A preliminary concept for discussion — financial modelling in progress
The concept
We are exploring a cabin leaseback structure as a complementary financing mechanism for the project. Under this model, individual investors purchase a cabin (the building), while we retain ownership of the land. Investors then lease the cabin back to our management company, which operates it commercially as part of the wider resort. Investors receive a revenue share; we retain full operational control.
This is not a new idea. It has been tried, tested and refined across Europe for over 70 years.
The Landal precedent
Landal GreenParcs — founded in the Netherlands in 1954 — is the clearest proof of concept. It pioneered precisely this model: private investors own individual holiday cabins; the park operator manages all bookings, pricing, maintenance and guest experience on their behalf. Today (following its 2024 merger with Roompot), Landal operates 260+ parks across 9 countries, with around 23,000 holiday accommodations and 6 million guests per year.
The model works because the operator controls everything that matters — design standards, pricing, brand, guest experience — while the investor holds a real, transferable asset with an income stream attached. Landal even added a dedicated real estate brokerage arm (Landal Makelaardij) to facilitate cabin resales within their parks, demonstrating how a healthy secondary market can be built around the concept.
Why Iceland — and why this project
A critical advantage here is that our cabins are situated on commercially licensed land in Hvalfjarðarsveit and may be rented out year-round, without restriction. This distinguishes our offering sharply from comparable vacation plots in Iceland — such as those sold near Hvammsvík in 2021, which are classified as frístundahúsalóðir (vacation home plots) and subject to Iceland’s homestay legislation, limiting short-term rental to 90 days per year. Year-round commercial operation means a materially larger income potential for investors — and a more resilient business model for the operator.
The legal framework
Icelandic property law is well-suited to this structure. Two mechanisms provide robust legal grounding:
1. Lóðarleigusamningur (Ground Lease)
Under Lög nr. 75/2008, investors hold a long-term lease over the cabin’s footprint. They can freely transfer or mortgage their lease rights and building without requiring the landowner’s consent. We retain the land — and with it, the zoning approval and planning permissions. No land subdivision is required.
2. Þinglýstar kvöðvar (Registered Covenants)
Rather than relying solely on contractual chain clauses, our obligations — brand standards, rental pool participation, access rights to shared facilities, maintenance charge obligations — are registered as real covenants at Þjóðskrá Íslands. These bind every future owner automatically. They run with the property, not just the original investor. This is the strongest possible form of operational control, embedded in property law rather than contract alone.
The net effect: investors get a clean, transferable asset with clear income rights; we retain full control over how the resort operates.
Ownership flexibility as a strategic tool
An important feature of the model is that our management company can buy cabins directly — either as an alternative to raising third-party investor capital, or by exercising a right of first refusal when early investors wish to exit. This creates meaningful strategic flexibility:
- Quick financing when needed: sell cabins to investors to raise capital for development phases.
- Consolidation when performance allows: buy cabins back over time as the business generates cash, shifting ownership back in-house.
- Investor confidence: a credible buyback mechanism makes the investment more liquid and lowers the perceived risk for initial investors — particularly important in what is still a niche secondary market.
This is a lever that traditional hotel development financing simply does not offer.
What comes next
This memo is deliberately high-level. For investors in the Hugarró project to consider this option in earnest, we need to complete a financial model that honestly compares:
- Projected investor returns (revenue share scenarios — base / expected / upside) under the leaseback model
- The cost of capital under this model vs. our current financing structure
- Sensitivity to occupancy rates, seasonal patterns, and operating costs
- The impact of ground rent (if any) and management fees on net investor yield
- Other external financing options in Iceland and elsewhere
The legal architecture is sound. The market precedent is strong. The next step is the numbers.