Real Estate Terminology | Glossary

Terminology, slang.

last update Thursday, October 20, 2022



multifamily investing


EM EM=equity multiple=Total Cash Distributions / Total Equity Invested
IRR IRR=Internal rate of return.
XIRR XIRR=Extended Internal Rate of Return is a method used to calculate returns on investments where there are multiple transactions happening at different times.
LTC LTC=Loan to Cost=Construction Cost/Loan Amount​​
LTV LTV=Loan to Value=Mortgage Amount/Appraised Property Value
LP LP=Limited Partner
GP GP=General Partner = Sponsor
T12 T12=TTM (Trailing Twelve Months) = financial statement that shows a multifamily property's previous twelve months of operations.
WALT Walt measures the weighted average remaining contractual lease term for all tenants at a property.
PGI PGI=Potential Gross Income
EGI EGI=Effective Gross Income
DSCR DSCR=Debt Service Coverage Ratio = Net Operating Income (NOI) / Debt Service.
DY DY=Debt Yield = Net Operating Income (NOI) / Loan amount.
ROI ROI = Return on investment or return on costs is a ratio between net income and investment.
Borrower Borrowing entity (SPE)
NOI Net Operating Income. NOI = Income - Expense
Guarantor(s) carve-out guarantors, etc.
Sponsor (Operational Risk). The individual or operating entity directly or indirectly promotes or manages Borrower’s day-to-day operations (e.g. Pension Fund advisor, fund manager - Sponsor does not need to have an ownership interest in the Borrower).
Borrower Affiliate Any material individual or entity affiliated with Borrower, excluding Sponsor and Key Principals.
Key Principal(s) (Equity Risk). Any entity or individual with >= 20% direct or indirect beneficial ownership interests in the borrowing entity.  A Key Principal of the Borrower can also be the Sponsor or Guarantor.
Carried interest Carried interest is effectively a payment for investment services that are taken out of the profits of the money managed for investors.
Debt Yield property NOI/loan amount
LTPP Loan To Purchase Price in Commercial Real Estate
OIR Office Industrial Retail
Fee Simple Interest A “fee simple” or “fee simple estate” is the most common way real estate is owned in the U.S.
Fee Simple refers to absolute ownership, limited only by the four primary governmental powers:
1) taxation,
2) eminent domain,
3) police power,
4) escheat.

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