Real Estate GlossarY

Altrio’s glossary of real estate terms and definitions.

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Absorption measures how quickly available space, including existing properties and new developments, is leased or sold within a specific period. Types of Absorption: Gross Absorption: The total amount of space leased or sold without considering vacancies. Net Absorption: The space leased or sold minus the space vacated during the same period. It’s calculated as: Net Absorption=Total Space Leased/Sold − Total Space Vacated


Arbitrage is the practice of taking advantage of a price difference between two or more markets or securities to make a profit. The term is often used in finance and investment contexts.


An anchor tenant is typically the largest and most prominent tenant in a commercial property, such as a shopping center or mall, and is expected to draw a significant amount of foot traffic and sales to the property.

Annual Percentage Rate (APR)

The Annual Percentage Rate (APR) represents the total cost of borrowing funds, encompassing not only the interest rate but also additional expenses such as loan origination fees, loan discount points, and other charges incurred by the borrower and paid to the lender.


Blind Pool

A blind pool is a type of investment fund where investors contribute capital without prior knowledge of the specific assets or properties that will be acquired or developed. The fund manager has the discretion to select the assets based on the fund's investment strategy and objectives. The term "blind pool" refers to the fact that investors are essentially investing blindly, without knowing exactly what their money will be used for.

Balloon, or bullet, loan

A balloon or bullet loan is a type of loan that has a shorter maturity than its amortization period, meaning that the borrower will have to make a large, "balloon" payment at the end of the loan term to pay off the remaining balance.

Balloon Risk

Balloon risk is the risk that a borrower will not be able to make a balloon payment (a large lump sum payment) at the end of a loan term due to a lack of funding or other reasons. This type of risk is commonly associated with balloon loans or balloon mortgages.


A Broker is a person who acts as an intermediary between two or more parties in a transaction, facilitating the buying or selling of goods, services, or financial products. Brokers play a key role in helping parties find each other, negotiate terms, and close deals. They can provide valuable expertise, information, and resources to help their clients make informed decisions and achieve their goals. Brokers can work in various industries, including real estate, finance, insurance, and commodities trading.

Basis Point

In commercial real estate, a Basis Point refers to a unit of measurement used to express the difference in interest rates or yields between two financial instruments or investments. One basis point is equal to one-hundredth of one percent, or 0.01%. For example, if the interest rate on a commercial loan increased from 4.50% to 4.55%, the increase would be five basis points. The use of basis points is common in commercial real estate finance and investment analysis, as small changes in interest rates or yields can have a significant impact on investment returns and property valuations.



A covenant is a written agreement between parties that is inserted into a deed or other legal instrument. It stipulates certain obligations or restrictions that the parties agree to perform or refrain from performing. In real estate, covenants may be used to regulate land use, building design, maintenance standards, and other matters related to property ownership and use.


Cross-Defaulting is a provision in a loan agreement that states that if a borrower defaults on one loan, then the borrower is in default on all loans with the same lender or group of lenders. This can also apply to a situation where a borrower defaults on a loan with one lender, and that lender can trigger a default with other lenders. The purpose of cross-defaulting is to ensure that the borrower cannot default on one loan and continue to service other loans without the lender's knowledge or consent.


A custodian is a financial institution, such as a bank or trust company, that holds and safeguards financial assets for individuals or entities such as mutual funds, pension funds, or investment companies. Custodians are responsible for safekeeping and administering the assets in accordance with the clients' instructions.


Cross-Collateralization is a term used in real estate finance that refers to the use of one or more properties as collateral to secure a single loan or other debt obligation. This can be used to increase the amount of financing available, as the lender has multiple assets to draw on if the borrower defaults on the loan. However, cross-collateralization can also increase the risk to the borrower, as the lender has the right to foreclose on all of the properties in the event of default, even if some of them may be performing well.


Conveyance typically refers to the transfer of ownership of a property from one party to another, often through the use of a deed or other legal instrument. However, it can also refer to the creation or assignment of an interest in a property, such as through a mortgage or lease.

Contiguous Space

Contiguous space refers to multiple suites or spaces within the same building and on the same floor that can be combined and rented to a single tenant. It can also refer to a block of space located on multiple adjoining floors in a building that can be combined for a single tenant.

Convertible Debt

Convertible debt in real estate typically refers to a type of financing where the lender provides a loan to a developer or property owner that can be converted into equity (ownership) in the property at a later time. The terms of the conversion, such as the conversion price and the conditions under which conversion can occur, are usually agreed upon at the time the loan is made. This type of financing is often used in early-stage real estate development or for properties with uncertain cash flows, as it provides flexibility to both the borrower and lender.


In real estate, a conduit refers to a financial entity that acts as an intermediary between investors and borrowers, primarily in the mortgage market. A conduit typically purchases and pools a large number of individual mortgages, then issues securities backed by those mortgages to investors in the form of mortgage-backed securities (MBS). The cash flow from the mortgage payments made by the individual borrowers is passed through to the investors in the MBS. Conduits allow for the efficient and widespread trading of mortgage-backed securities, which provides liquidity to the mortgage market and allows for more investment opportunities for investors.


Collateral refers to an asset or assets that are pledged as security for a loan. If the borrower defaults on the loan, the lender may seize and sell the collateral to recover the amount owed.


Concessions refer to incentives or benefits offered by landlords to prospective or existing tenants to encourage them to sign or renew a lease agreement. These incentives may include rent abatement, reduced security deposits, free parking, tenant improvement allowances, or other monetary or non-monetary incentives.

Commingled Fund

A commingled fund is a type of investment vehicle that pools capital from multiple investors, such as pension plans, endowments, and high net worth individuals, to invest in a portfolio of assets, which can include real estate. The fund is managed by a professional investment manager and the returns are shared among the investors in proportion to their investment.


Co-investment refers to the joint investment made by two or more parties in a real estate project or property. The co-investors typically contribute capital and share ownership of the investment, and may also share in the risks and rewards of the investment. This can include pension funds, private equity firms, and other institutional investors who pool their resources to invest in real estate projects.

Closed-End Fund

A Closed-End Fund is a type of investment fund that issues a fixed number of shares to investors through an initial public offering (IPO). Once the shares are sold, the fund is closed to new investors, and the shares can only be bought or sold on a stock exchange. Closed-end funds typically have a finite life and a targeted range of investor capital. They are managed by an investment advisor and can invest in a variety of assets, including stocks, bonds, and real estate.

Clear-Span Facility

A clear-span facility refers to a building or structure, typically used as a warehouse or parking garage, that has no columns or other obstructions to interrupt the interior space or floor plan, creating an open, unobstructed area for maximum storage capacity or flexibility of use.

Certificate of Occupancy

A Certificate of Occupancy is a legal document issued by a local government agency or building department to certify that a building or leased space has been inspected and is in compliance with all local building codes and regulations, and is therefore suitable for occupancy by tenants.


Core-Plus investments are a type of real estate investment strategy that involves assets with similar characteristics to core properties, such as moderate risk and moderate returns. However, these assets offer an opportunity for modest value enhancement, typically through improved tenancy/occupancy or minor property improvements. To achieve their return expectations of 9 percent to 12 percent, this strategy might employ leverage in the range of 30 to 50 percent, which means the investor is using borrowed funds to purchase the property. This can increase potential returns but also increases risk. Overall, Core-Plus investments are considered to be a middle ground between Core and Value-Add investments in terms of risk and return potential.

Core Properties

"Core properties" refers to high-quality, stabilized, income-producing real estate assets that are located in prime, central business district locations or other highly desirable submarkets with a proven history of attracting and retaining high-quality tenants. These properties tend to be well-established, with a track record of stable cash flows and lower risk of vacancy or default. They are often considered the most stable and conservative type of real estate investment.


In commercial real estate, "core" refers to a class of high-quality, income-generating properties that are typically located in major metropolitan areas and are considered to be low-risk investments. Core assets can include the four major property types - office, retail, industrial, and multifamily. Core assets are characterized by their high-quality construction, modern design, and attractive amenities. They are often multi-tenanted properties that are substantially leased, typically with a 90 percent or better occupancy rate, and have well-structured, long-term leases with high-credit tenants. These leases are usually in the early stages of their terms, providing a stable stream of income for the investor. Investors typically seek out core assets because they offer stable, long-term cash flows and are considered to be low-risk investments. These properties are often owned by institutional investors such as pension funds, insurance companies, and real estate investment trusts (REITs).


Comparables are used in commercial real estate to determine the fair market lease rate or asking price of a property by comparing it to similar properties in the same market. Comparables are properties that share similar characteristics, such as size, age, location, and amenities. By analyzing the lease rates or sale prices of comparable properties, brokers, appraisers, and investors can determine the market value of a property and ensure that it is priced appropriately. This information can also be used to negotiate lease rates or purchase prices with potential tenants or buyers.

Class "C"

Class "C" is a real estate rating used to describe commercial properties that are considered to be of lower quality than Class A and Class B properties. Class C properties are typically older buildings that may have outdated facilities and amenities, but are still in acceptable physical condition. They may be located in less desirable areas or have fewer features than higher-rated properties. Class C properties generally offer cost-effective space to tenants who are less concerned about image and more focused on affordability. These tenants may include start-ups, small businesses, and those with limited budgets. Due to their lower rental rates and potentially higher vacancy rates, Class C properties may offer higher yields for investors who are willing to take on additional risk.

Class "B"

Class "B" is a term used in commercial real estate to describe properties that are of good quality, but not as high-end as Class "A" properties. Class "B" properties are typically older, have fewer amenities and features, and may be located in less desirable areas compared to Class "A" properties. As a result, they command lower rental rates per square foot, but are still considered to be desirable to many tenants.

Class "A"

Class "A" is a term used in commercial real estate to describe properties that are considered to be of the highest quality and in the most desirable locations. These properties typically command the highest rental rates per square foot and are characterized by their modern design, high-end finishes, and state-of-the-art technology.

Carrying Costs

Carrying Costs refer to the costs that a property owner or landlord must bear while owning and managing a property, particularly during the initial lease-up phase and periods of vacancy. These costs can include a wide range of expenses, such as property taxes, insurance premiums, utilities, maintenance and repairs, and financing costs, among others. Overall, carrying costs are an important consideration for property owners and landlords, as they can have a significant impact on the profitability and viability of a property. By understanding the terminology associated with carrying charges and other property-related expenses, property owners can make more informed decisions about their investments and manage their properties more effectively.

Cash Flow

Cash Flow is the difference between the cash inflows and cash outflows during a specific period, such as a month, quarter, or year. In commercial real estate, cash flow is an important metric for evaluating the financial performance of a property. It is calculated by subtracting all cash expenses (such as operating expenses, debt service, and capital expenditures) from the rental income and other cash inflows generated by the property. The resulting amount represents the net cash flow or profit from the property.

Capital Markets

Capital Markets are the financial markets where businesses or individuals can raise or borrow capital through the issuance and trading of various financial instruments, such as stocks, bonds, and other securities. Capital markets can be divided into two main categories: public markets and private markets.

Capital Appreciation

Capital Appreciation is the increase in the market value of a property or portfolio over time, after accounting for capital improvements and partial sales. This means that any increase in value that is due to factors such as property renovations, upgrades, or other improvements is factored into the calculation of the property's or portfolio's overall capital appreciation.

Call Date

A Call Date refers to the date on which a borrower can be required to repay a loan before the end of its scheduled term. Call dates are typically included in loan agreements and allow lenders to protect their investments by requiring borrowers to repay the loan if certain conditions are met, such as a change in ownership of the property or a default on the loan.

Capital Asset Pricing Model

The Capital Asset Pricing Model (CAPM) is a financial model used to help price risky securities and estimate the expected return on an investment. It describes the relationship between risk and expected return, and it is based on the idea that investors require a higher return on investments that are riskier.


Drag-Along Rights

Drag-Along Rights refer to the right of a majority shareholder to force a minority shareholder to join in the sale of a company. This is usually done to facilitate a sale or merger of the company, as it allows the majority shareholder to sell their stake without being held up by the minority shareholder. The minority shareholder is typically required to sell their shares on the same terms and conditions as the majority shareholder. Tag-Along Rights, on the other hand, refer to the right of a minority shareholder to "tag along" with the majority shareholder in the event of a sale, allowing them to sell their shares as well.


A DownREIT is actually a type of structure used in real estate investment trusts (REITs) that allows a REIT to acquire properties through a partnership with a local property owner. The local property owner contributes their property to a partnership with the REIT, which then issues operating partnership units (OP units) to the property owner. These OP units can then be converted into shares of the REIT over time, allowing the property owner to gradually sell their property interest and receive shares of the REIT in exchange. The downREIT structure can be a tax-efficient way for property owners to sell their properties, and for REITs to acquire properties without using cash.

Dollar stop

A "dollar stop" is an agreed-upon limit for operating expenses or taxes that a landlord will be responsible for paying, after which the remaining expenses are passed on to the tenant. In other words, it sets a maximum amount that the tenant will be required to pay for these expenses.


Distraint is an archaic legal term that refers to the act of a landlord seizing the personal property of a tenant who is in default of rent payments, as a way to secure payment of the rent owed. However, in most jurisdictions, this practice is now illegal or strictly regulated, and landlords must resort to legal eviction procedures to regain possession of their property.

Demising wall

A demising wall is a partition wall that separates one tenant's space from another or from the building's common areas. It is also referred to as a party wall.

Deficiency judgment

A deficiency judgment is a court order that makes a borrower personally liable for the remaining debt after a foreclosure sale or short sale of the property fails to pay off the entire amount owed. The deficiency judgment allows the lender to attempt to recover the remaining debt through other means, such as wage garnishment or seizure of other assets.

Deferred maintenance account

A deferred maintenance account is a reserve account that a borrower is required to fund to cover future maintenance expenses for a property. The purpose of this account is to ensure that the property remains in good condition and that necessary repairs and maintenance can be completed in a timely manner. The borrower typically contributes a set amount of money to the account each month, and the lender may require periodic inspections to ensure that the property is being properly maintained. The funds in the account can only be used for maintenance expenses and are generally held in an escrow account by the lender.

