Under “tenure review,” a New Zealand pastoral lessee surrenders part of his leasehold toconservation and acquires a freehold interest in the remainder. 28 new freeholders paid the Crown$6.9 million for freehold rights to 101,752ha, then sold 46% of that land for $135.7 million. Wemodel tenure review as a sequential real option – first to acquire freehold, then to subdivide andsell all or part of their new freeholds. We find little evidence that the Crown accounted for theseoption values when negotiating tenure review, and conclude that the capital gains enjoyed byformer lessees are rents.