What is the benefit of a 99 year lease?
[{"id": "e3oi0ff", "text": "When I first saw this article from bloomberg.com, its title was:\n&gt; Kushners Give Up Control of Manhattan Tower to Save Themselves\n\nHere are some other articles about this story:\n\n* money.cnn.com: [Kushner Companies offloads troubled 666 Fifth Avenue flagship](https://money.cnn.com/2018/08/03/news/companies/kushner-666-fifth-avenue-brookfield/index.html)\n* washingtonpost.com: [Kushner Companies finalizes deal on troubled office tower](https://www.washingtonpost.com/politics/kushner-companies-finalizes-deal-on-troubled-office-tower/2018/08/03/89cb5eb0-9756-11e8-810c-5fa705927d54_story.html)\n* nytimes.com: [Deal Gives Kushners Cash Infusion on 666 Fifth Avenue](https://www.nytimes.com/2018/08/03/nyregion/kushners-building-fifth-avenue-brookfield-lease.html)\n* wsj.com: [Kushner Family Closes Deal to Unload 666 Fifth Avenue](https://www.wsj.com/articles/kushner-family-close-to-deal-to-unload-666-fifth-avenue-1533322813)\n* wral.com: [Deal Gives Kushners Cash Infusion on 666 Fifth Ave. :: WRAL.com](https://www.wral.com/deal-to-bail-out-kushners-on-666-fifth-ave-is-struck/17746276/)\n* abcnews.go.com: [Kushner Cos. signs 99-year lease deal at money-losing tower](https://abcnews.go.com/International/wireStory/kushner-cos-signs-99-year-lease-deal-money-57026267)\n* finance.yahoo.com: [Kushners Unload 666 Fifth Ave. to Brookfield in 99-Year Lease](https://finance.yahoo.com/news/kushners-unload-666-fifth-ave-193508002.html)\n* yahoo.com: [Brookfield gains lease on Kushner's landmark New York tower](https://www.yahoo.com/news/brookfield-gains-lease-kushners-landmark-york-tower-000813680--sector.html)\n* breitbart.com: [Kushner Family Nears Agreement to Off-load 666 Fifth Avenue Tower](https://www.breitbart.com/big-government/2018/08/03/kushner-family-nears-agreement-to-finally-off-load-666-fifth-ave-devils-tower/)\n* ft.com: [Subscribe to read | Financial Times](https://www.ft.com/content/ffb15d6a-975a-11e8-b67b-b8205561c3fe)\n* wxxv25.com: [Kushner Cos. to lease out New York tower](https://www.wxxv25.com/2018/08/03/kushner-cos-to-lease-out-new-york-tower/)\n* uk.businessinsider.com: [Jared Kushner family real estate company dumping 666 Fifth Avenue: report](http://uk.businessinsider.com/jared-kushner-real-estate-company-666-fifth-avenue-2018-8)\n\n-----\n\nI am a bot trying to encourage a balanced news diet.\n\nThese are all of the articles I think are about this story. I do not select or\nsort articles based on any opinions or perceived biases, and neither I nor my\ncreator advocate for or against any of these sources or articles. It is your\nresponsibility to determine what is factually correct.\n", "replies": [{"id": "e3oixfn", "text": "Good bot. ", "replies": [], "depth": 2}], "depth": 1}, {"id": "e3oi3nt", "text": "There are two owners.  The fee holder and the leasehold owner.", "replies": [], "depth": 1}, {"id": "e3oie5a", "text": "You get the vast majority of the value of the property, but you get it back after 99 years. You and me and them will be long gone by then, but it could be a windfall for future generations who retain ultimate control of the site.\n\nBuyers in some markets will refuse to buy anything under this structure, but it's not uncommon in New York.", "replies": [{"id": "e3ok6ya", "text": "It isn\u2019t uncommon in NYC for landlease coops but there are many potential issues with them.", "replies": [{"id": "e3oln0m", "text": "The biggest issue I have seen in running across land leases nearing their end is that the tenant has a big disincentive in maintaining the structure in the last 15-20 years.   I\u2019m dealing with one right now where they are 53 years into a 60 year ground lease and the current tenant is basically saying they won\u2019t reinvest without a lease extension (and rightly so).  Problem is the owner doesn\u2019t want to extend them. So what happens to the real estate over the next 7 years?  ", "replies": [{"id": "e3p15ot", "text": "A good lease will have maintenance and capital improvements written into the lease to protect the leaseholder.  If the leasehold interest is refusing to perform work with seven years remaining in the lease then they are in default or it\u2019s a poorly written lease.  ", "replies": [], "depth": 4}, {"id": "e3p24cw", "text": "&gt; Problem is the owner doesn\u2019t want to extend them. So what happens to the real estate over the next 7 years?\n\nTo sum it up quickly: There are also ways for the actual fee owner of the property/land to evict the tenant (because of a default under the land lease) if certain requirements or maintenance isn't continued during the lease (at any time). \n\n-\n\nSome of these leases also set an agreed upon purchase price (or some formula to determine it) at the end of the lease. This is to purchase the actual property, not just extend the lease.\n\n-\n\nSome of these also have built in options (or some formula to determine it) at the end of the lease.", "replies": [], "depth": 4}, {"id": "e3smgst", "text": "Really good point.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "e3pdf1e", "text": "If memory serves me correctly and it genuinely my not. If I remmember right, the Carlyle group bought the retail at a steep discount of 500MM, which that then broke up further and sold to Zara for 300mm for a piece. \nThat was their profit margin. This was set for break even at best for years now.", "replies": [], "depth": 1}, {"id": "e3q71yx", "text": "Taxes. ", "replies": [], "depth": 1}, {"id": "e4hs2qw", "text": "It's more convenient to be a tenant of the Kushners with 100% economic participation than to be in a JV with a political liability, or to be politically implicated for a purchase that may soon fall under unprecedented public scrutiny. The purchase option exists for when the political tempests softens.", "replies": [], "depth": 1}]