Deed in lieu of foreclosure

A deed in lieu of foreclosure is a transaction in which a borrower conveys all interest in a property to the lender to satisfy a mortgage debt and avoid foreclosure. It is a voluntary agreement between the borrower and lender, and the lender must agree to accept the deed instead of proceeding with the foreclosure process.

Deed of trust

A deed of trust is a legal document used in real estate transactions in some states in the United States. It is similar to a mortgage but involves three parties: the borrower, the lender, and a trustee. The trustee holds the legal title to the property until the borrower pays off the loan. If the borrower defaults, the trustee can sell the property to satisfy the debt.


To dedicate means to transfer ownership of private property to the public sector for a public use. This can occur voluntarily or through eminent domain.

Due diligence

Due diligence refers to the investigation and analysis carried out by a prospective buyer, lender, or investor to verify the accuracy and completeness of information provided by the seller or issuer of a property or investment. In the context of real estate, due diligence typically involves a thorough examination of the property, including its physical condition, legal status, and any environmental or other potential issues that may affect its value or usability. This may include reviewing property records, conducting site visits, and consulting with legal and environmental experts. In the context of an IPO registration statement, due diligence involves a reasonable investigation by the parties involved to confirm that all the statements within the document are true and that no material facts are omitted. This may involve reviewing financial statements, business plans, and other relevant documents, as well as consulting with legal and financial experts to ensure compliance with applicable laws and regulations. Overall, due diligence is a critical process in any real estate or investment transaction, as it helps to identify potential risks and issues that may affect the value or viability of the asset, and provides the parties involved with the information they need to make informed decisions.

Due on sale

Due on sale is a mortgage covenant that requires the full repayment of a loan if the property securing the mortgage is sold or transferred before the loan's maturity date. This covenant is typically included in mortgage agreements as a way to protect the lender's interests by ensuring that they are repaid in full if the property is sold or transferred. The due on sale covenant may apply to a variety of property transactions, including sales, transfers to family members, and other forms of conveyance. If the borrower fails to repay the mortgage upon the sale or transfer of the property, the lender may initiate legal action to foreclose on the property and recover their losses. However, there are certain exceptions to the due on sale covenant. For example, the Garn-St. Germain Depository Institutions Act of 1982 provides certain exemptions from the due on sale clause, such as allowing the transfer of the property to a spouse or a child without triggering the due on sale provision. Additionally, some lenders may be willing to waive the due on sale clause or modify the terms of the loan to allow for a sale or transfer of the property, depending on the circumstances.


Default refers to the failure of a borrower to fulfill their obligations under a loan agreement, typically by failing to make required payments or meet other contractual obligations. This can occur when the borrower is unable or unwilling to make payments on the loan or meet other obligations, such as maintaining insurance on a property. When a borrower defaults on a loan, the lender may take various actions to protect their interests and recover the outstanding debt, such as charging penalties, initiating foreclosure proceedings, or taking legal action to recover the debt. In some cases, the lender may also seize the collateral securing the loan, such as the property itself, and sell it to recover their losses. Defaults can occur in various types of loans, including mortgages, car loans, and credit cards. They can have serious financial consequences for the borrower, such as damaging their credit score, increasing the cost of borrowing in the future, and even leading to bankruptcy.

Debt Service

Debt Service refers to the amount of money required to cover all interest and principal payments on a loan during a specific period, typically a year. This includes both the required interest payments on the outstanding loan balance and any principal payments required to be made during the period. Debt service is a critical measure for lenders, as it indicates whether a borrower is capable of making payments on a loan. Lenders will typically evaluate a borrower's ability to service debt before approving a loan, and will also monitor the borrower's ongoing ability to meet debt service obligations throughout the life of the loan. From a borrower's perspective, it is important to ensure that the debt service requirements are manageable, and that the property or project generating the income is capable of generating sufficient cash flow to cover these obligations. If a borrower is unable to meet debt service requirements, it can lead to default, foreclosure, and other serious financial consequences.

Deal Structure

Deal structure refers to the way in which a real estate acquisition is financed. There are several types of deal structures, including: Unleveraged: This type of deal structure involves purchasing a property with all cash, without any debt financing. Leveraged: This type of deal structure involves using debt financing to purchase a property. The debt can be secured against the property or unsecured. Traditional Debt: This is a type of debt financing where the lender provides a fixed loan amount at a set interest rate, with the loan to be paid back over a fixed period of time. Participating Debt: This type of debt financing involves the lender receiving a percentage of the profits from the property, in addition to receiving interest on the loan. Participating/Convertible Debt: This type of debt financing is similar to participating debt, but the lender has the option to convert their debt into equity in the property at a later date. Joint Ventures: This type of deal structure involves two or more parties pooling their resources to acquire a property. Each party contributes funds and/or expertise, and profits are split according to the terms of the joint venture agreement.


Estoppel certificate

An estoppel certificate is a document signed by a tenant that certifies the terms and conditions of the lease and the tenant's obligations under it. It is typically requested by a landlord when the landlord is refinancing, selling, or transferring ownership of the property to a third party, and the certificate is used to confirm the tenant's agreement with the terms of the lease. The certificate may also be used to confirm the status of rent payments, security deposits, and other financial obligations of the tenant.

Escalation clause

An escalation clause is a common provision in a lease that allows for an increase in rent payments over the term of the lease to account for various expenses incurred by the landlord, such as property taxes, insurance, and maintenance costs. The clause typically sets out a formula or methodology for calculating the increased rent, such as a percentage increase based on the change in the Consumer Price Index (CPI).

Escrow agreement

An escrow agreement is a written agreement between parties involved in a transaction, which is typically facilitated by a neutral third party known as an escrow agent. The agreement outlines the terms and conditions under which the escrow agent will hold funds or other assets until certain obligations of the parties to the agreement have been fulfilled. Once the conditions are met, the escrow agent will release the assets to the appropriate party. This helps to ensure that the transaction is conducted fairly and in accordance with the agreed-upon terms.

Entity—level Fund

An Entity-level Fund is a fund that invests at the entity level, meaning that it invests in the securities of the operating company or takes an ownership position in the operating company. It is different from a deal-level fund, which invests on a deal-by-deal basis. Entity-level funds are often used for larger and more complex transactions.

Entity Investing

Entity investing refers to investing in an entity, such as a company or partnership, that controls an investment rather than directly in the underlying assets. An investment entity pools funds from an investor or investors and provides professional investment management services. It commits to its investors that its business purpose and only substantive activities are investing the funds for returns from capital appreciation, investment income, or both. The investment entity and its affiliates do not obtain or have the objective of obtaining returns or benefits from their investments that are other than capital appreciation and investment income, and not available to other noninvestors or are not normally attributable to ownership interests.

Entity—level Direct JV

An Entity-level Direct JV is an investment in which an investor invests in the securities of an operating company or takes a non-securitized ownership position in the company. It is a type of joint venture in which the investor participates at the entity level. An example of an Entity-level Direct JV is CALSTRS’ minority investment in PCCP, where CALSTRS has invested in the securities of the operating company.


An endowment is a fund made up of donations or gifts that is subject to the requirement that the principal be maintained and invested to create a source of income for a specific organization or purpose, such as a university or charitable foundation.


An encumbrance is a claim or liability attached to real property that may affect the transfer of its ownership. Some examples of encumbrances are liens, mortgages, easements, and restrictions.


Encroachment refers to any physical intrusion of an improvement or structure, such as a fence, building, or tree, onto the property of another without permission or legal right.

Effective date

In the context of real estate, the effective date is the date on which a contract or agreement becomes valid and enforceable. This is the date on which all parties have signed the document and any necessary conditions have been met. For example, in a lease agreement, the effective date is the date on which the tenant can move in and start occupying the property.

Economic rent

Economic rent is the theoretical amount of rent that a property can command in the market, based on its location, condition, and other characteristics, as well as the supply and demand of rental properties in the area. It is the rent that a rational tenant would be willing to pay for a property, and it can be influenced by factors such as inflation, interest rates, and the overall health of the economy.

Economic feasibility

Economic feasibility refers to the ability of a project or investment to generate enough revenue or profit to justify the costs associated with it. In other words, it assesses whether a project or investment is financially viable and sustainable in the long term. The term takes into account factors such as construction costs, operating expenses, potential revenue, market demand, and return on investment.

Earnings Before Interest, Taxes, Depreciation and Amortization.

EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It is a financial metric used to measure a company's operating performance and profitability before accounting for non-operating expenses such as interest, taxes, depreciation, and amortization.


An easement is a right to use someone else's property for a specific purpose.

Earnest money

Earnest money is a deposit made by a buyer as a sign of good faith when entering into a contract to purchase real estate. It is typically a small percentage of the purchase price, and is held in escrow until the closing of the sale. At closing, the earnest money is applied toward the buyer's down payment or closing costs.


Future proposed space

"Future proposed space" refers to space that is planned to be part of a commercial development, but is not yet built or under construction. It may also refer to future phases of a multi-phase project that have not yet been constructed.

Full recourse

Full recourse refers to a type of loan where the borrower is personally liable for the full amount of the loan, and the lender has the right to pursue the borrower's other assets in the event of default. In other words, if the borrower defaults on the loan, the lender can go after the borrower's personal assets, beyond the collateral securing the loan, to recover the full amount owed.

Federal Home Loan Mortgage Corporation (Freddie Mac)

Freddie Mac (FHLMC) is a corporation created by the federal government to provide a secondary market for residential mortgages by purchasing mortgages from lenders and issuing mortgage-backed securities.

First mortgage

A first mortgage is a senior mortgage that has priority over all junior encumbrances, giving the holder the right to be paid first in the event of default.

Financial Industry Regulatory Authority

The Financial Industry Regulatory Authority (FINRA) is the largest independent regulator for all securities firms doing business in the United States. FINRA's mission is to protect investors and ensure the integrity of the securities markets by enforcing its own rules and federal securities laws. It was formed in 2007 when the National Association of Securities Dealers (NASD) merged with the regulatory arm of the New York Stock Exchange (NYSE).

Finance charge

A finance charge refers to the total amount of interest and fees charged for borrowing money or obtaining credit. It includes any interest, service charges, transaction fees, and other costs associated with the extension of credit or the loan. The finance charge is usually expressed as a dollar amount, or as a percentage of the amount borrowed, and is often disclosed as part of the annual percentage rate (APR) in loan or credit agreements.


Fiduciary refers to a person or organization that is responsible for managing and administering assets for the benefit of another person or organization. They have a legal and ethical obligation to act in the best interests of the party whose assets they are managing, and they are held to a high standard of care, loyalty, and prudence. In the context of real estate, fiduciaries may include investment managers, trustees, and advisors who have been entrusted with managing and investing in real estate assets on behalf of others.

FFO multiple

The FFO multiple is a financial ratio used to evaluate the value of a real estate investment trust (REIT). It is calculated by dividing the market capitalization of the REIT by its funds from operations (FFO). The FFO multiple is a useful tool for comparing the relative value of different REITs and for evaluating the performance of a REIT over time.

Funds from Operations

Funds from Operations (FFO) is a financial performance measure used by real estate companies to indicate the cash generated by their operations, excluding gains or losses from property sales and debt restructuring. FFO is calculated as net income plus depreciation and amortization expenses. It is often used as a way to evaluate the profitability and financial health of real estate investment trusts (REITs) and other real estate companies.

Full-service (gross) rent

A full-service rent is an all-inclusive rental rate that includes not only the base rent, but also operating expenses and real estate taxes for a specified period of time, typically the first year of the lease. This type of rental rate is also referred to as a gross lease, as the tenant pays a single amount that covers all costs associated with occupying the space. However, it is important to note that the tenant may still be responsible for any increase in operating expenses or taxes that occur beyond the base year amount. This type of lease structure is commonly used in office and retail leasing.

Four quadrants of the real estate capital markets

The four quadrants of the real estate capital markets are as follows: 1. Private equity - This quadrant includes direct real estate investments that are acquired privately, typically through the purchase of individual properties or portfolios of properties. Private equity real estate investments are often made by institutional investors, such as pension funds, endowments, and private equity firms. 2. Public equity - This quadrant includes real estate investment trusts (REITs) and other publicly traded real estate operating companies. Public equity real estate investments are generally accessible to individual investors and provide liquidity through public markets. 3. Private debt - This quadrant includes whole loan mortgages and other debt instruments that are not publicly traded. Private debt real estate investments are often made by institutional investors seeking to generate yield through fixed income investments. 4. Public debt - This quadrant includes commercial mortgage-backed securities (CMBS) and other securitized forms of whole loan mortgage interests. Public debt real estate investments are also accessible to individual investors through public markets, but may involve greater risk due to the underlying mortgage loans being packaged and sold as securities.

Forward commitments

Forward commitments refer to a type of contractual obligation that involves a commitment by a lender to provide financing at a future date, subject to the satisfaction of certain conditions. In the context of real estate, forward commitments are often used to describe a lender's obligation to fund a mortgage loan upon the completion of a construction project or other real estate development. Under a forward commitment agreement, the lender agrees to provide financing at a specific date in the future, typically after certain conditions have been met, such as the completion of construction, obtaining necessary permits and approvals, and meeting certain financial requirements. In exchange for the commitment, the borrower typically agrees to pay a commitment fee or other upfront costs. Forward commitments can provide benefits for both borrowers and lenders. For borrowers, a forward commitment can provide certainty of financing, allowing them to plan and execute their projects with greater confidence. For lenders, forward commitments can help mitigate risk by allowing them to conduct due diligence and establish terms and conditions in advance of funding. Overall, forward commitments are a useful tool for financing real estate development projects, allowing both borrowers and lenders to manage risk and ensure that financing is available when it is needed.


