National Tenant

National tenant refers to a tenant that has a national footprint with locations throughout the US. The term is most frequently used in the context of retail properties.

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Natural Monopoly

A natural monopoly is a market that is controlled by one firm. This one firm supplies all consumer demand in the market. There are no other competitors within the market. A natural monopoly creates high barriers to entry and generally operates at a large scale. For those two reasons, competitors are not able to enter the market. By the time any competitors come along, the one firm has already taken virtually all consumer demand, built out an elaborate infrastructure for delivering its services, and has become regulated by the government.

Barriers to entry come in the form of high fixed costs. These costs are a result of the massive infrastructure needed to create a natural monopoly. For example, utility companies such as electric companies must build miles and miles of power lines and substations. Railroads must do the same for rail tracks and train cars. Gas and oil companies must build out pipelines and refineries.

For a natural monopoly to recoup those high fixed costs, it must operate on a large scale. Operating on a large scale doesn’t mean the natural monopoly is the only company supplying some specific service or product. One electric company may supply the northeast region of the U.S. while a different one supplies the northwest. Both are natural monopolies within their own region and are different utility companies that do not compete.


To ensure that natural monopolies do not take advantage of consumers, they are regulated by the government. This is the case for utility companies such as electric and water, railroads, and gas and oil companies. Without competitors to offer choices, the government is the only option to ensure that a quality product at a reasonable price is delivered to consumers.


Just because a company is a natural monopoly doesn’t mean it will be profitable. In fact, many natural monopolies are not. But because the natural monopoly provides an essential service (i.e., electricity or water) and possesses the required infrastructure to deliver that service, the government will often subsidize the firm’s operations. These firms may also sell bonds to help fund operations.

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Net Absorption

The amount of occupied space at the end of a period less the amount of space occupied at the beginning of the same period.

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Net Asset Value

Net asset value, or NAV, is defined as the total value of an entity’s assets less the total value of its liabilities. NAV is typically used to determine the share price of a pooled investment fund, based off how many shares are currently outstanding at a given time. In practice, NAV is used by funds registered with Securities and Exchange Commission, such as a mutual fund or real estate investment trust. In reality, however, any business or financial product that records its assets and liabilities can have a net asset value.

For example, say a REIT holds $15 million worth of real estate in its portfolio, and has a 10,000 shares outstanding. Given that the REIT is 50% leveraged, it would be assumed to hold $7.5 million in debt. NAV would then be calculated as so:

($15 million - $7.5 million) / 100,000 shares outstanding = $75 NAV

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Net Cash Flow

Net cash flow can be determined using the formula net operating income (NOI) less debt service payments, tenant improvements,

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Net Income

Net income is the total revenue minus total expenses. It represents the amount of money remaining after all operating expenses, interest, taxes and preferred stock

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Net Operating Income (NOI)

Net operating income is a calculation used to analyze real estate investments that generate income. Net operating income equals all revenue generated from the property less

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Net Present Value (NPV)

Net present value (NPV) represents the amount by which the expected cash flows of an investment exceeds the initial amount invested.

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Net Square Footage

Net square footage is the usable or “rentable” area of a specified space (e.g. a suite, floor, or an entire building). This measurement generally excludes non-rentable areas

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Net Worth

Net worth is a gauge of financial health typically defined as the difference between an individual’s or a business’s assets and liabilities. It is a measure that seeks to quantify the value of an entity’s owned assets, and the abilities of these assets to satisfy all outstanding liabilities. Ultimately, it provides insight into an entity’s financial position at a given point in time.

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New Market Tax Credits

Designed to increase the flow of capital to businesses and low-income communities by providing a modest tax incentive to private investors.

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Nominal GDP

Nominal GDP (gross domestic product) is a measure of economic production for a country. It includes inflation, which allows nominal GDP to use current prices or the price that products and services are sold for during that year. This is in contrast to real GDP, which does not include inflation, making nominal GDP a higher value than real GDP. Nominal GDP can be compared from quarter to quarter during a single year. To compare GDP across different years, real GDP must be used. To compare GDP across years also requires a base year.

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Non Profit Organization

A nonprofit is an organization, also called an NPO, that doesn’t pay taxes on its earnings. The IRS has granted the nonprofit a tax-exempt status because it both furthers a social cause and benefits society. Some nonprofits take in donations to help further their cause. Individuals and businesses donating to a nonprofit do not have to pay taxes on those donations. Financial documents of a nonprofit must be made public so donors can see how money is being used by the organization.

The technical IRS tax code name for a nonprofit is a 501(c)(3). 501(c)(3) status must be requested for the organization to receive its tax-exemption. Additionally, the organization has to maintain compliance through its state.

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Non-Accredited Investor

An investor who does not meet the special requirements for an accredited investor under the Securities & Exchange Commission’s Rule 501 of

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Non-Like Kind Investment

In order to qualify as an investment in a QOZ, capital obtained by the sale of assets to provide liquidity for investment in a QOZ do not have to be like-kind assets. For example, an investor can sell stocks or precious metals and still reap the benefits of QOZ investment if he or she invests in a business or real property in a QOZ.
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Non-Recourse Loan

Non-recourse loan is a loan that limits the lender’s remedies to foreclosure of the mortgage and acquisition of the collateral or property in the event of financial default

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Non-traded REITs

Non-Traded REITs are a type of security that invests in real estate properties and mortgages, but is not listed on an exchange and is not publicly traded. Like any REIT, non-traded REITs distribute at least 90 percent of the company’s taxable income to shareholders in the form of dividends, however, non-traded REITs are very illiquid and usually constitute a minimum holding period per investment. Non-traded REITs are difficult to value as well, lacking an organized exchange for valuing purposes.

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Nonprofit Organization

A nonprofit organization (NPO) does not pay taxes on earnings or donations used to run the business. The IRS grants NPOs a tax exemption status because they provide a social benefit. Those who make donations to an NPO, whether that be from individuals or other businesses, are able to take tax deductions on the donations. NPOs are also called 501(c)(3) organizations, after the section of the tax code that grants them tax-exempt status.

To qualify as an NPO, a business must serve the public. This can be through a service or the sale of products (or both). Financial information about the company must be made public. This allows donors to make informed decisions about whether to contribute money to the organization’s cause or not.

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Nonqualified Financial Property

Nonqualified financial property’’ is defined in §1397C(e) as: debt, stock, partnership interests, options, futures contracts, forward contracts, warrants, notional principal contracts, annuities and other similar property.

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Nonresident Alien

Nonresident aliens are non-citizens of the U.S. They are exempt from a Green Card. Teachers, students, foreign nationals (for tax purposes), and those seeking medical services are common nonresident aliens. Nonresident aliens pay taxes on a trade or business related to the U.S. Resident aliens (qualified persons under the substantial presence test) are those who have been in the U.S. for 31 days or resided in the U.S. for more than 183 days within a 3 year period.

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Normal Good

Normal goods have a relation to a person’s income. As income increases, purchases of normal goods also increase but by a lesser amount. This is because the income elasticity of normal goods is between 0 and 1. Elasticity can be calculated by dividing the increase in demand for a good by the increase in wages. For example, a 15% increase in wages results in a 5% increase in the purchase of clothing. The income elasticity is therefore .05/.15 = 0.33.

Normal goods are different from inferior or luxury goods. Inferior goods have an income elasticity of less than 1, while luxury goods have an income elasticity that is greater than 1.

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