A loan clause that allows the lender to ask for repayment of the entire balance at any time.

The change in market value of a property or portfolio, adjusted for capital improvements and partial sales.

The amount by which the net proceeds from the sale of a capital item exceeds the book value of the asset.

Public and private markets where businesses or individuals can raise or borrow capital.

A mathematical formula that investors use to calculate property value based on net income. See also “Rent Roll”.

Generally, the term “cap” refers to a limit placed on any type of financial transaction. Specifically in real estate financing terms, interest rate caps are consumer safeguards that limit the amount of change of an adjustable-rate mortgage.

Costs incidental to property ownership that must be absorbed by the landlord during the initial lease-up of a building and thereafter during periods of vacancy.

A cash amount sometimes required to be held in reserve in addition to the down payment and closing costs. This amount is determined by the lender.

The relationship, expressed as a percentage, between the net cash flow of a property and the average amount of invested capital during an operating year.

An index based on interest rates of six-month CDs, commonly used to determine interest rates for some adjustable rate mortgages.

A document that certifies that the building and/or the leased area is suitable for occupancy, as well as legal uses of the leased area. The Certificate of Occupancy may allow the building owner greater rights than those allowed by the local zoning regulations.

A document provided by a qualified source (usually a title company) that shows the property legally belongs to the current owner. The title should be clear of all liens or other liabilities before its transfer at closing.  

The portion of the federal bankruptcy code that deals with business reorganizations.

Interior space required for internal office circulation not accounted for in the net square footage.

The real estate rating assigned to properties that are above average, but lack the premium location or superior amenities of Class “A” properties.

A title to property that does not have liens, defects or other legal encumbrances.

A commingled fund that has a targeted range of investor capital and a finite life.

Costs that cover the process of ownership transfer, including loan, title, and appraisal fees. Closing costs generally vary by geographic location and are typically detailed to the borrower after submission of a loan application. Most closing costs are one-time, but some may be recurring.

An encumbrance on real property.

Collateralized Mortgage Obligation, debt obligation that is collateralized by, and have payments linked to, a pool of mortgages.

Cost Of Funds Index, a popular index for determining interest rates on adjustable-rate mortgages. COFI is the composite value that reflects the weighted-average interest rate paid by 11th Federal Home Loan Bank District savings institutions for savings and checking accounts, advances from the FHLB, and other sources of funds.  The 11th District represents the savings institutions (savings & loan associations and savings banks) headquartered in Arizona, California and Nevada.

An arrangement where two or more pension funds or groups of funds share ownership of a real estate investment. In co-investment ventures, relative ownership is always based on the amount of capital contributed.

Asset or assets pledged to a lender to secure repayment of a loan in case of default.

When an apartment owner takes two separate adjoining apartments and combines them into a larger single apartment. New York City has regulations that make residential space transformations much less cumbersome than in most markets. 

A mortgage broker who specializes in commercial mortgage applications.

Similar in purpose to a “Co-Investment Program”, this is a fund that allows qualified employee-benefit plans to combine their assets for the purpose of investing in large properties that are beyond the reach of individual accounts.

The act or process of committing an action.

A promise by a lender to make a loan with specific terms for a specified period.

The area in a building that is shared by all of the tenants/owners of the building.  This usually includes the lobby, hallways, sidewalk, and elevators. Building amenities, such as gardens, terraces, and pools, may be common or exclusive to a particular tenant.

Properties in the same area, of a similar type or value, that are used to determine the fair market price.

The interest paid on the principal balance of a mortgage, plus accrued interest.

In a residential building, an employee whose duties include receiving mail and packages, informing tenants of visitors, and forwarding messages. A concierge is not responsible for opening and holding doors, or operating an elevator.

The process or action of marking a property as unfit for habitation or other suitable use.

A promise by a lender to make a loan if the borrower meets certain conditions.

A form of apartment ownership in which an individual buys and owns a unit of housing in a multi-unit complex. Condominiums are more liberal than the co-operative type of apartment ownership, allowing owners to finance a much larger percentage of the purchase price (up to 90% in some cases), as well as have more flexible subletting, and pet policies.  Owners are responsible for monthly common-area maintenance charges and real estate taxes.

A home loan that meets qualifications to be purchased by Fannie Mae or Freddie Mac.

Interim financing during the developmental phase of a property. Lenders usually pay out installments of the loan based on completion of defined stages of construction.

A construction loan that is converts to a long-term loan after the construction is completed.

A composite index that measures inflation in relation to the change in the price of goods and services purchased by a specified population during a base period of time. The CPI is commonly used to increase the base rent. This increase serves as protection of the rental stream against inflation.

In residential structures, “contiguous space” means the multiple spaces or suites on the same floor, which can be combined and rented to a single tenant. In commercial structures, this term refers to combinable spaces on the same floor, and the adjoining floors.

The specific time when a buyer and seller have agreed on a price, and the parties’ attorneys have drafted a contract of sale and have sent it to the purchaser.

A private sector loan, one that is not guaranteed or insured by the U.S. government.  

A change in ownership structure, for example a rental building being converted to a co-operative ownership type.

A mortgage which starts as an adjustable rate loan, but contains a provision that allows the borrower to convert the loan to a fixed-rate mortgage during a specified period of time.

Preferred stock that is convertible to common stock under certain formulas and conditions, which are specified by the issuer of the stock.

A type of apartment ownership, under which owners purchase stock in a co-operative corporation that actually owns the structure. Each owner (stockholder) has the right to live in a specific unit, and is responsible for paying a portion of the loan on the entire structure.  

Major properties that generate high profits, have a potential for appreciation, and are completely or nearly leased and occupied (thus actively producing income). Core property types include: office, retail, industrial, and multi-unit residential. Most core properties are built within the last five years, or recently renovated.

The current cost to construct a reproduction of, or replacement for, the existing structure, after subtracting an estimate for accrued depreciation (loss of value over time). In other words, an estimate of whether it will be cheaper to renovate, or build a new or similar property.

The product arrived at by dividing the cost of sales (broker commissions, closing costs, fees, etc) by the value of the property. For example, if a property is worth $100,000 and it will cost $5,000 to sell it, the COS is 5%.

The fee (charged at closing) that covers the delivery of documents between lenders, escrow companies, and other third parties during a real estate transaction.

A written agreement inserted into deeds or other legal instruments, that stipulates performance or non-performance of certain acts, or use or non-use of a property and/or land. An example of a covenant would be a commercial space renter agreeing to not manufacture certain hazardous goods.

The credit support needed in addition to the mortgage collateral to achieve a desired credit rating on mortgage-backed securities. The forms of credit enhancement most often employed are subordination, over-collateralization, reserve funds, corporate guarantees and letters of credit.

Insurance that pays off a mortgage in the event of the borrower's death.

Large companies that gather financial and credit information from various sources about individuals who have applied for credit.

A grouping of mortgages or properties that serves to jointly secure one debt obligation.

The interest rate, expressed as a percentage of base rent, used in finding present values. The CDR takes into account all landlord lease concessions.

For CMBS, the coupon divided by the price.