Daniel stated that there were many benefits for the Ground Lessor, such as:

• A ground lease provides a secure income stream.
• A ground lease will improve the security of the investment.
• A ground lease will help control the use of the property. This includes rights in all regards, including control over the sale of the building or improvements by the Ground Lessee.

Daniel felt that ground leases were perfect for large agencies like universities and WMATA. This allows the agencies to keep their land and yet maintain control of the land use. Ground leases shouldn't impact the value of the land, but can depending on the lease's values and terms. Ronald, Daniel, and Amy agreed that ground leases work best for commercial properties. Condominiums very rarely work on a ground lease. The DC market typically doesn't accept it and it's almost impossible to negotiate. Co-ops, however can be negotiated on a ground lease.

However, ground leases aren't only beneficial for the Ground Lessor; they are also beneficial for the Ground Lessee. Jayne asked the group to discuss the advantages of ground leases for the Lessee. Daniel and Ronald noted the following benefits of a ground lease to the Ground Lessee:

• Less competition exists for what otherwise might be seen as prime land.
• A large amount of upfront capitol is NOT required for a ground lease.
• Being open to ground leasing allows the developer a larger selection of potential sites. Regionally, there are more ground leases in DC than anywhere else (mainly because there are less developable sites).

Specific challenges exist when negotiating a ground lease. Ronald, Amy, and Daniel stated that the following challenges may be encountered when negotiating rent:

• All aspects of the negotiations are magnified because of the long term of the lease (a ground lease can be established for a minimum of fifty years, per Amy, and as much or more than ninety-nine years).
• Assignment of the lease.
• Establishment of set rent increases.
• Keeping all parties satisfied, particularly the lender. Lenders require certain rewards and protection of security.
• Negotiating when there is a joint venture between the Ground Lessor and Ground Lessee. Amy warned that conflicts of interest can make this very difficult.

Negotiations can be even more complicated because they often take place twice, according to Amy. A negotiation takes place between the Ground Lessor and the Lessee and then a second negotiation takes place after the lender has reviewed the lease and establishes the necessary terms.

Jayne asked the panel how a Ground Lessee could be protected from substantial increases in rent. Ronald responded that during negotiation it is critical that you define what the increases are based on. Increases are quite often based on the base rent plus a percentage of the property's income with resets every ten years. This is extremely complicated because the establishment of base rent varies from Ground Lessee to Ground Lessee.

All in all, the group agreed that most parties would rather own the property but felt that ground leases are still a valuable asset.