Downing Street has a new initiative called The Land Recapitalization Program (LRCP). The LRCP allows a property owner to sever the building from the land, sell the land to Downing Street and lease back the building on a 99 year lease.
This Land Lease concept will allow building owners to recapitalize themselves with the sale of the land while still keeping their buildings.
Forms
THE LAND OWNER (LANDLORD)
Safety of Investment
The security offered by a Land Lease is substantially greater than that offered by mortgages or corporate bonds.
Increasing Return
A gradual increase in return over the term of the Lease where the new lease rate can never be below the prior year’s lease rate and may grow by a double digit increase every ten years.
Consistent Income
Land Lease Owners receive regular monthly payments of rent during the term of the Lease.
Resets: At the end of the first 99 year lease there would be a reappraisal and a new rental rate would be set.
Re-development Benefit
In the event of a re-development during the term the rental rate would be readjusted to reflect the increased value embedded in the land.
THE BUILDING OWNER (TENANT)
Building Ownership
On the sale of the land the building owner would enter into a 99 year lease which, with options to renew, would give him ongoing ownership of the building.
Opportunity Cost
On the sale of his land the building owner would be able to profitably invest the funds from the recapitalization of his land or pay off debts.
Tax Advantages
The building owner would continue to claim CCA on the building and would be allowed to write off lease payments as an expense.
Building Management
The building owner would continue to be responsible for his building and its use, in a similar manner as before the sale of land.