Is leasehold property a good idea?

[Ryan Sajdera]

Has anyone ever purchased a deal where a municipality owns the land and the improvements and rents it to the tenant to sublease? This example is an apartment complex in an industrial area owned by an airport. The "rent" is 3% of the gross revenues generated by the property. The airport had the buildings (from when federal gov turned the land over to the Airport Authority after WW2.) and allowed the current "owner" to spend a few $M improving the buildings. They signed a lease for 99 years and it's assumable. The price to the "owner" is the same as a normally valued apartment complex. So... can I:

1. Take depreciation on the structures if I don't own them? Are there any IRS exclusions for long term land leases?

2. Get financing from a lender?

3. Deed the property to me FROM a federal entity (now subject to property taxes)?

There is currently nothing in the lease that talks about what happens at the end of the lease. The airport is willing to make a new lease with us down the road. Is it unreasonable to pay a normally valued apartment price for something that is actually just the rights to a lease?