Foreclosure is a legal process by which a lender takes possession of a property from a borrower who has defaulted on their mortgage loan. The process is typically initiated by the lender or their agent, such as a trustee or servicer, who files a notice of default or a similar legal document with the appropriate court or public agency. Once the foreclosure process has been initiated, the borrower is generally given a period of time to cure the default by paying off the outstanding balance on the loan or coming to a new agreement with the lender. If the borrower is unable to cure the default, the property will be sold at a public auction, typically to the highest bidder. The proceeds of the sale are used to pay off the outstanding balance on the loan, and any remaining funds are returned to the borrower. In some cases, the sale may not generate enough funds to cover the full amount owed on the loan, in which case the lender may seek a deficiency judgment against the borrower to recover the remaining amount. Foreclosure can have serious consequences for both borrowers and lenders, and it is important for both parties to understand their rights and responsibilities under the law. Borrowers who are facing foreclosure may be able to seek assistance from government programs, nonprofit organizations, or legal professionals to help them negotiate with their lender or find alternative solutions to avoid losing their home.

First-generation space

First-generation space is a term used in the commercial real estate industry to refer to newly constructed or renovated space that has not been previously occupied by a tenant. This type of space is typically in its original, "raw" condition, and may require additional customization or tenant improvements to meet the specific needs of a tenant. First-generation space is often considered a desirable option for tenants who require a high degree of flexibility and control over their space, as they have the ability to design and build out the space to their exact specifications. This can include features such as custom layouts, specialized equipment, or advanced technology systems. However, first-generation space may also be more expensive and time-consuming to build out than existing, pre-built space, as tenants may need to invest significant resources into construction or renovation to create a suitable work environment. Additionally, tenants who lease first-generation space may be responsible for additional costs such as utility connections, building permits, or other fees associated with building out a new space. Overall, the decision to lease first-generation space versus pre-built space will depend on a variety of factors, including the tenant's specific needs, budget, and timeline for occupancy.

Force majeure

Force majeure is a legal term used in contracts to refer to unforeseeable circumstances or events that are beyond the control of the parties involved, and which prevent them from fulfilling their obligations under the contract. This may include natural disasters such as earthquakes, hurricanes, floods, or fires, as well as man-made events such as strikes, wars, riots, or government actions. Force majeure events are typically not foreseeable or preventable, and they often make it impossible or impractical for the parties to perform their contractual obligations. When a force majeure event occurs, the affected party may be excused from performing its obligations under the contract, or may be entitled to an extension of time to perform. In some cases, the contract may be terminated altogether, if the force majeure event makes it impossible for the parties to achieve the objectives of the contract. It is important to note that force majeure clauses are not automatically included in all contracts, and their scope and applicability may vary depending on the specific language of the clause and the circumstances of the event. Therefore, it is advisable for parties to carefully consider the potential risks and contingencies when negotiating and drafting contracts, and to seek legal advice if necessary.

Federal National Mortgage Association (Fannie Mae)

The Federal National Mortgage Association (FNMA), commonly known as Fannie Mae, is a government-sponsored enterprise (GSE) that was established in 1938 to provide liquidity, stability, and affordability to the US housing market. Fannie Mae operates as a quasi-governmental corporation and is authorized to sell debentures in order to supplement private mortgage funds by buying and selling FHA (Federal Housing Administration) and VA (Veterans Affairs) loans at market prices. By purchasing these loans from lenders, Fannie Mae helps to increase the availability of mortgage credit and provides funding for homebuyers. Fannie Mae also guarantees and securitizes mortgages into mortgage-backed securities (MBS), which are sold to investors in the secondary mortgage market. This allows lenders to free up capital and make more loans to homebuyers, while investors receive a stream of income from the mortgage payments. Overall, Fannie Mae plays a key role in the US housing market by providing access to affordable mortgage credit, supporting homeownership, and promoting the stability of the housing finance system. However, Fannie Mae has also been subject to controversy and criticism, particularly in the wake of the 2008 financial crisis, when it experienced significant financial losses and required a government bailout.

First refusal right, or right of first refusal

The right of first refusal, also known as first refusal right, is a contractual agreement that gives a tenant the option to buy a property or lease additional space in a property before the owner can offer it to any third-party. This lease clause typically requires the owner to provide the tenant with notice of an intention to sell or lease the property, along with the terms and conditions of the proposed transaction. The tenant then has the right to match the terms and conditions of the third-party offer and purchase the property or lease the additional space on the same terms. The purpose of the right of first refusal is to give the tenant a priority position in acquiring the property or leasing additional space, and to prevent the owner from selling or leasing to a third-party without giving the tenant an opportunity to participate in the transaction. This can be particularly valuable to tenants who have invested in the property and want to protect their business interests, or who have a strong desire to remain in a particular location. However, the right of first refusal can also be a burden on owners who may want to sell or lease their property quickly or at the best possible price. Therefore, it is important for owners and tenants to negotiate the terms of the right of first refusal carefully and ensure that they are acceptable to both parties.

Fair market value

Fair market value refers to the estimated price at which a property would be sold between a willing buyer and a willing seller, both of whom have reasonable knowledge of the property and are acting freely and independently, without any undue pressure or compulsion to buy or sell. In determining fair market value, various factors may be taken into consideration, such as the property's location, condition, size, age, and other relevant characteristics. The assessment may also take into account current market conditions, such as supply and demand, interest rates, and other economic factors that may affect the value of the property. Fair market value is often used in appraisals, property valuations, and real estate transactions, as it provides a standard measure of the property's worth that is generally accepted by buyers, sellers, and lenders. In some cases, the fair market value may differ from the actual sale price of the property, depending on various factors such as negotiation, marketing, and timing of the sale. However, fair market value provides a useful benchmark for evaluating the relative value of different properties and making informed decisions about buying or selling real estate.


Ground rent

Ground rent refers to the rent paid by the tenant or lessee for the use of land, typically under a long-term lease arrangement. The lessor or landlord retains ownership of the land, while the lessee may have the right to use the land for a specific purpose, such as building a structure or operating a business. The lease agreement usually specifies the amount of rent to be paid, the duration of the lease, and any other terms and conditions governing the use of the land.


A grant is the transfer of an interest in real property from one person to another, usually by a written instrument such as a deed or a lease.


A grantor is the person who conveys an interest in real property by grant.


Grantee is a term used in real estate to refer to the person or entity that receives the title or ownership interest in a property through a grant or deed.

Graduated lease

A graduated lease is a type of lease in which the rent amount varies over the term of the lease. The rent may be increased at predetermined intervals, based on a set percentage or a specific dollar amount. The increases are typically tied to inflation, changes in the Consumer Price Index (CPI), or other economic factors.

Glide Path

The Glide Path in investment terminology refers to the predetermined asset allocation strategy for a target date fund or a life-cycle fund. The allocation mix is adjusted as the fund nears its target date, becoming more conservative by reducing its exposure to riskier investments, such as equities, and increasing its allocation to fixed-income assets.

General partner

A general partner is a partner in a partnership who is responsible for the management of the partnership and has unlimited personal liability for the debts and obligations of the partnership. The general partner is also entitled to a share of the profits and losses of the partnership, as specified in the partnership agreement.

Generally Accepted Accounting Principles

GAAP stands for Generally Accepted Accounting Principles, which are a set of accounting principles, standards, and procedures that companies use to compile and present their financial statements. These principles are designed to ensure that financial statements are prepared in a consistent, accurate, and reliable manner, and provide useful information to investors, lenders, and other stakeholders. GAAP is established by the Financial Accounting Standards Board (FASB) in the United States, and is used by most publicly traded companies in the country.


Heating, Ventilation, and Air Conditioning

It refers to the systems used in buildings to control the temperature, humidity, and air quality.


Holdbacks refer to a portion of a loan commitment that is not funded until certain conditions or requirements are met, such as completion of construction or repair work. These funds are held back by the lender as a form of security until the necessary work is completed or the requirements are met to the satisfaction of the lender. Once the holdback conditions have been met, the funds are released to the borrower. Holdbacks can also refer to funds that are held back by the buyer of a property as security against any potential defects or issues that may arise after the sale.

Hold-over tenant

A hold-over tenant is a tenant who continues to occupy the leased premises after the lease term has expired, without the landlord's consent. In some cases, the hold-over tenant may be allowed to remain on a month-to-month basis, but they may also be subject to eviction by the landlord.

Highest and best use

"Highest and best use" refers to the most advantageous and profitable use of a property that is physically possible, legally permissible, financially feasible, and maximally productive. The concept is important in real estate valuation and appraisal, as well as in land use planning and zoning.

Hybrid debt

Hybrid debt refers to a financing structure that incorporates features from both debt and equity. It involves a lender providing a loan to a borrower, but with additional elements of equity participation. This could include options for the lender to convert the debt into an ownership stake in the property or to receive a share of profits upon sale or refinancing. The purpose of hybrid debt is to offer an alternative financing solution for borrowers who may face challenges in obtaining traditional debt financing. By including equity features, hybrid debt allows borrowers to maintain some level of ownership and control over the project while accessing the necessary funds.

Holding period

The holding period is the length of time that an investor plans to hold a property from the time of purchase to the time of sale. The holding period can vary depending on the investor's investment goals and strategy, market conditions, and other factors. Typically, the holding period for a real estate investment is several years or more, as it may take time for the property to appreciate in value or generate significant cash flow.


The term "high-rise" generally refers to a building that is taller than the surrounding buildings, but the exact definition can vary depending on the location and context. In a central business district, a high-rise building typically refers to a building that is taller than 25 stories, while in suburban markets, it may refer to a building that is taller than seven or eight stories. However, there is no strict definition of what constitutes a high-rise building, and the term is often used loosely to describe any building that is significantly taller than the surrounding buildings.

Hard cost

Hard cost is a term used in the construction industry to refer to the direct costs associated with the physical construction of a building or other improvement on a property. This includes costs such as materials, labor, equipment rental, and any other expenses directly related to the construction process. Hard costs do not typically include soft costs, such as fees for permits, design and engineering, or other professional services. Understanding hard costs is important for accurately estimating the total cost of a construction project, and for determining the profitability of a development or investment.


Investor status

Investor status refers to the classification of investors in accordance with their regulatory and legal status, and it determines what types of investments they are allowed to make. Investors may be classified as accredited investors, qualified purchasers, or institutional investors, among other categories. These classifications are based on various criteria such as income, net worth, investment experience, and regulatory status.

Investment-grade CMBS

Investment-grade CMBS (Commercial Mortgage-Backed Securities) are securities that are assigned ratings of "AAA," "AA," "A" or "BBB" by credit rating agencies, indicating a relatively low risk of default. These ratings reflect the creditworthiness of the underlying mortgages and the structure of the securitization.


Interest is the amount paid by a borrower to a lender for the use of borrowed money, usually expressed as a percentage of the loan amount.

Investment structures

Investment structures refer to the various ways that investments can be structured in real estate. These structures include, but are not limited to, unleveraged acquisitions, leveraged acquisitions, traditional debt, participating debt, convertible debt, triple-net leases, and joint ventures.

Investment manager

An investment manager is an entity or individual responsible for making investment decisions on behalf of clients, which may include investing in real estate assets. They may manage separate accounts, commingled funds, or co-investment programs, and provide asset management services to maximize returns for their clients.

Investment bank

Investment banks are financial institutions that provide a range of financial services to individuals, corporations, and governments. These services may include underwriting, securities trading, mergers and acquisitions, and corporate finance advisory services. Unlike commercial banks, investment banks do not take deposits or make loans to individuals and small businesses.

Investment policy

An investment policy is a document that outlines an organization's guidelines for investing and managing its assets. It typically includes the organization's investment goals and objectives, investment strategies and criteria, risk management guidelines, and guidelines for asset allocation and diversification.

Insurance company separate account

An insurance company separate account is an investment account that is maintained by an insurance company and is segregated from its general account. It is used to invest in assets such as real estate, stocks, and bonds on behalf of policyholders. The investment performance of the separate account is credited to the policies that are linked to the account, and the insurance company assumes no investment risk.

Individual account management

Individual account management refers to the management of accounts that are established for individual plan sponsors or other investors who invest in real estate. A firm acts as an adviser in acquiring and/or managing a direct real estate portfolio on behalf of these investors. The portfolio may include various types of real estate investments such as commercial, residential, or industrial properties. The management of these accounts is typically tailored to the specific needs and investment objectives of each individual client.


Inflation refers to the general increase in the price level of goods and services in an economy over a period of time, resulting in a decline in the purchasing power of a currency. The inflation rate is typically measured by the percentage increase in a price index, such as the Consumer Price Index (CPI), over a specified period of time.

Income property

Income property refers to real estate that is owned or operated to generate income through rental payments or other means, such as through leasing space for businesses or other activities.

Incentive fee

An incentive fee is a fee structure that is commonly used in asset management, including real estate, where the amount of the fee charged is determined by the performance of the assets under management. In real estate, an incentive fee is often paid to a fund manager or general partner when the returns on the real estate investment exceed a certain threshold, such as a specified internal rate of return (IRR). The incentive fee is typically calculated as a percentage of the excess returns earned above the hurdle rate.


Improvements generally refer to any permanent additions or modifications made to a property, such as buildings, landscaping, or infrastructure. In the context of leasing, improvements often refer to modifications or additions made to a space by the landlord or tenant, such as installing new fixtures, building out offices, or upgrading HVAC systems.

Investment committee

The Investment Committee (IC) is also commonly used in the context of real estate investment, where it refers to a group of individuals responsible for making investment decisions for a specific real estate fund or project. The committee may include representatives from the fund manager, investors, and other relevant parties, and is responsible for evaluating potential investments, conducting due diligence, and ultimately making investment recommendations or decisions.


Inventory refers to the total amount of available space for lease or sale within a specific market or geographic area, regardless of its condition or occupancy status. It includes both new and existing buildings, as well as any vacant land that could be developed for commercial purposes. The inventory is an important metric for analyzing the supply and demand dynamics of a particular market, and it is often used to evaluate the health of the commercial real estate sector.

