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(07-24-2016 01:09 PM)GoodTimer Wrote:  

This happens in U.S. commercial real estate also. Entire buildings are leased for 99 years and the 99 year "ownership" operates as, well, an owner. Another example is land is leased for 25+ years, the lessee builds a building and uses the property until the lease is up. In the mid 2000's, I know examples of banks leasing desirable commercial suburban corners to build a bank branch. For a couple of acres, the banks were paying close to $200,000 per year for the land! Soon after, and mostly for other reasons, these big bank stocks lost 90% of their value.
I think these deals are only done when the seller/lessor has a very strong negotiating position. If the lease is long enough, the buyer's analysis of the deal is similar to actual ownership.
In commercial, tax advantages also exist so the the owner gets to depreciate the value of the property over 37 years (I recall).

It's amazing how many big buildings are on leased land. These companies lease the land for decades (often with high lease payments) and then spend millions on the building. Breach the lease agreement or fail to make the payments and they lose that beautiful building and all the money they put into it.

The worse case I've ever seen was the Horizon Hotel and Casino in Lake Tahoe. Tropicana bought the building without the land in 1990 for $19 million. They paid a big fat land rent payment each year and the landlord in 2008 was able to squeeze another $165 million from Tropicana which allowed Tropicana to continue to lease the land for another 3 years. After a few more years the lease agreement expired or was terminated and the landlord kicked them out and kept the building. Source