What is a Ground Lessee in Real Estate?

A Ground Lessee in real estate is the tenant under a ground lease—a long-term lease (often 30–99 years) in which the tenant leases land only, while any building or improvements on the land are typically constructed, owned, and maintained by the tenant during the lease term.

How It Works

• The landowner is the Ground Lessor.
• The tenant who leases the land is the Ground Lessee.
• The Ground Lessee can build structures on the land (e.g., apartments, retail, hotels).
• At the end of the lease term, ownership of the improvements usually reverts back to the landowner, unless the lease states otherwise.

Key Characteristics

• Long-term: Commonly 50–99 years.
• Land only: Lessee pays rent for the land but finances and owns the building during the lease.
• Control and operations: The Ground Lessee typically controls, operates, and maintains the improvements.
• Reversion: At lease expiration, the building often transfers to the Ground Lessor without additional payment.

Where You See Ground Lessees

• Urban developments on institutional land (universities, churches, government land).
• Retail pads (fast food, gas stations).
• Large mixed-use developments where the developer doesn’t buy the land.