Institutional-grade property

Institutional-grade properties are typically high-quality and well-located properties that are attractive to large institutional investors such as pension funds, insurance companies, and sovereign wealth funds. These properties are typically larger in size and are located in major markets with stable economic and demographic fundamentals.


Lump-sum contract

A lump-sum contract is a type of construction contract in which the contractor agrees to complete a project or building for a fixed price that is established before construction begins. This fixed price is typically determined through a competitive bidding process, in which contractors submit their proposed costs for the project. Under a lump-sum contract, the contractor is responsible for completing the work within the specified budget, and any cost overruns or additional expenses must be absorbed by the contractor. On the other hand, if the project is completed for less than the specified budget, the contractor retains any excess profit. Lump-sum contracts are commonly used in construction projects, particularly for large-scale projects such as commercial buildings, infrastructure, and public works projects. They provide a clear and predictable budget for the project owner, while shifting the risk of cost overruns and delays to the contractor. However, they may also discourage innovation and creativity on the part of the contractor, as the fixed price may limit their ability to propose alternative solutions or materials that could improve the project.

Long-term lease

In real estate, a long-term lease typically refers to a lease agreement with a minimum term of three years from the date of signing to the expiration or renewal date. This is in contrast to a short-term lease, which typically has a term of less than one year. Long-term leases are common in commercial real estate, where tenants may need a stable location for their business operations over an extended period of time. Long-term leases provide security for both the landlord and the tenant, as the tenant has the assurance of a stable location for their business, while the landlord has a steady source of rental income. Long-term leases are often negotiated between the landlord and the tenant and may include options for renewal or extension of the lease beyond the initial term. The terms of the lease, including the rent, may also be subject to negotiation between the parties.

Loss severity

Loss severity refers to the percentage of the principal balance of a loan that is lost when the borrower defaults and the lender forecloses on the property. For example, if a borrower defaults on a $100,000 mortgage loan, and the lender forecloses and sells the property for $80,000, the loss severity would be 20%, as the lender lost 20% of the principal balance of the loan. Loss severity is an important metric for lenders to consider when evaluating the risk associated with a particular loan or portfolio of loans. A higher loss severity indicates a greater potential loss for the lender in the event of default and foreclosure. Lenders may use loss severity as a factor in determining the interest rate and other terms of a loan, and may also use it to assess the overall risk of their loan portfolio.


A "lien" is a legal claim or encumbrance against a property, usually used to secure a debt or obligation. Liens can be placed on property by a variety of entities, including creditors, tax authorities, and contractors, among others. In general, a lien gives the holder of the lien the right to take legal action to enforce their claim against the property. For example, if a homeowner fails to pay their property taxes, the local tax authority may place a tax lien on the property, giving them the right to sell the property to satisfy the unpaid taxes. There are several different types of liens, including: 1. Mortgage liens - A lien placed on a property by a lender to secure a mortgage loan. 2. Judgment liens - A lien placed on a property as the result of a court judgment. 3. Mechanic's liens - A lien placed on a property by a contractor or subcontractor who has performed work on the property but has not been paid. 4. Tax liens - A lien placed on a property by a government agency to secure payment of unpaid taxes. Liens can have a significant impact on a property owner's ability to sell or refinance their property, as they may need to pay off the lien before the property can be transferred or the mortgage can be refinanced. It is important to understand the nature and extent of any liens on a property before entering into a real estate transaction involving that property.


A lot is a portion of land that is designated and identified by specific boundaries, which are typically recorded on a map or plat. In most cases, a lot is a subdivision of a larger block of land, and multiple lots will make up the block. Lots are commonly used for the purpose of property ownership and development. An owner of a lot has the right to use and develop the land within the boundaries of the lot, subject to any zoning or land use regulations that apply in the area. Lot size can vary widely, depending on the location and intended use of the land. In some urban areas, lots may be very small and densely packed, while in suburban or rural areas, lots may be larger and more spread out. The size and shape of a lot can have a significant impact on the value of the property and the types of development that are feasible.


A lockout period is a provision in a loan agreement that prevents the borrower from prepaying or refinancing the loan during a certain period of time, typically the first few years of the loan. During the lockout period, the borrower is required to make regular payments on the loan, but is not allowed to pay off the loan early without incurring penalties. This provision is often used in commercial real estate lending, where the lender wants to ensure a minimum return on its investment during the early years of the loan. The lockout period is typically negotiated between the lender and the borrower at the time the loan is originated. The length of the lockout period can vary depending on the size of the loan, the creditworthiness of the borrower, and other factors. In some cases, the lockout period may be waived if the borrower pays a premium or agrees to other terms that compensate the lender for the lost interest.

Lock-box structure

A lock-box structure is a financial arrangement where a borrower's loan payments are collected by a third-party agent and placed into a lock-box account. The lender then receives the funds from the lock-box account to pay off the loan. In real estate finance, a lock-box structure is often used to securitize mortgages. The third-party agent responsible for collecting loan payments is typically a trustee or servicer who is appointed to manage the securitization trust. The lock-box account is usually held at a bank, and the borrower's payments are deposited into the account on a regular basis. The trustee then distributes the payments to the bondholders who hold securities backed by the mortgage loans. The lock-box structure is designed to provide a more secure and efficient way to collect and distribute loan payments. By using a third-party agent to collect the payments, the lender can reduce the risk of fraud or default. The structure also allows for more accurate and timely distribution of payments to investors, which can increase investor confidence and reduce the risk of losses.

Listing agreement

A "listing agreement" is a contract between a property owner and a real estate broker or agent that gives the broker the exclusive right to market the property for sale or lease. The agreement outlines the terms and conditions of the arrangement, including the listing price or rental rate, the length of the listing period, the commission or fee the broker will earn upon completion of the transaction, and any other relevant details. There are several types of listing agreements, including exclusive right-to-sell agreements, exclusive agency agreements, and open listings. In an exclusive right-to-sell agreement, the broker has exclusive rights to sell the property and is entitled to a commission regardless of who finds the buyer. In an exclusive agency agreement, the broker has exclusive rights to sell the property but is only entitled to a commission if they are the ones who find the buyer. An open listing agreement allows the owner to work with multiple brokers and only pay a commission to the broker who successfully sells or leases the property. Listing agreements are a standard practice in the real estate industry and provide a legal framework for the relationship between property owners and brokers. By signing a listing agreement, property owners can ensure that their property is marketed effectively and that the broker is motivated to find a buyer or tenant as quickly as possible.


"Liquidity" refers to the ease with which an asset can be bought or sold in the market without significantly affecting its price. An asset that is highly liquid can be quickly converted into cash without causing a significant change in its market value. The concept of liquidity is important in financial markets, as it affects the ability of investors to buy and sell assets at fair prices. Assets that are highly liquid, such as stocks traded on major exchanges, tend to have tight bid-ask spreads and high trading volume, which makes it easy for investors to buy and sell them quickly and at a fair price. On the other hand, assets that are illiquid, such as real estate or private equity investments, can be more difficult to sell quickly and may require a significant discount in price to attract buyers. Liquidity is also important for financial institutions, as they need to be able to sell assets quickly to meet their funding needs or to manage their risks. A lack of liquidity in a particular market or asset class can lead to significant disruptions in financial markets, as was seen during the global financial crisis of 2008. Overall, liquidity is a key consideration for investors and financial institutions, as it affects the ease with which assets can be bought and sold and the prices at which they can be traded.


"To liquidate" means to convert assets into cash. This can be done for a variety of reasons, such as to pay off debts or to distribute the proceeds of an investment or business venture. When a company is liquidated, it means that its assets are sold off to pay off its debts and obligations, and any remaining funds are distributed to its shareholders or owners. Liquidation can take different forms depending on the type of assets being liquidated and the reason for the liquidation. For example, a company may sell off its inventory or equipment to raise cash, or it may sell off a subsidiary or division to focus on its core business. In some cases, individuals may also need to liquidate assets, such as selling stocks or real estate to pay off debts or to finance a major purchase. Liquidation can also refer to the process of closing out a financial position, such as selling off a portfolio of stocks or bonds to realize gains or losses. In this context, liquidation may be done to rebalance a portfolio or to free up capital for other investments. Overall, liquidation refers to the process of converting assets into cash, which can be a necessary step in managing financial obligations or pursuing investment opportunities.

Legal description

A "legal description" is a detailed and precise geographical description of a specific parcel of land that is used to identify the boundaries and characteristics of the property for legal purposes. The legal description is typically included in documents such as deeds, mortgages, and other legal agreements related to the property. There are several different methods of legal description, including: 1. Government survey: This method uses a system of rectangular survey lines and townships to describe the location and boundaries of a parcel of land. 2. Metes and bounds: This method uses a series of physical markers, such as trees or rocks, to describe the perimeter of the property. 3. Recorded plat: This method uses lot numbers from a recorded subdivision plat to describe the location and boundaries of the property. In addition to describing the location and boundaries of the property, the legal description may also include information about any easements, reservations, or other encumbrances that affect the property. This information is important for ensuring that all parties involved in a transaction related to the property have a clear understanding of the rights and limitations associated with the land.

Limited partnership

A "limited partnership" is a type of partnership in which there are one or more general partners and one or more limited partners. The general partners manage the business and are personally liable for the partnership's debts, while the limited partners contribute capital but do not participate in the management of the business and have limited liability for partnership debts. Limited partnerships are typically used for business ventures in which the general partners have expertise or experience in a particular industry or field, and the limited partners provide capital but do not have the same level of expertise or experience. Limited partnerships can also be used in real estate investments, with the general partner responsible for managing the property and the limited partners providing capital. The limited liability of the limited partners is a key feature of limited partnerships, as it allows them to invest in the partnership without incurring unlimited personal liability for the partnership's debts or legal obligations. This means that if the partnership were to fail or incur significant debts or legal liabilities, the limited partners would only be liable for the amount of their investment in the partnership. In contrast, the general partners have unlimited personal liability for the partnership's debts and obligations. This means that if the partnership were to fail or incur significant debts or legal liabilities, the general partners could be held personally liable for those obligations, even beyond the amount of their investment in the partnership.

Like-kind property

"Like-kind property" is a term used in a tax-deferred exchange of property held for productive use in a trade or business or for investment, pursuant to Section 1031 of the Internal Revenue Code. In such an exchange, the taxpayer can defer the recognition of capital gains tax if they exchange one property for another property that is of "like-kind." In this context, "like-kind" means that the properties being exchanged are of the same nature or character, even if they differ in grade or quality. For example, an exchange of a commercial building for another commercial building would generally qualify as a like-kind exchange, as would an exchange of a rental property for another rental property. However, an exchange of a commercial building for a residential property would generally not qualify as a like-kind exchange. It's important to note that the tax deferral associated with a like-kind exchange is not permanent - it simply postpones the recognition of capital gains tax until the taxpayer ultimately sells the replacement property. Additionally, there are specific rules and requirements that must be followed in order to qualify for a like-kind exchange, so it's important to consult with a qualified tax professional before engaging in this type of transaction.

Lien waiver

A "lien waiver" is a document in which a contractor or subcontractor waives their right to file a mechanic's lien against a property in exchange for payment. Lien waivers are commonly used in the construction industry to ensure that all parties are paid for the work they have performed, and to provide assurance to property owners and lenders that there are no outstanding liens on the property. In many cases, lien waivers are required before a contractor or subcontractor can receive payment for work performed on a construction project. For example, a general contractor may be required to obtain lien waivers from all subcontractors before they can receive a draw on the payment provisions of a construction contract. Similarly, an owner may be required to obtain lien waivers from all contractors and subcontractors before they can receive a draw on a construction loan. There are two main types of lien waivers: conditional and unconditional. A conditional lien waiver is typically used when the contractor or subcontractor has not yet received payment for the work performed, and is conditioned upon receipt of that payment. An unconditional lien waiver, on the other hand, is used when the contractor or subcontractor has already received payment, and waives their right to file a lien in exchange for that payment. It is important for all parties involved in a construction project to understand the requirements for lien waivers, as failure to obtain the necessary waivers can lead to delays, disputes, and potential legal liability.

Letter of intent

A "letter of intent" is a document that outlines the proposed terms and conditions of a future agreement or contract between two or more parties. It is a preliminary agreement that is often used in business transactions, real estate deals, and other negotiations where the parties wish to establish a framework for a more detailed contract. The letter of intent typically outlines the major points of the proposed agreement, such as the purchase price, delivery terms, payment terms, and any other key provisions. It is intended to serve as a starting point for further negotiations and discussions, rather than a final, binding agreement. The letter of intent is often used as a way for parties to demonstrate their commitment to a proposed deal and to establish a level of trust and understanding between the parties. It can also help to clarify any potential misunderstandings or disagreements early in the negotiation process, which can help to prevent more serious issues from arising later on. While a letter of intent is not a binding agreement in and of itself, it may include certain provisions that are binding, such as confidentiality agreements or exclusivity agreements. In general, however, the letter of intent is intended to be a non-binding expression of the parties' intentions, subject to further negotiation and the execution of a final, binding agreement.

Letter of credit

A "letter of credit" is a financial instrument issued by a bank or other financial institution that provides a guarantee of payment to a third party. The letter of credit serves as a commitment by the issuer to honor drafts or other demands for payment upon full compliance with the conditions specified in the letter of credit. In the context of a commercial lease, a letter of credit may be used to satisfy the security deposit provisions of the lease. Instead of providing a cash deposit to the landlord, the tenant can obtain a letter of credit from a bank or financial institution, which guarantees the payment of the security deposit in the event that the tenant defaults on the lease. Letters of credit are often used in international trade, where they serve as a way for buyers and sellers to mitigate the risk of non-payment. For example, a buyer may obtain a letter of credit from their bank to assure the seller that they will be paid for goods or services rendered, and the seller can then present the letter of credit to their own bank to obtain payment. Overall, letters of credit are a useful tool for managing risk and providing financial guarantees in a variety of commercial transactions.

