Category: Ground Lease

MHC Ground Lease & Land Purchase:

MHP Land subject to a Ground Lease – Orange County MHP

Description – A ~100 space park in Orange County was subject to 5 years on a 65 year ground lease. The asset was owned by a trust and managed by a trustee who was responsible for divesting of the land. We worked with the owner and provided the highest price and best terms.

The Trust’s goals:

  • Execute as smooth of a transaction possible
  • Find a buyer willing to wait 5+ years for the ground lease to expire
  • Find a buyer willing to accept a <2% return while the ground lease was effective

There were several steps to this ground lease purchase:

  • Step 1: Rutherford provided the highest price and best terms for the Trust
  • Step 2: Rutherford purchased the land subject to the ground lease
  • Step 3: Subsequent to closing the land, Rutherford built a strong relationship with the ground lessee
  • Step 4: Over 1 year after closing the land, Rutherford purchased the remaining term of the ground lease from the ground lessee.
Ground Lessor and Lessee: Originally signed a 55 year ground Lease, Lessor and Lessee had strained relationship Both parties had no ongoing responsibility to each other
Remaining Lease Term: 12.5 Years
Property Type: Leased fee and Ground Lease Fee Simple
Ground Lessor Cashflow: $500,000/Year $1,400,000/Year
Ground Lessee Cashflow: $600,000/Year expiring in 12.5 years $740,000/year
Access to Equity: Trapped equity Expedite access to capital 12.5 years earlier.