The original purchase price of an asset plus its acquisition costs plus any capital improvements less the cumulative depreciation deductions
Paying off debt over a period of time with a fixed repayment schedule in regular installments. Monthly mortgage payments are often comprised of
An estimate of a property’s fair market value by an authorized person with applicable knowledge and expertise. Appraisals can be used for taxation
A property that has increased in value over time. This increase can occur for a number of reasons including increased demand or weakening supply,
Appreciation is the increase in the value of an asset over time, which can be affected by a number of factors such as increased demand, weakening supply, or changes in inflation.
Bankruptcy remote is typically used when discussing a special purpose entity. A bankruptcy remote entity is a separate legal entity whose bankruptcy or insolvency
Base rent is the minimum monthly rent due pursuant to a lease. Base rent does not account for expense reimbursements or percentage rent, which
A beneficial interest, typically referred to in manners concerning trusts, is the right to receive benefit from assets held by another party.
Any person who is eligible to receive distributions from a trust, will, or life insurance policy.
Although not specifically defined (or even mentioned) in IRC Section 1031, the term “boot” is commonly used and refers to the fair market value of cash,
A person or firm in the business of buying and selling securities, operating as both a broker and a dealer, depending on the transaction.
Capital Expenditures are, in the context of commercial real estate, funds used by a company to acquire or upgrade physical assets that cannot be expensed as
In the context of commercial real estate, capital reserves are funds designated for long term capital investment projects or
Capitalization rate is the initial rate of return an investment property is expected to generate. The Capitalization Rate is determined by dividing the
Cash flow is the net amount of cash moving in and out of a business, usually measured during a specified, limited period of time.
In the context of commercial real estate, cash and cash equivalents held in short term accounts used to cover things such as
Ratio of annual before-tax cash flow from an investment to the total amount of cash invested, represented as a percentage.
Expenses over and above the price of the property that buyers and sellers normally incur to complete a real estate transaction.
Commercial real estate is real estate intended to generate income or profit for the owner of the property. Generally includes all categories of non-residential real estate
The contribution or fee paid collectively by individual tenants for the maintenance and upkeep of the non-exclusive areas of the premises.
Core properties exhibit the lowest risk and lowest potential returns amongst the four major commercial real estate risk profiles, and represent
Core-plus properties are generally similar to core properties, but have a slightly higher degree of risk and potential for slightly higher returns than core properties.
Debt service is the cash that is required for a particular time period to cover the repayment of interest and principal on a debt.
In the context of commercial real estate, a measure of the cash flow available to pay current debt obligations. It is calculated as the annual
A separate legal entity created as a trust under Delaware state laws. Despite the name, neither the property nor the investor need to be located
In a Delaware Statutory Trust (DST), the Delaware trustee maintains a physical address in the state of Delaware in order to prevent the DST from
In our context, depreciation refers to the allocation of an asset’s cost over the timeframe of its “useful life”, or duration for which it will be useful
DST Interests represent equity ownership in a large property by multiple investors through an investment structure known as a
A DST Sponsor is a person or entity that creates a Delaware Statutory Trust (DST) to hold real property asset(s) and arranges for the issuance of
An investigation or audit of a potential investment to confirm all material facts regarding a transaction. For example, when analyzing a potential property
Effective Gross Income (EGI) is income generated by a property including base rent and miscellaneous income, less vacancy and collection losses.
The value of an asset less the value of all liabilities on that asset. For example, if an investor owned a property with a market value of
Equity Interests are ownership interest in a business entity, from the concept of equity as ownership.
One or more shares in the ownership of a business or corporation that are purchased by investors. In contrast to debt investments, equity investments
Expected return is the amount an investor would anticipate receiving on an investment that has various known or expected rates of return.
First loss position is an investment’s or security’s position that will suffer the first economic loss if the underlying assets lose value or are foreclosed upon.
The real or expected period of time which an investment is attributable to a particular investor.
A trustee who is not related to the beneficiary of the trust and does not stand to inherit any property under the trust.
While not a precisely defined term, an institutional-grade, or institutional-quality property generally refers to a property of sufficient size and stature to
A legal document outlining the terms under which one party agrees to rent property from another party.
Lease termination fee is a payment made by the tenant or resident to the landlord in order to legally end a lease early and not be held liable for the remaining time.
Claim or right to enjoy the exclusive possession and use of an asset or property for a stated definite period, as created by a written lease.
The multiplier to a tenant's useable space that accounts for the tenant's proportionate share of the common area (restrooms, elevator lobby, mechanical rooms, etc.)
The primary lease that controls other sub-leases and may cover more property than all sub-leases combined.
