Leasehold lenders size against leasehold value ( LTLV ), not combined- fee value. Sizing uses post-ground-rent NOI for DSCR , a residual-term cushion test (lease term > loan term + 10 to 30 years), and LTLV typically capped 5 to 15 percentage points below comparable fee-simple LTV. Modern ground leases price tighter than legacy bespoke leases.
How LTLV and post-rent DSCR drive sizing math
Leasehold value differs from combined-fee value by the present value of the future ground rent stream. On a stabilized asset with $5M of property NOI and $1M of annual ground rent, the leasehold operator sees $4M of leasehold NOI; lender DSCR is sized off the $4M, not the $5M.
Loan-to-leasehold-value (LTLV) is the operative LTV concept. Caps are typically 5 to 15 percentage points below comparable fee-simple LTV, so a deal that would size at 65% fee-simple LTV may size at 50% to 60% LTLV depending on lease structure quality, residual term, and reset visibility.
Residual-term cushion: lender requires remaining ground lease term to exceed loan maturity by a defined cushion (often 10 to 30+ years per rating-agency criteria). Loans on short residual leases are difficult or impossible to size at scale; sponsor needs to negotiate a lease extension before approaching the leasehold debt market.
Maturity refinance risk: rating agencies and leasehold lenders also assess whether the leasehold can be refinanced at maturity given the remaining lease term and any pending rent resets. A loan maturing 5 years before a major FMV reset is essentially unrefinanceable and is typically structured around (paydown, prepayment, or restructuring of the underlying lease before the reset).
Sources
- Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations · Mortgage Bankers Association · 2026-Q1