where:

1. The Land Owner has an interest in controlling the character of the development with a concern for the environment and the impact on contiguous land and on the immediate surrounding communities.

2. The Land Owner is interested in benefiting from the future appreciation of the value of the land.

3. The Land Owner is desirous of receiving a long term flow of income in lieu of short term returns from a sale of the property.

4. The Land Owner is prepared to take on the responsibility for preparing the land for leasing including the preparation of option and lease documents, master planning, zoning and annexation and standards for development.

Typically land leases must contain provisions including those that call for:

1. Terms of the lease including performance schedules.

2. The base ground lease rental. 3. The method by which inflation is reflected in the increases of base ground rental. 4. Methods and periods of reappraisal of land value.

5. The rights of the land owner to approve all development on the area covered by the ground lease.

6. The commitment of the ground lessee to all the standards and conditions of a master plan prepared by the ground lessor.