Tenant which is party to direct lease with the property owner which subsequently sub-leases all or a portion of the property to other occupants.
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
An investor who does not meet the special requirements for an accredited investor under the Securities & Exchange Commission’s Rule 501 of
Opportunistic properties exhibit the greatest risk but highest potential returns within the four major commercial real estate risk profiles
Rent due in lieu of, or in addition to base rent that is paid to landlords based on tenant sales. A percentage rent clause is nearly exclusive to
Preferred Equity is an equity investment which is superior in interest to common equity but subordinate to debt. Preferred equity is secured by a
An offering of securities that is not registered with the Securities and Exchange Commission (SEC) and which are sold not through a
Private placement memorandum is an offering document for a private placement that contains relevant disclosures so that an investor may make an informed investment decision.
Pro Forma is a forward-looking cash flow projection based on a set of assumptions. Pro forma financial statements depict future financial results if the underlying assumptions hold true.
Property condition report provides an analysis of a building or facility to help establish a buyer's risk due to the physical condition of the facility. The analysis includes architectural, structural, mechanical and electrical systems and elements.
Short for “flexible”, flex properties are typically considered a subsect of industrial properties that contain a higher percentage of
Multifamily property types are typically considered apartment buildings that can accommodate more than one family. Condominiums can sometimes be covered in this property type as well.
A quitclaim deed is a legal document that may be used to sell or transfer interests in real property. A quitclaim deed transfers whatever interest the seller or transferor actually holds in a property with no representations or warranties made to clear (unencumbered) title or the exact rights held by the grantor (seller).
Property consisting of land and the buildings on it, along with its natural resources such as crops, minerals, or water.
A licensed intermediary between buyers and sellers of real estate, typically working for commission. A real estate broker typically has completed
Real estate equity is the difference between the current fair market value of a property and the amount of debt owed against the property.
Real estate that generates income or is otherwise intended for investment purposes rather than as a primary residence or personal use.
A trust or company that owns, finances, or invests in real estate and/or real estate-related assets. REITs provide individuals the ability to invest in
An investor who evaluates the real estate market and purchases property with the intention of building wealth.
Real estate syndication is a method of pooling capital from multiple investors for the common goal of acquiring real estate.
A Regulation D Offering is a Securities and Exchange Commission (SEC) regulation governing private placement exemptions that allows companies to raise capital through
In a tax deferred (aka 1031 exchange or like-kind) exchange, the property being sold or disposed of is referred to as the relinquished property.
In the context of commercial real estate, rent bumps refer to periodic adjustments on the rental rates pursuant to a lease, typically stated as a
Replacement property, during a tax deferred (aka 1031 exchange or like-kind) exchange, is the property being purchased or acquired.
Replacement Property InterestsTM is the term Realized uses to describe equity ownership in large properties by multiple 1031 exchange investors through Delaware Statutory Trusts (DST) and Tenant-In-Common (TIC)
Return on investment measures the amount of return on an investment relative to the investment’s cost. To calculate ROI, the benefit (or return) of an investment is
Single tenant property is property that is fully occupied by a single user. Single tenant properties often feature a triple-net (NNN) lease structure and generally have remaining lease terms of at least 10 years.
Special purpose entity is a legal entity established by the sponsor or borrowing entity whose operations are limited to the acquisition and financing of specific assets.
In the context of real estate partnerships, a sponsor is an individual or company in charge of finding, acquiring, and managing the real estate property on behalf of
Stabilized occupancy is the long-term average occupancy rate that an income-producing property is expected to achieve after exposure for leasing in the open market for
Stated rent is the rent amount paid by the occupant to the landlord as specified in the lease. Stated rent does not account for any concessions or landlord costs
A person or entity who rents real estate from another though a lease. A tenant also may be referred to as a lessee.
Tenant improvement allowance is a leasing incentive offered by a landlord in order to entice tenants to lease space. The tenant improvement allowance is the dollar amount, typically
The customized alterations a building owner makes to rental space as part of a lease agreement, in order to configure the space for the needs of that
The individual or company that packages and markets Tenant-In-Common (TIC) properties. The sponsor is in charge of a variety of different
Tenants-In-Common is a type of shared ownership of property, where each owner owns a share of the property. Unlike in a joint tenancy, these shares can be of unequal size,
Real property owned through a trust rather than by an individual. In this context, the exact legal form of ownership may take a variety of forms
Underwriting is the process of evaluating the future performance of a property. Similar to an insurance underwriter, in the context of commercial real estate,
Vacancy allowance is a line item on a real estate pro forma that accounts for expected vacancy of the property. The specific allowance is dependant on the property type and