Why Ground Lease REITs Are Building in Popularity

As more property owners in need of liquidity use ground leases to unlock capital, real estate investors could reap the rewards.

The outside of a hotel on a summer day.
(Image credit: Getty Images)

Numerous publicly traded real estate trusts (REITs) have faced challenges in the past year, with returns largely trailing stock market indexes. But REITs that are focused on ground leases — owning the land without owning the buildings that sit on it — have been an exception.

Splitting the ownership of commercial land from the buildings that sit on it isn’t a new idea. In some ways, it’s the same financial structure that medieval royalty used with its subjects. But the democratization of ground leases and their growing popularity is reflective of other kinds of securitization across the economy — creating narrower and more focused return characteristics to suit the needs of different classes of investors.

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Jim Small
Founder and CEO of Sante Realty Investments

Jim Small is the Founder/CEO of Sante Realty Investments, an impact-based real estate company. For over 10 years, he has partnered with ultra-high-net-worth individuals and family offices to acquire and manage thousands of multifamily assets across the U.S. and Europe, generating consistent returns and positive social impact.