All Forum Posts by: Kent Parks

I have been researching ground leases for over a year now and have learned that there is more then one way to structure the rent. What has been the most common method used in your experience?

annual base rent

How is the rental rate established?

Ideally, through comps. However, you can capitalize through a standard Direct Cap if there is data available or run a DCF based on investor or market return expectation/rate.

How do you obtain comps?

0 Votes

Quote from @Ronald Rohde:

Quote from @Kent Parks:

Quote from @Ronald Rohde:

Sure, we handle them.

I have been researching ground leases for over a year now and have learned that there is more then one way to structure the rent. What has been the most common method used in your experience?

annual base rent

How is the rental rate established?

0 Votes

Quote from @John McKee:

feel free to hit me up! I have a ground lease. Commercial leases can be a pain as a lot of them are different, but in my opinion Ground leases should in theory be the simplest. Leave it to human beings to muck up a lease!

Hey John, thank you very much!

0 Votes

I have done a vast amount of research on ground leases over the past year and have learned that rent can be structured a number of ways. If there is anyone here on this forum that has direct experience with this and is willing to share their experience I would really appreciate it. If there isn't anyone here who has any expertise with this then I would welcome a referral to another forum where I might could find a community of more experienced professionals to talk with.

0 Votes

Quote from @Ronald Rohde:

Sure, we handle them.

I have been researching ground leases for over a year now and have learned that there is more then one way to structure the rent. What has been the most common method used in your experience?

0 Votes

Quote from @Ronald Rohde:

Quote from @Kent Parks:

Quote from @Ronald Rohde:

Quote from @Kent Parks:

Some of you have mentioned the word underwriting. Just so I am clear, do you mean due diligence or are you referring to the way you structure the lease terms?

So underwriting typically refers to the complete spectrum of analysis including whether to close on a property on closing day. Due diligence review is just a subset of underwriting, similar to how modeling is just one part of underwriting. Lease terms would be underwriting as you model future vacancy or renewals.

When you say model, I take that to mean forcasting. Would I be correct?

The model can also include current valuation metrics. Its just a spreadsheet with income and expenses, valuation calculations. If you're trying to refer to DCF models, thats slightly different.

Thanks for your response.

0 Votes

Denton, Texas

Are there any resident experts here on ground leases?

0 Votes

Quote from @Ronald Rohde:

Quote from @Kent Parks:

Some of you have mentioned the word underwriting. Just so I am clear, do you mean due diligence or are you referring to the way you structure the lease terms?

When you say model, I take that to mean forcasting. Would I be correct?

0 Votes

Denton, Texas

Some of you have mentioned the word underwriting. Just so I am clear, do you mean due diligence or are you referring to the way you structure the lease terms?

0 Votes

Denton, Texas

Quote from @Bjorn Ahlblad:

Cash is not free money; your cost of money is a business expense and you can't 'hope' it away. You might as well buy stocks or Bitcoin.

That's a really good point.

0 Votes

All Forum Posts by: Kent Parks

Kent Parks has started 4 posts and replied 25 times.

Post: Commercial Ground Leases

Post: Commercial Ground Leases

Post: Commercial Ground Leases

Post: Commercial Ground Leases

Post: Commercial Ground Leases

Post: Commercial Retail - Big box store Out of State

Post: Commercial Ground Leases

Post: Commercial Retail - Big box store Out of State

Post: Commercial Retail - Big box store Out of State

Post: YouTuber Makes Some BIg Assumptions About Multifamily