The county wants my 12 acres for a spec shell. Three ways to say yes.

The ground lease sounds like paper to me and paper is what I've been reading about, but I don't follow what happens to your position if the developer's leasehold lender forecloses. Do you end up with a lender as your tenant, and is that better or worse than the developer? Genuinely asking, this is the part where I get lost.

@vellum yes, effectively. A leasehold mortgage means the lender's collateral is the tenant's interest in the lease, so on default the lender or its buyer steps into the leasehold and owes hollow the rent. That's usually fine for the landowner as long as the lease was drafted so it survives, and the lender will demand exactly that plus notice and cure rights before it funds. Hollow, the clause that decides your outcome is subordination. If they ask you to subordinate the fee to the construction loan, your land is collateral for their building and a bad project can take it. Plenty of ground leases get done unsubordinated. That single term is worth more to you than the rent escalator.

tender named the term that matters most. I'd add three mechanical points and one on which specialist you actually need.

Subordinated fee means the lender can foreclose the land, so an unsubordinated structure is the version that keeps your downside at losing rent rather than losing the parcel. Developers will tell you unsubordinated deals are harder to finance, and on smaller spec industrial that is sometimes true, so expect it to cost you rent.

Second, reversion of the improvements at year 50 or 75 is not a number you should underwrite. The building will be at end of useful life and possibly a demolition liability. Value the rent stream and the escalators, and treat the reversion as an unpriced option.

Third, in the equity version, understand the dilution mechanism before the land goes in. A land contribution valued at an entitled price, followed by capital calls you can't meet, is how a minority partner ends up with a fraction of what they contributed. Ask for the operating agreement language on non-contributing members in writing.

The tax treatment of contributing appreciated land to an entity versus selling it differs a lot and it's a question for a CPA or tax attorney, not a forum. State practice on recording and transfer taxes on long ground leases also varies by state, and some states tax or record them differently than fee conveyances, so confirm locally.

The assumption driving your choice is whether that tenant prospect signs. A ground lease with a leaseholder that never leases up is a lease with a rent obligation and a distressed counterparty.