RIO
RANCHO NEW MEXICO HOMES west Albuquerque.
CORRALES NEW MEXICO HOMES
north river Albuquerque
PLACITAS NEW MEXICO HOMES
north of AlBUQUERQUE
LOS
LUNAS NEW MEXICO HOMES south Albuquerque
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ACREAGE – a 2 dimensional measure of land equaling 160 square
rods, 10 square chains,
4,840 square yards, or 43,560 square
feet.
ADJUSTABLE RATE MORTGAGE – a mortgage with an
interest rate that changes periodically,
according to an index
that is selected when the mortgage is issued. The initial interest rate is
lower than that of fixed–rate mortgages, but monthly payments can go
up or down as the rate is adjusted.
ADJUSTMENT INTERVAL – the period of time between
changes in the interest rate for an
adjustable–rate mortgage.
Typical adjustment intervals are 6 months and one year.
AMENITIES – in appraisal, the non–monetary benefits
derived from property ownership.
AMORTIZATION PERIOD the period or length of time over
which the principal portion of a
mortgage loan is scheduled to be paid
down through periodic payments.
ANCHORED – a piece of commercial real estate
property, which will serve as the main
tenant in a shopping
center.
ANCHORS – all long term, credit worthy
tenants.
APPRAISAL – an estimate of the value of a property,
made by a qualified professional
called an appraiser.
ASSISTED LIVING – type of senior housing that is
typified by independent living and limited
assistance to its
renters.
ASSUMABILITY – a mortgage loan which can be
transferred to another person without a
change in the terms of the
loan.
AVAILABLE SF – the square feet available for
lease.
AVERAGE ANNUAL OCCUPANCY – percentage of currently
rented units in a building, city,
neighborhood or complex.
AVERAGE DAILY RATE – a hotel rate
used to evaluate the average daily rate of a hotel
inclusive of
vacancy and seasonality.
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BALLOON PAYMENT – one large payment for the remaining principal balance of
a mortgage,
due at a time specified in the contract.
BASIS POINT (BP) – 1/100th of 1% expressed
as a margin over an index rate.
BORROWING ENTITY TYPE – the legal form under which
property is owned.
BRIDGE/SHORT TERM LOAN – a short–term or interim loan
for borrowers who need more
time to find permanent financing or are
repositioning a commercial property.
BUILDING PERMIT – a document, issued by government
regulatory authority that allows a
builder to construct or modify a
structure.
BUILDING SF –
the usable square footage of the building.
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CAP –
the maximum, which an adjustable–rate mortgage may increase, regardless of
index
changes. An interest rate cap limits the amount the interest can
change, while a payment cap
limits the increase in monthly payment to
a specific dollar amount.
CAPITAL EXPENDITURES – line items on a profit and
loss statement that would not be
expensed on an annual basis.
This category would include replacement of major building
systems,
such as roofs, etc.
CAPITALIZATION RATE – the ratio of the first year NOI
to the asking price (NOI/Asking price).
Not the rate of
return.
CARVE OUT – the definition used for the inclusion of
recourse in loan documents for fraud and
misrepresentation.
CASH OUT REFINANCING – when the principal amount of a
new mortgage involved in refinancing is greater than the principal
amount outstanding of the existing mortgage being refinanced, and all or a
portion of the equity is converted to cash.
CENTRAL BUSINESS DISTRICT (CBD) – the downtown
section of a city, generally consisting of
retail, office, hotel,
entertainment, and government land uses with some high–density
housing.
CLEARANCE – the distance between the building’s floor
and effective storage
ceiling.
CLIMATE CONTROLLED – an industrial and self–storage
term that represents temperature
controlled commercial space.
CLOSING – the meeting between the buyer, seller and
lender (or their agents) where the property
and funds legally
change hands.
CLOSING COSTS – the costs and fees associated with
the official change in ownership of the property and with obtaining
the mortgage, that is assessed at the closing.
CMBS (Commercial Mortgage Back Security) – a bond or
other financial obligation secured by a pool of mortgage loans.
COFI (Cost of Funds Index) – index used to determine
interest rate changes for adjustable rate
mortgages. It is based
on the cost of funds of the 11th District of the Federal Home
Loan Bank.
COMMERCIAL LAND – development and transitional land
acquired for investment use: land for lots, site selection and
assemblage of parcels.
COMPARATIVE MARKET ANALYSIS – an estimate of the
value of a property based on an analysis of sales of properties with
similar characteristics.
CONDUIT – the financial intermediary that sponsors
the conduit between the lender(s) originating loans and the ultimate
investor. The conduit makes or purchases loans from third party
correspondents under standardized terms, underwriting and documents and
then, when sufficient volume has been obtained, pools the loans for sale
to investors in the CMBS market.
CONGREGATE CARE – a type of senior housing that
typified by a central eating facility, smaller rooms, and a higher
level of care for its
tenants.
CONSTANT MATURITY TREASURE (CMT) – an index based on
the U.S. Treasury that is used in the pricing of debt for banks.
CONSTRUCTION LOAN – a short term loan to pay for the
construction of commercial buildings. These loans typically provide
periodic disbursements to the builder as each stage of the building is
completed. When construction is completed a take–out or permanent loan is
used to pay off the construction loan.
