It’s called a land or ground lease, and it’s not at all uncommon in commercial real estate, especially in areas where buildable land is scarce. IMHO, it’s great for the landlord, not so great for the lessee/tenant/developer.
A twenty-year term seems very short, though.
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More:
“B. Ground Leases in General
1. Characteristics of a Ground Lease. While purchase and sale
transactions of real property may be more familiar, a significant portion of improved land
in the United States is constructed on ground-leased land. Examples include the
Empire State Building and the World Trade Center complex in New York.
A ground lease is typically a long-term lease of unimproved land or
previously developed property that requires the tenant to construct new improvements.
Lease terms typically run 50 to 99 years, and generally no less than 30 years. The
tenant typically holds ownership of the improvements during the term of the lease and
the tenant has the obligation to pay all expenses attributable to the property except the
mortgage on the landlord’s fee interest and income taxes owed by the landlord.
Because of the significant improvements by the tenant, a mortgage of the leasehold
estate is the norm.”