Legal owner

A "legal owner" is a person or entity that holds legal title to a property, meaning that they have the legal right to use and control the property as they see fit. However, it is important to note that legal ownership does not necessarily confer all of the rights and benefits associated with the property. For example, a legal owner may hold title to a property that is subject to liens or other encumbrances that limit their ability to use or dispose of the property. In this case, while the legal owner has the right to control the property, they may not have the ability to sell or transfer it until the liens are satisfied or otherwise resolved. It is also possible for someone to hold a beneficial interest in a property, even if they are not the legal owner. For example, a tenant may have a leasehold interest in a property that gives them the right to use and occupy the property, but the legal owner retains title and control over the property. In general, legal ownership is an important concept in real estate and other areas of law, as it determines who has the right to use and control a particular asset or property.

Lease expiration exposure schedule

A "lease expiration exposure schedule" is a document that lists the total square footage of all current leases that are set to expire within a specific time frame, typically the next five years. This schedule is usually prepared by a landlord or property manager to provide an overview of their upcoming lease expirations and to help them plan for future leasing activity. The lease expiration exposure schedule typically includes information on the size and location of each leased space, as well as the date on which the lease is set to expire. This information is presented without taking into account any renewal options that may be available to the tenant, which could potentially extend the lease beyond the listed expiration date. By reviewing the lease expiration exposure schedule, a landlord or property manager can gain a better understanding of their leasing activity and plan accordingly. For example, they may use the information to identify opportunities to negotiate lease renewals or to prepare for upcoming vacancies by marketing the space to potential new tenants.

Lead manager

A "lead manager" is an investment banking firm that takes on the primary role of coordinating the issuance of new securities, such as stocks or bonds, for a company or other issuer. This involves managing the entire process of bringing the securities to market, from underwriting and pricing to distribution and marketing.The lead manager typically has the greatest responsibility for ensuring the success of the offering and may work closely with the issuer to determine the most appropriate terms and structure for the securities. The lead manager may also assemble a syndicate of other investment banks to participate in the underwriting process and help to sell the securities to investors. In exchange for their services, the lead manager typically receives a fee, which is a percentage of the total value of the securities issued. This fee is known as the underwriting fee and is intended to compensate the lead manager and its syndicate for the risks and costs associated with the offering.

Landlord's warrant

The term "landlord's warrant" refers to a legal document that authorizes a landlord to seize a tenant's personal property, such as furniture, to satisfy a debt or obligation owed by the tenant under the terms of a lease. This warrant allows the landlord to conduct a public sale of the seized property to collect the outstanding rent or enforce other provisions of the lease agreement. In some jurisdictions, the use of a landlord's warrant is subject to certain legal requirements and limitations, such as the need to provide the tenant with prior notice of the warrant and an opportunity to dispute the landlord's claim. The specific procedures and rules governing the use of landlord's warrants can vary depending on the applicable state or local laws.


Lifecycle is a term used to describe the different stages of a real estate property, from its pre-development phase to development, leasing, operation, and redevelopment or rehabilitation.


In some contexts, a low-rise building is defined as having fewer than five or six stories above ground level. The exact definition may vary depending on the local building codes and regulations.

Leasehold interest

Leasehold interest refers to a tenant's right to hold or use a property for a specified period of time, usually through a lease agreement, without actually owning the property. The tenant has a leasehold interest in the property and is entitled to exclusive possession of the property during the term of the lease. The landlord retains ownership of the property, but the tenant has the right to use and enjoy it subject to the terms of the lease.


Mortgage broker

A mortgage broker is a person or company that acts as an intermediary between borrowers and lenders in the mortgage loan process. The broker's job is to evaluate the borrower's financial situation and find a suitable mortgage loan from a lender. The broker typically earns a commission based on the size of the loan.


A mortgage is a loan agreement in which the borrower pledges property as collateral for the repayment of the loan. The mortgage document creates a lien on the property, which gives the lender the right to foreclose on the property if the borrower defaults on the loan.

Modified Funds from Operations

Modified Funds from Operations (MFFO) is a financial performance measure used in the real estate industry. It is a variant of Funds from Operations (FFO) that adjusts for certain non-cash and non-recurring items. MFFO typically starts with net income in accordance with Generally Accepted Accounting Principles (GAAP), adds back depreciation and amortization, and excludes gains and losses from the sale of depreciable property. However, the exact definition of MFFO may vary depending on accounting principles and industry standards.

Master servicer

A master servicer is responsible for administering a pool of mortgage loans on behalf of a trustee or bondholder. Their duties include collecting loan payments, advancing funds to cover delinquencies, and managing the foreclosure process if a borrower defaults on their loan.

Market study

A market study is a research report that analyzes the market conditions for a specific type of real estate, such as residential, commercial, or industrial. It may include an assessment of supply and demand, demographic trends, and other factors that affect the value and viability of real estate in a particular area. The purpose of a market study is to provide data and analysis to help developers, investors, and other stakeholders make informed decisions about real estate projects.

Mechanic's lien

A mechanic's lien is a legal claim that can be filed by contractors, subcontractors, and suppliers who have not been paid for work done or materials provided to improve a property. The lien gives the claimant a security interest in the property, which can be used to force payment or to force the sale of the property to satisfy the debt.

Modern portfolio theory

Modern Portfolio Theory (MPT) is an investment theory that aims to maximize investment returns for a given level of risk by constructing a well-diversified portfolio of assets. It was first proposed by Harry Markowitz in 1952 and is based on the principle that an investor can reduce risk by diversifying their investments across different asset classes that have low or negative correlations with each other. MPT takes into account various statistical measures, such as alpha, beta, and R-squared, to construct portfolios that provide the highest expected return for a given level of risk.

Marketable title

Marketable title refers to a title that is free from reasonable doubt or encumbrances, and can be readily sold or transferred to a willing purchaser.

Master lease

A master lease is a lease agreement that grants the lessee the right to sublease a property to sub-tenants for a specified period of time, usually for a higher rent than the lessee pays to the lessor. The master lease is a primary lease that controls subsequent leases and may cover more property than subsequent leases. The lessee is responsible for managing the sub-tenants and collecting rent from them, while the lessor usually has limited involvement with the sub-tenants.

Market rental rates

Market rental rates refer to the prevailing rental rates for a particular type of property in a given location or market. It is determined by the current rents charged for comparable properties in the same area, taking into account factors such as location, size, age, condition, and amenities. Market rental rates are an important consideration for landlords, tenants, and real estate investors, as they affect the cash flow and return on investment of a rental property.

Mark to market

Mark to market refers to the accounting practice of adjusting the value of an asset or portfolio of assets to reflect its current market value, rather than its historic cost. This practice is commonly used in the valuation of securities, futures contracts, and other financial instruments. By marking assets to market, investors can get a more accurate view of the current value of their holdings, which can be useful for making investment decisions or managing risk.


In finance, a mandate is a specific task or responsibility given to a person or an organization. It can refer to various types of activities, such as managing investments, providing financial advice, or executing a specific transaction. The term is often used in the context of asset management, where a mandate may define the scope and objectives of an investment strategy or portfolio.


A maker is a person who makes or creates a promissory note and promises to pay back the amount borrowed with interest on or before the due date mentioned in the note. The maker is the primary obligor of the note and is responsible for making the payments to the lender or holder of the note.

Magic page

In the context of a REIT, a magic page is a summary page in the prospectus that highlights the key investment features and financial metrics of the REIT. It typically includes a summary of the investment strategy, key financial ratios such as price-to-earnings ratio (P/E), dividend yield, and a comparison with relevant market benchmarks. The magic page is designed to quickly and concisely communicate the REIT's investment story to potential investors.


Mixed-use refers to a building or development that combines multiple uses, such as residential, retail, office, and/or hotel, within a single project.


A building with four to eight stories above ground level. In a central business district, it might extend to buildings up to 15 to 25 stories.

Mezzanine financing

Mezzanine financing refers to a hybrid form of financing that typically involves a combination of debt and equity. Mezzanine financing is often used to fill the gap between senior debt and equity in a company's capital structure. It is a higher-risk investment than senior debt, but it also offers higher returns. Mezzanine financing is often used in leveraged buyouts (LBOs) and other types of mergers and acquisitions (M&A). Mezzanine financing typically has a higher interest rate than senior debt and may also involve an equity component, such as warrants or options to purchase equity in the company. The term "mezzanine" refers to the level of risk and return between senior debt and equity.

Maturity date

Maturity date in the context of commercial real estate refers to the date when the entire principal balance of a loan or mortgage becomes due and payable. It is the date on which the borrower is required to fully repay the loan amount to the lender. The maturity date is typically set at the time of loan origination and is determined based on the loan term and repayment schedule. At maturity, the borrower may choose to repay the loan in full, refinance it, or negotiate an extension with the lender.

Market value

Market value in CRE (Commercial Real Estate) is the most probable price that a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. This definition comes from the Appraisal Institute.


Non-recourse debt

Non-recourse debt is a type of loan where the lender's only claim against the borrower is the collateral or property that was pledged as security for the loan. In the event of a default, the lender is not allowed to seek additional repayment from the borrower's other assets or income.

Non-performing loan

Non-performing loan (NPL) refers to a loan that is in default or is close to being in default due to the borrower's inability to make the required payments on time. A loan is typically classified as non-performing when it is delinquent for 90 days or more.

Non-discretionary funds

Non-discretionary funds refer to investment funds where the investment manager must obtain the investor's approval for each transaction before making it. This is in contrast to discretionary funds, where the investment manager has the authority to make investment decisions on behalf of the investor without requiring prior approval.

Non-investment-grade CMBS

Non-investment-grade CMBS (Commercial Mortgage-Backed Securities) are securities that are rated "BB" or "B" by credit rating agencies. These securities are also commonly referred to as high-yield CMBS.

Non-compete clause

A non-compete clause is a provision in a lease that restricts a tenant from engaging in a particular type of business or activity that competes with other tenants or the landlord's interests in the property.

Nominal yield

Nominal yield typically refers to the annual return on an investment property, expressed as a percentage of the purchase price or current market value, before accounting for any expenses or risk factors. It is a basic measure of the potential return on investment, without taking into account any external factors that could affect the actual return, such as vacancy rates, maintenance costs, or market fluctuations. Nominal yield is also known as gross yield or initial yield.

Negative amortization

Negative amortization occurs when the borrower's payments are not sufficient to cover the interest due on the loan. As a result, the unpaid interest is added to the loan balance, causing the outstanding principal to increase over time. This can result in the borrower owing more than the original loan amount, even after making payments for a period of time.

NCREIF Property Index

The NCREIF Property Index (NPI) is an index that tracks the performance of commercial real estate in the United States. It reports quarterly and annual returns consisting of income and appreciation components. The index is based on data collected from the voting members of the National Council of Real Estate Investment Fiduciaries (NCREIF), and specific property-type subindices include apartment, office, retail, industrial, and hotel. Regional subindices include West, East, South, and Midwest.

National Council of Real Estate Investment Fiduciaries

The National Council of Real Estate Investment Fiduciaries (NCREIF) is an association of real estate professionals that sponsor research articles, seminars, and symposiums, and produce the NCREIF Property Index, which is a performance index for U.S. institutional-grade real estate.



"Opportunistic" typically refers to a higher-risk, higher-reward investment strategy focused on acquiring underperforming assets that have the potential for significant appreciation or cash flow increases. These types of investments often involve higher levels of leverage and may require a more active management approach to realize their full potential.


An out-parcel is an individual retail site or building that is situated on a separate parcel of land within a larger shopping center or retail development. Typically, out-parcels are occupied by fast-food restaurants, banks, or other businesses that can benefit from a high-traffic location but don't require the larger space or visibility of the anchor tenants in the main shopping center.

Open-end fund

An open-end fund is a type of investment fund that allows investors to buy and sell shares in the fund at any time. It does not have a set number of shares, and new shares can be created or redeemed as needed. The fund typically invests in a diversified portfolio of assets, such as stocks, bonds, and real estate, and is managed by professional fund managers. Open-end funds are also sometimes referred to as mutual funds.


An originator is a person or entity that facilitates the process of loan application, underwriting, and funding on behalf of a lender or financial institution. In the context of commercial real estate, an originator is typically a company that sources and underwrites commercial and/or multifamily mortgage loans.


Punch list

A punch list is an itemized list of incomplete or unsatisfactory items in a construction project that need to be addressed or corrected by the contractor before final acceptance by the owner or client. The term can be applied to any type of construction project, not just tenant spaces.


"Programmatic" refers to a joint venture or investment strategy in which multiple assets, often of a similar type or in a particular geographic area, are acquired or developed over time under a single agreement or framework. The specific properties to be acquired or developed may not be identified at the outset, but the general parameters of the investment, such as asset class, geographic focus, and investment structure, are established in advance.

Prohibited transaction

Prohibited transactions refer to certain transactions between a pension plan and a party in interest that are prohibited under ERISA. These include the sale, exchange or leasing of any property, a loan or other extension of credit, and the furnishing of goods or services. Other examples include the transfer of plan assets to a party in interest or the use of plan assets by a party in interest, and the acquisition of employer real property in excess of limits set by ERISA.

Principal payments

Principal payments refer to the portion of a loan payment that goes towards paying down the original amount borrowed, as opposed to interest or other fees.

Prime tenant

A prime tenant is typically a major tenant in a building or an anchor tenant in a shopping center. They are often considered key tenants that drive traffic and business to a property.

Prime space

"Prime space" can also refer to the most desirable and highest quality space in a particular market or submarket, regardless of whether it is first-generation or not. This can include space in newer buildings, buildings with better amenities or locations, and space that is in high demand.

Prepayment rights

Prepayment rights refer to the right of a borrower to make an early payment of part or all of the outstanding principal balance on a loan without incurring any penalty.


