Commercial ground lease calculations

[Bradley]

Hi Everyone,

We've been approached about leasing a bare portion of our commercial land for a removable show home to be housed on for a 6 year term.

While I can happily calculate the lease rate for the other permanent buildings on the site, I'm not up to speed on methods to calculate the ground lease.

The majority of advice I've received from colleagues, is to simply use a fair rate of return on the value of the property they occupy. So based on advice, 7%-10% annually of the market value of the land occupied, with the tenant responsible for opex.

Thoughts most appreciated.

[Beano]

Hi Everyone,

We've been approached about leasing a bare portion of our commercial land for a removable show home to be housed on for a 6 year term.

While I can happily calculate the lease rate for the other permanent buildings on the site, I'm not up to speed on methods to calculate the ground lease.

The majority of advice I've received from colleagues, is to simply use a fair rate of return on the value of the property they occupy. So based on advice, 7%-10% annually of the market value of the land occupied, with the tenant responsible for opex.

Thoughts most appreciated.

5.12% of the land value plus rates
For Wellington Cbd Auckland 4.8%

[Bradley]

Thanks very much for that info Beano. The rate is much less than my colleagues have suggested, but perhaps they are somewhat overcharging!

[Beano]

I should be able to update you later this month on two more lessors interest
Henderson 75yr 1 ror terminating
Elleslie perpetually renewable (if they sell)

[Davo36]

How do you find out about these Beano?

[Beano]

How do you find out about these Beano?

I just get contacted by agents
Henderson CBRE expression of interest
Elleslie Bayley tender