The Ground Lease Advantage
Understanding why ground leases represent the most defensible position in commercial real estate — and how SANTE has mastered this strategy over 20+ years.
What is a Ground Lease?
A ground lease is a long-term agreement in which a tenant leases land from a landowner and is permitted to develop or use the property during the lease period. At the end of the lease term, the land and all improvements revert to the landowner.
This structure creates a unique position in the capital stack: the ground lease holder sits below the mortgage and below the equity, making it the most senior claim on the property. If the building owner defaults on their mortgage, the ground lease remains intact — the land and its income stream are protected.
Ground leases typically span 50 to 99 years and include built-in rent escalations tied to CPI or fixed percentages, providing inflation-protected income that grows over time. The tenant bears all operational costs including taxes, insurance, and maintenance.
Capital Stack Position
Building Owner's Equity
Preferred Equity Holders
Subordinated Debt
First Lien Debt
SANTE's Position
Most senior position — protected even in default scenarios
Most Senior Obligation
Super-senior government lien — senior to all private claims
Key Advantages of Ground Lease Investing
Why institutional investors are increasingly allocating to ground lease strategies.
Near-Permanent Cash Flow
Ground leases span 50-99 years with contractual rent escalations, creating predictable income streams that outlast economic cycles and traditional lease terms.
Zero Operational Complexity
SANTE actively manages all operational complexity on behalf of investors — including compliance monitoring, verifying that taxes and insurance are paid, ensuring lease rent escalations are implemented on time, and overseeing all tenant obligations. Investors collect income with no operational complexity to deal with.
Built-In Appreciation
At lease expiration, all improvements revert to the landowner. Combined with land appreciation over decades, this creates substantial long-term value creation.
Downside Protection
As the most senior position in the capital stack, ground leases are protected even in foreclosure scenarios. The land and its income stream survive building-level distress.
Inflation Hedge
Built-in CPI-linked or fixed-percentage rent escalations ensure that income keeps pace with inflation, protecting purchasing power over the long term.
Institutional Quality
Ground leases are typically associated with premier commercial properties and credit-worthy tenants, providing institutional-grade portfolio diversification.
How a Ground Lease Works
Land Acquisition
SANTE acquires the land beneath a commercial property, separating land ownership from building ownership.
Lease Execution
A long-term ground lease (50-99 years) is executed with the building owner, establishing rent payments and escalation schedules.
Passive Income
SANTE collects ground rent while the tenant operates the building, handles all expenses, and maintains the property.
Value Reversion
At lease expiration, all improvements revert to SANTE as the landowner, creating significant long-term value.
Invest in Ground Lease Expertise
Access SANTE's ground lease platform through our Private Credit Plus fund — senior-secured lending with 6.0%–7.75% target yields and institutional-grade protection.