"Preleased" refers to a situation where space in a building that is still under construction or has not yet been completed has already been leased out to a tenant. This is usually done in order to secure financing for the construction of the building, and to give tenants the assurance that they will have a space to occupy when the building is completed.

Performance measurement

Performance measurement refers to the process of evaluating and assessing the performance of real estate investments, such as individual assets, advisers/managers, and portfolios. It involves analyzing various metrics, such as returns, risk, and other performance indicators, to help investors and managers make informed decisions and improve their investment strategies. The scope and criteria of performance measurement reports can vary depending on the needs and goals of the stakeholders involved.

Power of sale

A power of sale is a clause inserted in a mortgage or deed of trust that gives the lender or trustee the right to sell the property at a public auction if the borrower defaults on their loan payments. The lender is allowed to sell the property without going through a court process, which is known as nonjudicial foreclosure.

Performance bond

A performance bond is a type of surety bond that ensures a contractor will complete a project according to the terms of a contract. If the contractor fails to fulfill their obligations, the bond provides financial compensation to the owner or developer to cover any resulting losses or damages.

Placement agent

A placement agent is a firm that helps a fund manager raise capital from potential investors.

Permanent loan

A permanent loan is a long-term mortgage on a property that is typically used to finance the acquisition or development of real estate. The term "permanent" distinguishes these loans from shorter-term construction loans, which are used to finance the building of a new property.

Performance-based fees

Performance-based fees are compensation paid to investment managers or advisers based on the investment performance of a portfolio, rather than a fixed management fee. These fees are typically calculated as a percentage of the profits earned by the investment manager or adviser, which incentivizes them to achieve higher returns for the investor. The performance-based fee structure is commonly used in the alternative investment industry, such as hedge funds and private equity, but is also used in some traditional investment products.

Percentage rent

Percentage rent is a type of rent that is calculated as a percentage of the tenant's gross sales or gross revenues received by the tenant. This type of rent is typically used in retail center leases where the landlord shares in the success of the tenant's business.

Pass-through certificate

A pass-through certificate is a security created from a pool of debt instruments, such as mortgages, that distributes payments of principal and interest from the underlying assets to the certificate holders.

Passive income

Passive income refers to income that is earned without active involvement or effort, such as rental income, interest, or dividends from investments. In real estate, passive income may refer to rental income from a property in which the owner is not actively involved in the management or operation of the property.

Partial taking

"Partial taking" refers to the seizure of only a portion of a property owner's land by the government or another entity with eminent domain authority. This can occur when the government needs only a portion of a property for a public project, such as a road expansion or public park. The owner is typically compensated for the seized portion of the property.

Partial sales

Partial sales refer to the sale of an interest in real estate that is less than the entire property, such as the sale of an easement right, a parcel of land, a retail pad, or a single building within a multi-building investment.

Public Equity Real Estate

Public Equity Real Estate refers to the public trading of securities of real estate investment trusts (REITs) and other publicly traded real estate operating companies. REITs are companies that own or finance income-producing real estate in various property sectors, such as office, retail, residential, and industrial. The public equity real estate market allows investors to buy and sell shares in these companies, providing exposure to real estate assets without direct ownership of the properties.

Public-Private Partnership

Public-Private Partnership (P3) is a contractual agreement between a public agency and a private sector entity to deliver a service or facility for the use of the general public, where each party shares in the risks and rewards. These partnerships can take various forms, including design-build, build-operate-transfer, and concession agreements, among others. They are used in a wide range of industries, including real estate, infrastructure, transportation, and social services, among others.

Public Debt Real Estate

Public Debt Real Estate refers to the quadrant of the real estate capital markets that includes publicly traded debt securities such as Commercial Mortgage Backed Securities (CMBS) and Residential Mortgage Backed Securities (RMBS), as well as public bond issues from both public and private companies and agencies. These securities are traded on public exchanges and are accessible to a wide range of investors. Public Debt Real Estate is one of the four quadrants of the real estate capital markets, along with Private Equity Real Estate, Private Debt Real Estate, and Public Equity Real Estate.


A prospectus is a formal legal document that provides details about an investment offering for sale. It is required by and filed with the Securities and Exchange Commission, and should contain all the facts that an investor needs to make an informed investment decision.

Pro rata

Pro rata refers to a proportional allocation or distribution of a certain amount or obligation among parties involved, based on their respective shares or percentages. In the context of a tenant, pro rata refers to the portion of shared expenses or costs that a tenant is responsible for paying based on the amount of space they occupy in a building or property, relative to the total leasable area.

Private REIT

A private REIT is an investment company that is structured as a real estate investment trust, but unlike public REITs whose shares are traded on a stock exchange, private REIT shares are placed and held privately. Because private REITs are not subject to the same regulatory requirements as public REITs, they can have fewer investors and can offer investments to accredited investors only.

Private placement

Private placement refers to the sale of securities that are not registered with the Securities and Exchange Commission (SEC) and are offered only to a select group of investors. These offerings are exempt from the registration requirements of the SEC because they are made only to sophisticated investors who can fend for themselves. The securities sold in a private placement are typically not listed on a public exchange and may not be freely traded.

Private Equity Real Estate Manager (Private Equity Manager)

Private Equity Real Estate Manager (Private Equity Manager) is an individual or a company that manages direct investments in real estate for their own account, for the account of third-party investment management clients, or both. They invest capital in direct equity real estate investments, including Opportunity Funds, which are typically higher risk, higher return strategies with target returns in the 18% to 20% or higher range. Private Equity Real Estate Managers can manage private equity funds, which are pooled fund vehicles that invest in direct equity real estate holdings on behalf of their investors.

Private Equity Real Estate Fund (Private Equity Fund)

A private equity real estate fund, also known as a private equity fund, is a pooled fund vehicle that invests in direct equity real estate holdings on behalf of its investors. The fund is typically structured as a private real estate investment trust (REIT) or other type of real estate operating company, or through a commingling arrangement. Private equity real estate managers are responsible for managing the fund and its investments, and the fund can be structured as an open-end or closed-end fund.

Private Equity Real Estate

Private Equity Real Estate refers to a category of real estate investment in which investors provide equity capital to acquire or develop real estate properties or portfolios, or to invest in real estate operating companies. It is one of the four quadrants of the real estate capital markets, along with private debt real estate, public equity real estate, and public debt real estate. Private equity real estate investments can take many forms, including direct ownership, joint ventures, limited partnerships, private REITs, and other legal structures. The investments are typically illiquid and require a long-term investment horizon.

Private Debt Real Estate

Private Debt Real Estate refers to a type of real estate investment that involves the lending of money by private investors or institutions to real estate developers, operators or owners. It can include traditional mortgage loans, as well as loan participations and syndications. Private Debt Real Estate investments can be made in a variety of real estate asset types, such as office buildings, retail centers, hotels, and multifamily residential properties. Private Debt Real Estate is one of the four quadrants of the real estate capital markets, alongside Private Equity Real Estate, Public Equity Real Estate, and Public Debt Real Estate.

Positive Spread Investing

Positive Spread Investing (PSI) is an investment strategy that involves raising funds at a low cost and investing them in assets with a higher expected return. The difference between the cost of funds and the expected return on investment is referred to as the "positive spread." By employing this strategy, investors seek to maximize their returns while minimizing their costs. PSI can be applied to various types of investments, including real estate, stocks, and bonds. Terminology.

Portfolio turnover

Portfolio turnover refers to the frequency with which assets within an investment portfolio are bought and sold over a certain period of time, typically a year. It is calculated by taking the lesser of the value of purchases or sales made during a year and dividing it by the average value of the portfolio during that year. A high portfolio turnover rate can indicate active management, while a low turnover rate can suggest a more passive investment strategy.


In the context of commercial real estate, performance typically refers to the financial performance of a property or portfolio. This can include metrics such as net operating income, cash flow, return on investment, and occupancy rates. These metrics are used to evaluate the financial success of a property or portfolio and to make decisions about future investments and management strategies. Performance can also refer to the overall success of a real estate investment fund or company, based on the returns generated for investors or shareholders.

Participating debt

Participating debt is a financing arrangement that allows the lender to receive additional compensation beyond the contract interest rate. This additional compensation can come in the form of equity participation, allowing the lender to share in any increases in income or residual value of the property above a certain threshold. The lender essentially becomes a partner in the investment, sharing in both the risks and rewards.

Portfolio management

Portfolio management can be defined as the process of managing a group of investments, typically real estate properties, in order to meet the overall investment objectives of the owner or investor. This includes a range of activities such as asset selection, acquisition, financing, leasing, and disposition. The objective is to optimize the performance of the portfolio as a whole, rather than focusing on individual assets in isolation. The ultimate goal is to maximize returns while minimizing risk over the long-term.


In real estate, a plat refers to a map, drawing or chart of a specific area, such as a subdivision, that shows the boundaries of individual lots together with streets and easements. The plat is typically filed with the local government to record the division of land and the placement of improvements on the property.

Plan assets

Plan assets refer to the funds and other assets held by a pension plan, including cash, securities, and other investments.


Roll-over risk

Roll-over risk refers to the risk that a borrower will not be able to refinance or roll over its debt when it comes due, typically used in the context of commercial mortgage-backed securities (CMBS) or other types of debt securities.

Renewal option

A renewal option is a clause in a lease agreement that gives the tenant the right to extend the lease for an additional period of time beyond the initial lease term. The renewal option typically includes specific terms for exercising the option, such as notice requirements and any changes in rent or other lease terms.

Replacement reserves

Replacement reserves refer to an amount of money set aside by property owners to cover the future replacement of major capital items in a building or property, such as HVAC systems, roofing, and elevators. The reserves ensure that the necessary funds are available when these components reach the end of their useful lives and need to be replaced.

Retail investor

When used to describe an investor, "retail" typically refers to an individual or small group of investors who buy and sell securities through a brokerage or other financial intermediary, as opposed to institutional investors who trade securities in large volumes. Retail investors typically have smaller portfolios and less experience in financial markets compared to institutional investors.

Reserve account

A reserve account refers to an account set up by a borrower to cover future expenses, such as maintenance or repair costs, and to protect the lender's interest. It is also known as an escrow account or impound account.

Rental concession

A rental concession is any incentive offered by landlords to attract or retain tenants, which may include rental abatement, tenant improvement allowances, moving allowances, free rent periods, and more.

Rent-up period

The rent-up period is the time frame following the completion of a new building or major renovation when the owner or leasing agent is actively marketing the property and seeking tenants to occupy the space. During this period, the building may not yet be fully occupied and is still in the process of reaching its stabilized occupancy level.


"Rent" is compensation or fee paid for the use or occupation of a property, such as land, buildings, or equipment.

Renewal probability

Renewal probability refers to the estimated percentage of tenants who are likely to renew their leases at the end of their term. This is an important metric for landlords and property owners to help estimate future cash flows and plan for potential vacancies.

Real estate mortgage investment conduit

A Real Estate Mortgage Investment Conduit (REMIC) is a special purpose vehicle that holds a pool of mortgages and issues multiple classes of mortgage-backed securities. REMICs were created under the Tax Reform Act of 1986 and are designed to avoid corporate double taxation.


"Rehab" generally refers to the process of extensive renovation or restoration of a property, often with the aim of updating it to modern standards or fixing any functional or structural issues. This can be done for a variety of reasons, such as to improve the property's value, extend its useful life, or comply with building codes or regulations.


Recapture can have different meanings in different contexts. In tax law, it refers to the IRS recovering the tax benefit of a deduction or credit previously taken by a taxpayer. This can happen in cases where there is a forgiveness of debt, among other situations. In real estate, recapture can refer to a clause in a lease agreement that gives the lessor a percentage of profits above a fixed amount of rent, or the right to terminate the lease if the tenant fails to achieve minimum sales.

Risk Profile

Risk Profile refers to the assessment and characterization of the level and types of risks associated with a particular property or investment. It involves identifying, analyzing, and understanding the potential risks and uncertainties that could impact the performance, value, and viability of an asset. Understanding the risk profile of different commercial real estate investment strategies is essential for investors to align their investment objectives with their risk tolerance. The risk profile of a CRE asset is influenced by various factors, including market conditions, property type, location, tenant quality, lease terms, financing structure, and macroeconomic trends. Commercial real estate investments can be categorized into four main risk profiles: Core, Core-Plus, Value-Add, and Opportunistic. Each risk profile corresponds to a different level of risk and potential return, catering to investors with varying investment preferences and objectives.

Rent commencement date

In real estate, the "Rent Commencement Date" refers to the date on which a tenant begins paying rent to the landlord or property owner. This date is typically specified in the lease agreement and is often tied to other lease-related events, such as the completion of tenant improvements or the delivery of possession of the space to the tenant. The rent commencement date is important because it marks the start of the tenant's financial obligations under the lease, including the payment of rent, utilities, and other charges. Depending on the terms of the lease, the rent commencement date may be adjusted if there are delays in construction or other issues that prevent the tenant from occupying the space on the originally agreed-upon date.


In finance, "Recourse" refers to the right of a lender or creditor to seek repayment or recover losses from a party other than the primary borrower in the event of default. This typically involves the ability of the lender to go after the personal assets of a party who is secondarily liable for the debt, such as a guarantor or co-signer. Recourse provides an additional layer of protection for lenders and helps to reduce their risk of loss in the event of default by the primary borrower. In some cases, loans may be structured with full recourse, meaning that the lender has the right to seek repayment from any party involved in the transaction. In other cases, loans may be structured with limited recourse, which limits the lender's ability to seek recovery from parties other than the primary borrower. The terms of recourse are typically spelled out in the loan agreement or other contractual documents between the parties.

