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Article: Determining ground-lease rental rates.
- Article from:
- Appraisal Journal
- Article date:
- April 1, 1994
- Author:
CopyrightCOPYRIGHT 1994 The Appraisal Institute. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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In the course of a career, a commercial/industrial real estate appraiser may be confronted with the need to establish rates of return for ground-leased property (also referred to as land leases). Often the need to establish an appropriate ground-lease rate is a requirement of the lease terms, which call for periodic adjustments to "market." Most land leases are basically structured in such a way that rent is determined by a market ground-lease rental rate (expressed as a percentage such as 9%) being applied to the market value of the land. The problem is that while sufficient data typically exist to establish the market value of the fee interest in land, sufficient actual ...