Pad Retail Center And Land Lease
Am considering a new strip center on a Kohl's outlot. New construction, 9 cap w/ national tenants. Only thing unusual so far is a land lease (50 year w/ 5 yr adjustments.) Is there anything I need to be aware of w/ land lease? Anything I should look at lease for to protect me.? Will financing be difficult w/ this land lease?
Financing , while not impossible, will be difficult due to the non ownership of the land. The interest rate will be a little higher as you dont own the land. (The appreciating part of the investment). If possible I would partner with someone that has the cash to buy it outright, or try and buy the land with it if possible, since you are financing.
To make it more attractive to a financier if you choose to finance try and make the loan for as short a term as possible within your budget so that you wont be gouged by the interest rates.
Good Luck,
Kyle