Regional diversification

In investment management, "Regional diversification" refers to the practice of investing in a variety of geographic regions to reduce risk and increase potential returns. The specific definition of regions can vary depending on the investment manager, consultant, or plan sponsor, and may be based on geographic, economic, or other factors. Geographically defined regions may include countries, continents, or specific geographic areas such as North America, Europe, or Asia. Economically defined regions may be based on factors such as GDP, industry sectors, or trade patterns. For example, an investment portfolio may be diversified across regions to reduce exposure to regional economic or political risks, such as recessions, natural disasters, or changes in trade policies. Regional diversification can be achieved through investments in various asset classes, including stocks, bonds, real estate, and alternative investments such as private equity and hedge funds. The goal of regional diversification is to balance risk and return across different regions and asset classes to achieve a more stable and consistent portfolio performance.

Rating agencies

"Rating agencies" refer to independent firms that are engaged to rate the creditworthiness of securities for the benefit of investors. The major rating agencies in the CRE industry include Fitch Ratings, Standard & Poor's, and Moody's Investors Service. These agencies assign credit ratings to various types of securities, including commercial mortgage-backed securities (CMBS), to help investors assess the risk of default associated with these investments. The ratings assigned by these agencies are based on factors such as the creditworthiness of the borrower, the quality of the underlying collateral, and economic and market conditions that could impact the performance of the security. Investors use these ratings to help make informed decisions about investing in CMBS and other securities.

Real property

In real estate, "Real property" refers to land and all the structures, buildings, and improvements that are permanently attached to it. Real property includes not only the physical land and buildings but also all the natural resources, such as water, minerals, and vegetation, that are associated with the land. Real property is distinguished from personal property, which includes movable items that are not permanently attached to the land, such as furniture, appliances, and vehicles. Examples of real property include houses, commercial buildings, farms, forests, and undeveloped land. Real property can be bought, sold, leased, and used for a variety of purposes, including residential, commercial, industrial, agricultural, and recreational uses.

Real Estate Investment Trust

In real estate, a "Real Estate Investment Trust" (REIT) is a corporation or business trust that pools the capital of many investors to invest in and manage income-producing real estate assets, such as commercial properties, apartment buildings, or hotels. REITs offer individual investors the opportunity to invest in real estate without the hassle of owning and managing physical properties. To qualify as a REIT, a company must meet certain requirements set by the Internal Revenue Service (IRS), including distributing at least 90% of its taxable income to shareholders in the form of dividends each year. In exchange for meeting these requirements, a REIT is generally not required to pay corporate income tax at the federal level, allowing it to pass through the majority of its income to investors. REITs are traded on major stock exchanges like other publicly traded companies, providing investors with liquidity and the potential for capital appreciation as well as income.


"Rating" refers to the grade assigned by a rating agency, indicating the credit quality or creditworthiness of the underlying assets. The rating system is typically used to evaluate the risk of default on commercial mortgage-backed securities (CMBS), which are pools of commercial real estate loans that are securitized and sold to investors. The ratings assigned to CMBS are based on factors such as the creditworthiness of the borrowers, the quality of the properties securing the loans, and the overall economic and market conditions that could impact the performance of the underlying assets. The rating scale typically ranges from AAA (the highest rating indicating the lowest credit risk) to D (the lowest rating indicating the highest credit risk).

Real estate fundamentals

In real estate, "Real estate fundamentals" refer to the factors that drive the value of real property. These factors include the supply, demand, and pricing of land and/or developed space in a given geographic or economic region or market. Real estate fundamentals can vary widely depending on the location and type of property, as well as the overall economic conditions of the region or market. Key factors that impact real estate fundamentals include population growth, employment rates, income levels, interest rates, construction costs, and zoning and land-use regulations. Real estate investors and analysts use these fundamentals to assess the potential return on investment of a particular property or market and to make informed decisions about buying, selling, or developing real estate assets.

Real Assets

In finance and investing, "Real Assets" generally refers to physical or tangible assets that have intrinsic value and tend to provide a "real return" over time, often linked to inflation. This definition encompasses a wide range of investments, including real estate, infrastructure, timberlands, agrilands, commodities, precious metals, and natural resources such as oil, gas, and minerals. Real assets are typically considered as an alternative investment class and are increasingly popular among investors due to their potential to provide long-term capital appreciation, income generation, and portfolio diversification. Additionally, real assets may have a low correlation with traditional stocks and bonds, which can help to reduce portfolio risk and improve overall performance.


Synthetic lease

A synthetic lease is a financing structure that appears as a lease for accounting purposes but as a loan for tax purposes. Under a synthetic lease, a lessor (often a special purpose entity created for this purpose) purchases a property and leases it to a lessee, who is typically the company that will use the property for its operations. The lessee has the benefits of ownership, such as control of the property and the ability to deduct lease payments as operating expenses, while the lessor retains legal ownership of the property. At the end of the lease term, the lessee typically has the option to purchase the property.


A survey is the process of measuring and mapping a parcel of land to determine its boundaries and physical features. The resulting document is called a survey, and it provides valuable information for property owners, buyers, and real estate professionals.


A sublessee is a person or entity who leases or rents property from a lessee, who is not the owner of the property. The sublessee essentially takes over some or all of the leased space for a certain period of time, but the original lessee (the tenant) remains responsible for paying rent and complying with the terms of the lease.

Surface rights

Surface rights refer to the rights granted to an individual or entity to use and control the surface of a particular piece of land, which may include the right to build structures, grow crops, or graze livestock. These rights are typically separate from the ownership of any minerals or natural resources that may exist beneath the surface.

Special servicer

A special servicer is a firm that is typically hired by the holder of a mortgage-backed security or other structured finance product to handle loan workouts or asset management on loans that are in default or otherwise distressed. They are responsible for managing the default process and maximizing the recovery value of the assets on behalf of investors.


A "surety" is a person or entity that agrees to be responsible for the debt, default, or obligation of another party. In other words, a surety is a guarantor who promises to fulfill the obligations of another if that party fails to do so. The surety is responsible for paying the debt or fulfilling the obligation if the original party defaults.

Strip center

A "strip center" is a commercial development consisting of a long, narrow row of retail stores with no enclosed common area. Typically, strip centers are anchored by a larger store or restaurant and serve a local community or neighborhood.

Specified Assets

Specified assets refer to assets that are identified and agreed upon by joint venture partners for acquisition or development within a joint venture structure. These assets are typically identified beforehand and may be a single property or a portfolio of properties.

Special assessment

A special assessment is an additional property tax imposed by a government agency or municipality to pay for a specific improvement or service that benefits the property owner, such as a new road or sewer line. The assessment is based on the assessed value of the property and is typically collected over a period of years.

Space plan

In real estate, a space plan is a detailed graphic representation of a tenant's space requirements, showing the locations of walls, doors, and other features of the space, as well as room sizes and sometimes furniture layouts. It is often used by architects, interior designers, and space planners to help tenants visualize their space and ensure that it meets their needs.

Site plan

A site plan is a detailed architectural or engineering drawing that shows the layout of improvements on a parcel of land, including buildings, roads, parking lots, landscaping, and other features. It is often required by local planning and zoning authorities as part of the approval process for new development or construction projects.


In real estate, a slab is a concrete foundation that is poured directly onto the ground, without a basement or crawl space. It is a flat, monolithic concrete pad that provides a sturdy base for a building or structure. Slab foundations are commonly used in areas with a high water table or poor soil conditions.


While "socialize" can have different meanings in different contexts, in the real estate industry, it is commonly used to refer to the process of sharing information or ideas with others in order to gather input, feedback, or consensus. For example, a developer might "socialize" a proposed development plan with community members or local officials to gauge their support and address any concerns or objections. In this context, "socialize" means to engage in a dialogue or discussion with others to ensure that the proposed plan is appropriate and acceptable to all stakeholders involved.

Site development

Site development refers to the process of preparing a parcel of land for construction or development, including the installation of any necessary infrastructure, such as roads, utilities, and drainage systems, as well as grading and landscaping.

Site analysis

Site analysis refers to the process of evaluating a piece of land to determine its suitability for a particular development or use. This evaluation may include considerations such as zoning, topography, soil composition, environmental factors, accessibility, and market demand. Site analysis is an important step in the real estate development process, as it helps developers to make informed decisions about whether or not to pursue a particular project, and to identify any potential issues or challenges that may need to be addressed.

Single Real Estate Operating Company fund

"Single REOC fund" is a term used in real estate investment to describe a type of fund offered by a fully or partially vertically integrated real estate operating company (REOC). In this type of fund, the REOC sponsoring the fund is also the operator of the assets, and the fund does not enter into joint ventures with third-party operators. This is in contrast to a multi-sponsor fund, where multiple sponsors contribute capital and the fund invests in assets managed by various operators.

Sidecar Fund or Investment

A sidecar fund or investment is a type of co-investment vehicle that operates alongside a primary private equity fund. The sidecar fund is typically structured as a separate investment vehicle that is managed by the same fund sponsor as the primary fund. Its purpose is to provide additional capital to the primary fund for specific investments that require more equity than the primary fund can commit on its own. The sidecar fund may have a right of second opportunity to invest in these larger deals, after the primary fund has committed its own capital.


A setback is the required minimum distance that a building or structure must be located away from a property line, street, or other reference point. The purpose of setbacks is to ensure that buildings are not too close to each other or to public spaces, and to provide for light, air, and privacy.

Separate account

A "separate account" is a type of investment account where an investor hires a professional asset manager or investment adviser to manage their assets in accordance with their specific investment objectives and guidelines. In real estate, a separate account is a relationship where an investment manager or adviser is retained by a single pension plan sponsor to source real estate product under a stated investment policy exclusively for that sponsor.

Senior classes

"Senior classes" refer to the highest-priority classes of securities that receive payments from the underlying mortgage loans. These securities are usually the first to receive principal and interest payments and are considered less risky than lower-priority securities.

Self-managed REIT

A self-managed REIT is a real estate investment trust that manages its own properties through its own employees, rather than outsourcing management to a third-party company. This allows the REIT to have more control over the management of its properties and potentially reduce management fees.

Self-administered REIT

A self-administered REIT is a type of real estate investment trust where the management is made up of employees of the REIT or an entity with the same economic ownership as the REIT. This is in contrast to an externally managed REIT, where the management is provided by an external company.

Seisen (seizen)

"Seisen" or "seizin" refers to the right to possess and own real property. It implies that the owner has a good title to the property and the legal right to possess it.

Security deposit

A security deposit is a sum of money paid by a tenant to a landlord, usually at the beginning of the lease term, to cover any damage caused by the tenant during the lease term or to cover any unpaid rent. The landlord holds the deposit until the end of the lease term and returns it to the tenant, less any deductions for damages or unpaid rent. In some cases, the security deposit may take the form of a letter of credit or other financial instrument.

Secondary, or follow-on, offering

A secondary, or follow-on, offering is an issuance of new stock for public sale by a company that has already had an initial public offering (IPO) and is already publicly traded.

Second-generation or secondary space

Second-generation or secondary space refers to previously occupied space that becomes available for lease, either directly from the landlord or as sublease space.

Sales comparison approach

"Sales comparison approach" it is an appraisal method used to estimate the value of a property by comparing it to recently sold properties with similar characteristics.

Specified investing

"Specified investing" refers to an investment strategy in which investors have specific control over the selection of individual real estate properties or portfolios. This can include direct investment in individual properties, as well as investment in commingled funds that provide investors with a high degree of transparency and control over the underlying real estate assets. In specified investing, investors typically have a high degree of involvement in the due diligence process and the selection of individual assets, and they may also have some degree of input into the management and operation of those assets. This strategy is often contrasted with blind-pool investing, in which investors commit capital to a fund without knowing the specific assets in which their money will be invested. Specified investing can offer investors greater transparency and control over their investments, but it can also require more time and effort in the due diligence and selection process.

Straight lease (flat lease)

In commercial real estate, a "Straight Lease" (also known as a "Flat Lease") is a lease agreement that specifies a fixed amount of rent that is to be paid periodically, typically monthly, during the entire term of the lease. The rent remains the same throughout the entire lease term, and there are no provisions for rent increases or adjustments. A straight lease may be preferred by tenants who want more certainty and stability in their rent obligations, and by landlords who want to avoid the administrative and legal complexities of negotiating and enforcing rent increases. However, straight leases do not provide for adjustments in the event of changes in market conditions or inflation, which could lead to the rent becoming less competitive over time. For this reason, some landlords may prefer to use other types of lease structures, such as step-up leases or indexed leases, that provide for some degree of rent adjustments over time.

Step-up lease (graded lease)

In commercial real estate, a "Step-Up Lease" (also known as a "Graded Lease") is a lease agreement that specifies predetermined increases in rent at set intervals during the term of the lease. The step-up provisions can be structured in various ways, such as a fixed dollar amount or a percentage increase, and may be applied annually or at other intervals. The purpose of a step-up lease is to provide the landlord with an increasing stream of rental income over time, while giving the tenant some predictability in their future rent obligations. Step-up leases are often used in markets where rental rates are expected to increase over time, or where a landlord wishes to hedge against inflation or other market risks. Tenants may negotiate various terms related to the step-up provisions, such as the timing and amount of the increases, or provisions for early termination or rent abatement.

Secondary market

In finance, the "Secondary Market" refers to a marketplace where existing financial assets, including securities, bonds, and loans, are bought and sold among investors, rather than directly from the issuer. In the context of mortgage loans, the secondary market refers to the market where existing mortgage loans are packaged and securitized into mortgage-backed securities (MBS) and then bought and sold among investors. This allows banks and other lenders to sell off their mortgage loans, freeing up capital to make new loans, while also allowing investors to earn a return on their investment through the interest and principal payments made on the underlying mortgage loans. The secondary market for mortgage loans is typically made up of large institutional investors, such as pension funds, hedge funds, and insurance companies, as well as government-sponsored entities like Fannie Mae and Freddie Mac. The secondary market is an important source of liquidity for mortgage lenders, and helps to ensure that mortgage loans remain widely available to borrowers.

