If I'm understanding you correctly, the 30 years remain on the land lease...not the tenants' leases. If this is the case, then the owner of this structure loses the right to collect rents in 30 years and using a traditional cap rate valuation model would exaggerate the value.
I think a more appropriate tool to evaluate the yield on this investment would be the discounted cash flow model. Consider that your NOI, in addition to providing the yield on your capital, must recover within the 30 year term:
1. Capital invested to purchase the asset.
2. Any CAPEX for improvements, deferred maintenance, etc. invested into the asset during your holding period.
You need to quite careful with a deal like this. Consider what happens in year 25 when the building needs a new roof. If you pay to install it, you may never recover most of that capital. If you don't pay to install it, you may lose your tenants or find yourself in a legal dispute with the land owner (depending on your obligations under the lease).
Jan 10, 2011