Real estate terminology sheet | Glossary

real estate investment terminology, slang, commercial real estate

last updated Monday, September 25, 2023
#real estate terminology sheet #real estate glossary

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John Burson

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CONTENTS

Below you will find the most commonly used real estate slang phrases and terminology.

Real Estate Terminology Sheet

#commercial real estate terminology, #real estate investment terminology

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 the 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.
AFFO	AFFO is Adjusted Funds From Operations. Related questions/keywords: affo meaning, affo definition. Learn more about AFFO - REIT Valuation by FFO and AFFO
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.
Vanilla strategy real estate	The vanilla strategy includes passive index investing, an index primarily focusing g on real estate allocation.
Interval fund	Fund periodically offers to buy back a stated portion of its shares from shareholders.

 
 
 

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