What is a Ground Lease?

A ground lease is a long-term net lease (usually 49 or 99 years) of land including any improvements. It can apply to vacant land, office buildings, and large residential buildings.

Who should consider a ground lease?

Long-term property owners who can't make capital improvements, those with significant air rights, or those wanting to ensure generational income should consider ground leases.

How do owners benefit from ground leases?

Owners retain property title, generate income, potentially avoid capital gains tax, and create a hassle-free income stream for generations.

How do tenants benefit from a ground lease?

Tenants reduce upfront capital investment and gain long-term access to prime locations, even when owners are unwilling to sell outright.

Are ground leases complicated?

Ground leases are complex but can be tax-efficient if structured correctly. Expert knowledge and relationships in the real estate market are crucial for smooth transactions.

What asset classes can be ground leased?

Any asset class can be ground leased, but it's most common for vacant land, industrial properties, office buildings, residential buildings, and hotels.

Is the owner stuck once the ground lease is in place?

No, owners retain the right to mortgage or sell the property, and can often borrow more due to increased net income.

What flexibility does the tenant have in a ground lease?

Tenants can mortgage their lease or assign it to a new tenant. They're responsible for their own debts, protecting the landlord from liability.

What makes an appropriate ground lease tenant?

Ideal tenants are knowledgeable about ground leases, financially capable of improvements, willing to provide personal guarantees, and have a strong financial history.

Where can I learn more about ground leases?

Visit groundlease.nyc for comprehensive information on ground leasing.

Benedict pays $47M for Queens Portfolio

BY: ELIZABETH CRYAN - OCTOBER 26, 2024 3:46PM

New York, NY - A Queens portfolio of mostly rent-stabilized units has traded for $46.5 million in an off-market deal. Longtime owner Algin Management sold three multifamily properties for about $107,000 per unit, a source said.

The buyer is Benedict Realty Group, a real estate investment and property management firm based in Great Neck. Skyline Properties’ Robert Khodadadian, Daniel Shirazi and Daniel Davidov represented both sides in the transaction.

The portfolio includes Richelieu Gardens, a three-building complex at 34-44 77th Street in Jackson Heights, and two six-story buildings in Elmhurst — The Martinique at 56-11 94th Street and The Alameda at 40-40 79th Street.

The price per unit reflects the buildings’ relatively high regulated rents and good condition. One-bedroom units recently rented for $2,400 at Richelieu Gardens, $2,800 at The Martinique and $2,600 at The Alameda, according to StreetEasy.

Changes to the rent law in 2019 severely limited rent increases in rent-stabilized buildings. Net operating income has since plummeted, falling 9.1 percent in 2021 alone — the steepest annual decline since the Rent Guidelines Board started its tracking of the metric in 1990.

The previous sales of the buildings appears to have been too long ago to show the effects of the 2019 law on the portfolio’s value. Family-owned Algin Management, founded in 1957 by Albert Ginsberg, has owned all three buildings since at least the 1970s, property records show.