The rate at which properties are expected to lease up at prevailing rates.

The entry to a property via public street or easement across another’s property.

The outcome of a default whereby a loan becomes due prior to its contractual due date due to a default.

43,560 square feet.

The arrangement regarding representation of one person by another (such as a broker or attorney) to buy, sell or lease real estate.  A real estate “agent” as the term is commonly used works for a “broker” who is licensed to provide 3^rd party services.

A major tenant that generates significant traffic.  Generally used in describing a department store or supermarket in a retail center.

Asset management deals with capital expenditures and financing issues that relate to maximizing property value.  Property management deals with the physical maintenance of property.

Original investment + additions - depreciation.  Basis is used for the calculation of gain on sale.  Net sales price less “adjusted basis” equals taxable gain upon which capital gains tax is applied.

(Best Alternative To a Negotiated Agreement) used by negotiators to determine ultimate fallback position in negotiations fail.

(Building and Owners Management Association) – the trade association of professional building managers.  Determines standards.

A licensed, paid professional who represents others as agent in buying, selling or leasing real estate.  Agents work for brokers and are not state licensed.  Realtors are members of the National Association of Realtors (and may be brokers or agents).

(tripartite agreement) – Contract between buyer, seller and lender covering various rights, obligations on a transfer of property.

The initial before-tax rate of return sought by a buyer of real property based on expected Net Operating Income.  The “capitalization” of pre-tax cash flows, used to estimate a value of a property.

A partner’s basis in a property as measured by original capital invested plus additional contributions, plus profits, less losses, less distributions.

The first year pre-tax yield on capital invested (equal to the cap rate.) 

Covenants and restrictions placed on a property regarding its use generally involving such things as building heights, density, signage, etc.

(Comprehensive Environmental Response, Compensation and Liability Act) – This act, passed in 1980, was what authorized the original Super-fund legislation aimed at environmental clean-up.

(C.O.) – Building approval by local officials (zoning board or building department) certifying that it meets code and is ready for occupancy.  Generally marks the end of the construction phase of a project.

The recorded history of conveyances and encumbrances affecting the title of a specific parcel of land.  The various owners of a particular property are considered to be “in the chain of title.”  Particularly significant when determining liability for environmental clean-up and liability.               

Consumer Price Index) escalator – is used to adjust rent based on figures issued by the US Dept of Labor gathered to estimate the change in price levels.

·         The taking of property by use of “eminent domain” (a power of government to take private property for public use, requiring “just compensation” to owner.)

Land or building areas used by all tenants or owners (halls, elevators, landscaping, parking.)

(comparables) – Sales prices (or lease rates) of similar properties used to estimate value for another property taking into account similarities/differences.  Used as one method of determining value.

– One of 3 standard appraisal methods (comparables, cost and income) to assess the value of a property.  The cost method assumes the value of the underlying land at its “highest and best” use, then “reconstructs” all buildings and amenities at current market costs and adjusts for wear-and-tear and obsolescence.

– Hard costs are those related to “bricks and mortar” or construction costs.  Soft costs are all development costs except for hard costs (including A&E fees, interest, taxes, insurance, marketing expenses, development fees, etc.)

– Forms of R/E ownership relating to a partial interest in a property, associated with specific space.  A condominium ownership is a form of joint ownership in which a property owner owns his “demised premises” as well as a percentage of common areas.  A co-op differs in that its owners own shares in a corporation that owns the R/E and have rights to a specific unit.

– A limit on the use of a property placed on it in perpetuity by an owner prior to sale.

– A 3-party agreement (buyer, lender, trustee) that secures an obligation by making real estate a security.  (In some states, done by mortgage.)

– A deed offered voluntarily instead of requiring a secured party to foreclose to perfect its security interest.  (Deed-in-lieu of foreclosure.)

– The exclusive space leased by a tenant (not including common areas.)

– The allowable annual deduction on real property improvements.  Land may not be depreciated.  Property used for personal use may not be depreciated.  Income producing property may be depreciated according to schedules provided by the Internal Revenue Service as updated from time to time.

– Gains for which no cash is received.  So-called dry gains occur when depreciation is recaptured.

– The Employee Retirement Income Security Act governing, among other things, pension fund investment in real estate.  (Also known as Every Rotten Idea Since Adam.)

– A non-possessory right of one owner to use a part of the land of another.  Generally created by writing and fairly permanent; however, can be implied (called “prescriptive”) and gained simply by repeated use over time.

– Any restriction that limits the use of property.

– An account governed by a third-party until terms of a contract are met.

– The most extensive interest in land recognized by law (subject only to police seizure, taxation, eminent domain, escheat and/or deed restrictions.)

– The impact on returns of adding debt to the capital structure of property financing.  (If the cost of debt > overall return on assets, the financial leverage is “negative,” if overall ROA > cost of debt, it is “positive.”  Also called “gearing.”)

– The relationship of the total floor area of a building and the total land area of its site.  Typically used to limit the permitted density of development.

– A legal process whereby a lender forces the sale of a property in order to pay off a loan.

– the term used for maximizing the rental income (and hence value) available from a particular property.

