1031/NNN Question

I have a question ragarding 1031 exhanges and NNN property. To make sure my question is clear, I’m going to give an example.

We lease ground from a hospital. Upon that ground is a medical office. A medical user leases that office from us. It’s a NNN lease on the users part since they pay all utilities, maintenance, rent, and ground rent. They take care of the building, they give us ground rent which we just pass through to the hospital and they give us building rent which we gain our profit from. We are now looking to assign the ground lease for consideration.
My question is, can someone purchase this lease from us (remember we’re assigning the lease since we don’t actually own property) and use it as a like-kind 1031 replacement property? Even though they wouldn’t be purchasing real estate, would it be sufficient enough for someone to relinquish their real estate and purchase this lease as a like-kind replacement?

Hopefully someone knows the answer to this question. Thank you.

Yes, ground leases qualify as a real estate interest IF the remaining term of the lease has at least 30 years or more (including options). If the lease has a remaining term of less than 30 years (including options) then it would not be considered to be a real property interest.

William is right on…

NNN leasehold interests are frequently sold… although with some discount based upon the remaining duration of the lease…

One selling advantage though to them is that you depreciate the whole property because there is no land that has to be seperated.