Speculative space

In commercial real estate, "Speculative Space" refers to space within a new development project that is built on a speculative basis, meaning it has been constructed without a tenant already in place. This is in contrast to "pre-leased" space, which is leased by a tenant before the start of construction. Speculative space is typically built in anticipation of demand from tenants, and the developer takes on the risk that they will be able to find tenants to fill the space after construction is complete. Developers may offer incentives or concessions to attract tenants to speculative space, such as rent abatements or build-out allowances, and may also offer shorter lease terms or flexible lease options to make the space more attractive to prospective tenants. Speculative space can be a key indicator of market demand for commercial real estate in a given area, and its availability can affect rental rates and other market conditions.

Soft cost

In finance, "Soft Costs" refer to the non-construction-related expenses associated with a real estate investment or development project, such as architectural and engineering fees, legal fees, permit fees, financing fees, and other administrative expenses. Soft costs are generally deductible as operating expenses and can help to reduce taxable income for the year. In the context of equity investments in real estate, soft costs may also include expenses such as due diligence fees, management fees, and other expenses related to the acquisition and management of the investment. However, the tax treatment of these expenses may vary depending on the specific circumstances of the investment and the applicable tax laws.


In finance, a "Servicer" refers to a company or organization that is responsible for managing and administering a pool of loans or other financial assets on behalf of a trustee or other third-party beneficiary. Servicers typically perform a variety of tasks related to loan or asset management, including collecting loan payments, processing borrower requests and inquiries, managing escrow accounts, and handling delinquencies and defaults. In the context of mortgage-backed securities (MBS), the servicer is responsible for collecting monthly mortgage payments from borrowers and distributing the payments to the MBS investors, as well as handling any delinquencies or defaults on the underlying mortgages. The servicer also acts as an intermediary between the borrower and the investor, providing customer service and support to borrowers and working to maximize the value of the mortgage assets for the investors. Servicers may be independent third-party companies, or they may be affiliated with the lender or investor that originated the loans or assets.

Secondary financing

"Secondary financing" refers to a type of loan on real property that is secured by a lien that is subordinate to an existing first mortgage loan. This means that if the borrower defaults on the loans and the property is foreclosed upon, the holder of the first mortgage loan will have priority over the holder of the secondary financing in terms of recouping their investment. Secondary financing is typically used when the borrower is not able to obtain all of the financing needed to purchase or refinance a property from a single lender. Instead, the borrower will obtain a primary mortgage loan from one lender and then secure a secondary loan from another lender to cover the remaining amount needed. Secondary financing may be in the form of a second mortgage or a home equity loan, and it may be used for a variety of purposes, including home improvements, debt consolidation, or other personal expenses. Because secondary financing is considered riskier than primary financing, lenders may charge higher interest rates and fees to offset the additional risk.


Turnkey project

A turnkey project is a type of construction project in which the builder or developer completes the entire project and delivers it to the client or owner in a ready-to-use or "turnkey" condition. This means that the client can immediately occupy or use the building or facility without the need for any additional construction or customization work. The builder is responsible for every aspect of the project, from design and planning to construction and finishing. Turnkey projects are commonly used in real estate development, as well as in the construction of manufacturing facilities, data centers, and other commercial or industrial facilities.


In the context of CMBS, the trustee is a third-party entity appointed to oversee the flow of funds and manage the interests of bondholders in the CMBS transaction. The trustee is responsible for collecting payments from the servicer, distributing principal and interest payments to bondholders, and enforcing the terms of the pooling and servicing agreement (PSA) that governs the CMBS transaction.

Tenant improvement

Tenant improvement (TI) refers to the improvements or alterations made to a leased commercial or industrial space by the tenant or on behalf of the tenant. These improvements may include things like painting, carpeting, partition walls, lighting, and other modifications to the space to meet the tenant's specific needs.

Tenant at will

A tenant at will is a person who occupies a property with the owner or landlord's permission, but without a lease or any guarantee of a fixed term of occupancy. The tenancy can be terminated by either party at any time, as long as proper notice is given.

Triple net lease

A triple net lease, also known as a "NNN lease," is a lease agreement where the tenant is responsible for paying for all three "nets" - property taxes, building insurance, and maintenance/repairs.


Tranche refers to a specific portion of a larger financial security or investment that has been divided into smaller parts. Each tranche has its own set of characteristics, such as its level of risk, maturity, or interest rate. In the context of commercial mortgage-backed securities (CMBS), tranches refer to the different classes of securities that are created by dividing the underlying pool of loans into different risk segments. Each tranche has a different level of risk and expected return, with the most senior tranche being the safest and the lowest tranche being the riskiest.

Title search

A title search is a review of public records to verify a property's legal ownership and find any claims or liens on the property. It's typically performed by a title company or attorney to ensure that the seller has the right to transfer ownership and that there are no outstanding liens or judgments against the property.

Title insurance

Title insurance is a type of insurance policy issued by a title company that protects real estate owners and lenders against any losses that may arise from a defect in the title or from liens or encumbrances on the property. The policy guarantees that the title is valid and that the insured has the right to sell, transfer, or mortgage the property.


Title is the legal term used to describe the owner's right to possess and use a piece of real estate property. It also refers to the collection of legal documents that establishes the right to own or use the property, and any claims or liens that may affect the property.

Time-weighted average annual rate of return

The time-weighted average annual rate of return is a method of calculating the average annual return on an investment portfolio over a specific period of time. It is calculated by determining the average return for each year in the period, and then compounding those returns to arrive at an overall average annual return. This method is used to eliminate the effects of cash inflows and outflows during the period, which can distort the true performance of the portfolio.

Tenant improvement (TI) allowance

A TI (Tenant Improvement) allowance is the amount of money that a landlord contributes toward the cost of tenant improvements, such as renovations, alterations, or additions made to the leased premises by or for the tenant. The allowance is typically a fixed amount agreed upon in the lease, and the tenant is responsible for any costs that exceed this amount.

Tenant mix

Tenant mix refers to the combination of tenants within a multi-tenant property, and is often used to evaluate the quality and diversity of the property's income stream. Institutional investors may prefer a tenant mix that includes a variety of tenants with different levels of creditworthiness, such as national and regional credit tenants as well as local non-credit tenants. The goal is to create a well-balanced and stable income stream for the property.

Tenant (lessee)

A tenant, also known as a lessee, is someone who rents real estate from another and holds an estate by virtue of a lease.

Tax roll

tax roll is a list or record of all land parcels in a specific area, usually a county or municipality, along with their assessed values and the corresponding tax amounts. It serves as the basis for calculating property taxes and is maintained by the local government's tax assessor or collector.

Tax lien

A tax lien is a legal claim against a property for unpaid taxes. It gives the taxing authority the right to seize the property or sell it to recover the unpaid taxes.

Target date fund

A target date fund is an investment vehicle that adjusts its asset allocation over time to become more conservative as the target date, typically the investor's planned retirement date, approaches. These funds are designed to provide investors with a diversified portfolio that is appropriate for their age and risk tolerance. The glide path of the fund determines how the asset mix changes over time, and different target date funds may have different glide paths. Some target date funds may include alternative investments, such as real assets, to diversify their portfolios and potentially increase returns.

Tax base

The tax base refers to the assessed valuation of all real property within a taxing authority's jurisdiction, which is used to calculate the amount of tax due based on the tax rate. It is essentially the total taxable value of property within a particular area.

Tag-Along Rights

Tag-Along Rights are a contractual provision that allows minority shareholders to sell their shares in a company when a majority shareholder decides to sell their stake. This provision is meant to protect minority shareholders by giving them the right to participate in the sale and receive the same terms as the majority shareholder. Tag-along rights are often included in shareholder agreements and can be triggered by various events, such as the sale of a controlling stake in the company. They are sometimes also referred to as "co-sale rights."


A taking occurs when the government interferes with a property owner's use or enjoyment of their property, even if they do not physically seize or appropriate it. The most common type of taking is eminent domain, which is the power of the government to take private property for public use, with just compensation to the owner. Other types of takings can include regulations that restrict the use of property in a way that deprives the owner of significant economic value or the right to exclude others from the property.

Trade fixtures

In real estate, trade fixtures are personal property items that are attached to a structure and are used for business purposes. These items can include machinery, equipment, furniture, and other items that are necessary for the operation of a business. Trade fixtures are generally removable upon the termination of a lease, because they are considered to be the property of the tenant and not part of the real estate itself. This is in contrast to improvements made to the property that are permanently attached and become part of the real estate, such as walls or fixtures. Trade fixtures can be an important consideration for both landlords and tenants when negotiating a lease, as they can impact the condition of the property and the ability of the tenant to conduct their business.


In finance, the term "term" can refer to the duration or lifetime of a loan, typically expressed in months or years. The term is the length of time over which the borrower is expected to make payments to repay the loan. For example, a 30-year mortgage loan has a term of 30 years, while a 5-year business loan has a term of 5 years. The term is an important consideration for both lenders and borrowers, as it affects the amount of interest that will be paid over the life of the loan, as well as the monthly payment amount. Loans with longer terms generally have lower monthly payments but higher total interest costs, while loans with shorter terms have higher monthly payments but lower total interest costs.


Unimproved land

"Unimproved land" typically refers to land that has not been developed with any permanent structures or improvements, such as buildings, roads, or utilities. It may also refer to land in its natural state, without any landscaping, grading, or other modifications.

Unrated classes

Unrated classes are generally the most subordinated classes of CMBS, meaning they have the lowest priority in terms of receiving cash flows from the underlying collateral.


"Use" refers to the specific purpose for which a parcel or building is intended to be used or for which it has been designed or arranged. This term is often used in real estate to describe the legal, zoning, or practical use of a property.

Under contract

"Under contract" typically refers to the period of time between the acceptance of an offer to purchase a property and the closing of the sale, during which the buyer and seller are working towards finalizing the transaction.

Under construction

"Under construction" refers to the period during which a building or project is being built, but it has not yet been completed or occupied. This term is used to describe a property that is still in the construction phase and not yet ready for use.

Umbrella partnership real estate investment trust

An Umbrella Partnership Real Estate Investment Trust (UPREIT) is a tax-deferred structure in which a REIT contributes its real estate assets to a partnership or a limited liability company (LLC) that it controls, and in exchange receives partnership or LLC units. The property owners can then exchange their property for operating partnership units in the new partnership, deferring capital gains taxes until they sell the partnership units.


In the context of real estate, an underwriter is a financial institution or investment banking firm that helps to facilitate the issuance of new securities, such as stocks or bonds, by guaranteeing that the entire issue will be purchased. In this role, the underwriter typically works with the issuer of the securities to determine the terms of the offering, including the price, the number of securities being offered, and the timing of the issuance. The underwriter then sells the securities to investors at a markup, with the markup representing the underwriter's profit on the deal. In real estate, underwriters may also play a role in the origination of mortgages and other real estate-related loans. In this context, an underwriter helps to assess the risk associated with the loan and determines whether it is likely to be repaid according to the terms of the loan agreement. The underwriter may also help to structure the terms of the loan, such as the interest rate and repayment period, and may work with other parties, such as mortgage brokers or loan officers, to facilitate the closing of the loan.


Unencumbered property refers to property that is free and clear of any liens, mortgages, or other encumbrances that may affect its title or value.



A variance is a deviation or exception granted by a local zoning board that allows a property owner to use their property in a way that would otherwise be prohibited by a zoning ordinance. The variance is typically granted when the property owner can demonstrate that the zoning ordinance would cause them undue hardship, and that the variance would not adversely affect neighboring properties.


A warrant is a financial instrument that gives the holder the right, but not the obligation, to buy or sell an underlying asset, such as a stock, at a predetermined price within a certain time frame.

Weighted-average cost of capital

Weighted-average cost of capital (WACC) is the average cost of all the capital used by a company to fund its operations, including debt and equity.

Weighted-average coupon

The weighted-average coupon is a calculation used in mortgage-backed securities (MBS) that reflects the weighted average of the interest rate on the underlying mortgages in the pool. It is calculated by taking the total interest paid on all of the mortgages in the pool, dividing it by the total amount of the mortgages, and then weighting the result by the outstanding balance of each individual mortgage. The weighted-average coupon is an important factor in determining the yield and risk profile of an MBS.

Weighted-average rental rates

"Weighted-average rental rates" is the average rental rate calculated by multiplying the rental rate for each unit by the number of units with that rental rate, then adding those products together and dividing by the total number of units. This method gives more weight to units with higher rental rates, hence the term "weighted-average".


A workout is a process where a borrower and lender try to negotiate new terms for a loan to avoid default or foreclosure. It may involve modifying the loan's interest rate, principal balance, or repayment schedule. The goal is to find a mutually beneficial solution for both parties.


A write-down is the reduction in the book value of an asset because it is overvalued compared to the current market value. It is an accounting method to recognize a loss on an asset or investment.


A write-off is the accounting procedure used to remove an asset or liability from the balance sheet after it has been determined to be uncollectible or of little value. It is typically charged as a loss.


Yield is the return on an investment and can be expressed as a percentage of the amount invested. Yield can be calculated as the income earned on an investment, such as dividends or interest payments, divided by the initial cost of the investment.

Yield maintenance premium

A yield maintenance premium is a fee paid by a borrower to compensate investors for any loss of income that results from the prepayment of a loan. This fee is typically calculated based on the difference between the interest rate on the loan being prepaid and the interest rate on a comparable U.S. Treasury security, multiplied by the remaining term of the loan.

Yield spread

Yield spread refers to the difference in yield between a debt instrument or other investment and a benchmark value, typically U.S. Treasuries of the same maturity.


Zoning is the practice of dividing a city or town into zones or districts and applying regulations to control the use of land and the construction of buildings within those zones or districts. These regulations often specify the permitted uses, building height and setback requirements, lot size and density requirements, and other design and development standards for each zone or district.

Zoning ordinance

A zoning ordinance is a local law or regulation that sets out the specific ways in which land within a given area or zone may be used and developed. It typically divides an area into zones or districts and establishes rules and standards for each zone or district, such as permitted land uses, building heights and setbacks, lot sizes, parking requirements, and other design and development criteria.