Real Estate Terminology | Glossary
Terminology, slang.
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| INDEX OR TERM | Meaning and definition | ||||||
| EM | EM=equity multiple=Total Cash Distributions / Total Equity Invested | ||||||
| IRR | IRR=Internal rate of Return. | ||||||
| XIRR | XIRR=Extended Internal Rate of Return calculates investment returns where multiple transactions happen simultaneously. | ||||||
| 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 costs, 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 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 from 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 | ||||||
| Alternative Investments | Alternative Investments are financial assets outside the mainstream asset classes, like stocks, bonds, and cash. The alternative asset class offers a broad collection of diverse unregistered investments. Learn more about alternative investments. | ||||||
| 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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| AFFO | AFFO is Adjusted Funds From Operations. Related questions/keywords: affo meaning, affo definition. Learn more about AFFO - REIT Valuation by FFO and AFFO |
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| Passive investor | passive investor meaning: A passive investor does not actively seek out or manage investments. Passive investors typically invest in a diversified portfolio of stocks, bonds, or other securities and hold them for the long term. They do not try to time the market or make trades based on short-term price movements. Instead, they seek to achieve a relatively stable return over time by holding diverse investments. |
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| Vanilla Strategy Real Estate | The vanilla strategy includes passive index investing, an index primarily focusing g on real estate allocation. | ||||||
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