– (Heating, Ventilating and Air Conditioning)

– a special purpose association of individuals (or firms) to carry out a for-profit effort.  (Also may be defined as an arrangement where someone with money joins up with someone with experience, resulting in the party with experience ending up with the money and the party with the money ending up with experience.)

– forms of property interest.  A leasehold interest is subject to a lease and is for a limited time.  A freehold interest is subject to title and lasts until a conveyance of that title.

– The tenant.  (A tenant may have various kinds of leases such as “at sufferance” [occupying a property after expiration of lease], “at will” [terminable by either lessee or lessor at any time], or “for a term” [use for a period of time, also called “estate for years.”])

– The landlord.

– Financial leverage has to do with the use of borrowed funds to magnify the returns on equity.  (Negative leverage occurs when total project yield is inferior to the cost of borrowed funds; positive leverage when project yield exceeds the cost of borrowed funds.)  Operating leverage occurs when a change in expenses has a magnified effect on net income.

– a claim on real property.  A “mechanic’s lien” is one created by a laborer who’s added value to a property and has not been paid.  A “materialman’s lien” is one created by a supplier of goods to a property who has not been paid.  A “tax lien” is owed to the government.  A “judgment lien” is created by a court granting a creditor an interest Liens are also created by lenders who secure their interests by a deed of trust or a mortgage lien. 

– The dominant method of land description used by surveyors in the US, based on starting at a point (an iron pin deep in the ground), and describing a parcel of land by use of distances (metes) and directions (bounds) from that reference point.

· – A listing of all properties in a given area by brokers who distribute information to all members of the service.  Provides broader exposure to a property.

– Income after operating expenses (before deductions for debt service or income taxes).  The key number used in establishing property value.

– The expense-to-revenue ratio.  If expenses are significant (such as with hotels), a property has high operating leverage (i.e., a small decrease in expenses will have a significant impact on NOI).  If expenses are insignificant (such as industrial leases), a property has low (or no) operating leverage.          

– usually expressed in terms of number of “car parks” to rentable square footage.  (For example, office buildings and shopping centers usually require something on the order of 4 parking places for every 1,000 feet of leased space; industrial might be 1 space per 1,000 s.f.)

– a survey that shows location of streets, blocks and lots in a given area.  Usually part of the public record.  Used to identify particular parcels.  Subdivisions require “plat approval” prior to putting in streets, utilities.

– A contract between the buyer and seller that specifies sales price and terms of sale.

– Seller financing for all or part of the financing requirements upon sale of a property.

– An exclusive right of possession a tenant is extended by the landlord.

– An auxiliary track branching off a more significant railroad track to allow for delivery and loading of goods to a warehouse.

– Exchanging existing financing for new financing.  Sometimes includes bringing in new equity and/or debt, or restructuring current obligations with new terms.

– An ownership entity created by congress in 1960 that provides limited liability, no tax at the entity level, and liquidity (required net income distribution.)  Beneficial interest has certain limitations and is evidenced by shares of stock traded.  

– What is available by law or contract to recover one’s rights or interests.  Contracts provide remedies for breaches.    

– The yield on capital invested above debt.  (Return of equity is sometimes applied to recover outstanding funds prior to sale or refinancing.)

– Established by the government to manage loans and liquidate properties acquired in the S&L collapse of the late 1980’s.

– A transaction in which a seller immediately leases back a property from its buyer.

– The total environment impacting on a specific urban land parcel, capturing how a property interacts with its environs and all surrounding parcels.

– The legal doctrine that requires that all real estate contracts be in writing to be enforceable. 

– A fee charged by a lender to a borrower to remain available to provide a loan on pre-arranged terms and conditions for a period of time.

– An economic interest earned by work rather than capital invested.

– Avoidance is simply using available code provisions to minimize taxes; fraud will get you time in the “iron house.”        

– Should be called tax-deferred; often called a Section 1031 Exchange, whereby a like-kind swap of properties occurs that meets IRC tests and allows seller(s) to defer payment of taxes on the appreciation of property.

– The evidence of ownership of real property.  Title is made a part of the public record, can be insured and is passed from owner to owner by conveyance.

– the tenant pays taxes, insurance and operating expenses in addition to rent.  (Typical of industrial leases)

– Real estate is valued according to i) the income method (“capitalizing NOI at a cap rate intended to capture in a simple calculation a value that will provide investors with a required rate of return over time), ii) the cost method (valuing land at highest and best use value and all improvements at replacement cost), and iii) the comparable method (assessing like-property sales over the recent past and making adjustments for differences.)

– Unlike in statistics, where variance refers to the square of the standard deviation, or in accounting, where variance refers to the difference between actual and expected results, in real estate, one is granted a variance, which allows for building something otherwise not allowed by zoning, or setbacks or other restrictions.

Negotiations between borrowers and lenders to restructure obligations.

– Zoning is governed by municipalities according to a master plan which can change the classification of a property to a lower use (down-zoning) or a higher use (up-zoning).  Zoning typically covers not only use but lot size, building heights, setbacks, etc.