CONSTRUCTION TYPE – the type of construction used for
a commercial building, (i.e. concrete tilt–up, etc.).
CONTINGENCY – an element of an agreement that must be
satisfied before the total agreement can be consummated.
COUPON – the coupon on U.S. Government securities
expressed as an annual percentage of face value, is the interest rate
the U.S. Government promises to pay to the holder on an ongoing basis
until maturity.
CREDIT TENANT – a tenant, who has obtained a debt
rating by S&P or Moody’s of "BBB–" or better.
CREDIT TENANT NET
LEASE – a lease with a tenant that has a credit rating of BBB– or
better.
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DEBT SERVICE – the periodic payments (principal and interest) made on a
loan.
DEBT SERVICE COVERAGE RATIO (or DEBT COVERAGE RATIO)
– measures a mortgaged
property’s ability to cover monthly
payments defined as the ratio of net operating income over the
periodic payments (principal and interest) made on a loan. A DSCR of
less than 1.0 means that there is insufficient cash flow generated by
the property to cover required debt payments.
DEFEASANCE – a clause in a mortgage that gives the
borrower the right to prepay a commercial
mortgage by purchasing US
Treasuries in an escrow account to pay off ongoing debt service
DENSITY – the number of buildings or persons
occupying a certain area of land, generally an acre.
DEPRECIATION (ACCOUNTING) – allocating the cost of an
asset over its estimated useful life.
DEPRECIATION (APPRAISAL) – a charge against the
reproduction cost (new) of an asset for the estimated wear and
obsolescence. Depreciation may be physical, functional or
environmental.
DISCOUNT RATE – the rate of interest that the Federal
Reserve charges member banks for loans.
DISTRIBUTION WAREHOUSE – (also called Light
Industrial) Generally the least intense industrial use. Office use is
limited to management tasks for the distribution or warehouse facility, or
about 15 percent of total space.
DOCK HIGH – existence and/or number of dock level
doors.
DOUBLE–WIDE – a mobile home consisting of two units
which have been fastened together along
their length.
DUE DILIGENCE –
the legal definition: a measure of prudence, activity or assiduity, as is
properly to be expected from, and ordinarily exercised by, a reasonable
and prudent person under the particular circumstances. In CMBS due
diligence is the foundation of the process because of the reliance
securities investors must place on the specific expertise of the
professionals involved in the transaction.
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EFFECTIVE GROSS INCOME – gross income of a building
if fully rented, less an allowance for estimated vacancies.
ENGINEERING REPORT – report generated by an architect
or engineer describing the current physical condition of the property and
its major building systems, i.e., HVAC, parking lot, roof, etc. The report
also determines an amount for calculating replacement reserves, if
needed.
ENTITLEMENTS – a right to benefits specified
especially by law or contract.
ENVIRONMENTAL REPORT – report generated by qualified
environmental firms to determine potential environmental hazards in a
building’s region or within the building itself.
ENVIRONMENTAL RISK – risk of loss of collateral value
and of lender liability due to the presence of hazardous materials, such
as asbestos, PCB’s, radon or leaking underground storage tanks
(LUSTS) on a property.
EQUITY – the difference between the fair market value
and current indebtedness, also referred to as "owner’s interest."
EQUITY LOAN – a loan for an equity position which
represents an ownership position in a property or a loan for the
participation in the profits of the commercial property
ESCROW – 1. A special account set up by the lender in
which money is held to pay for taxes and insurance. 2. A third party who
carries out the instructions of both the buyer and seller to handle the
paperwork at the settlement.
EURODOLLAR – U.S. dollar denominated deposits at
commercial banks outside of the United States.
EXTENDED STAY –
a hotel that caters to a business traveler on an extended lodging
period.
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FAIR MARKET VALUE – an appraisal term for the price which a property would
bring in a competitive market, given a willing seller and willing buyer,
each having a reasonable knowledge of all pertinent facts, with neither
being under any compulsion to buy or sell.
FARM – land used for agricultural purposes for crop
and livestock farming.
FEDERAL FUNDS (FED FUNDS) – Fed Funds is the interest
rate charged by those banks with excess reserves on hand (reserves
over and above the minimum required by the Federal Reserve) to
those banks in need of overnight loans to meet reserve requirements.
Since it is set daily, the Federal Funds rate is the most sensitive
indicator of the direction of interest rates.
FIT–OUT – tenant improvements within a commercial
property.
FIXED–RATE MORTGAGE – a mortgage with an interest
rate that remains constant for the life of the loan.
FIXTURES – personal property which for some reason,
such as the manner of attachment, has become realty. Such property is also
referred to as chattel real.
FLEX SPACE – an industrial property, which has both
an office and an industrial component.
FLOOR–TO–AREA RATIO (FAR) – the relationship between
the total amount of floor space in a multi–story building and the base of
that building. FAR’s are dictated by zoning laws, in effect, stipulate the
maximum number of stories a building may have.
FORECLOSURE – the process by which a lender takes
back a property on which the mortgagee has defaulted. A servicer may
take over a property from a borrower on behalf of a lender. A property
usually goes into the process of foreclosure if payments are more than 90
days past due.
FOUNDATION – the concrete slab beneath the property,
which holds the property in place.
FRANCHISE – a business arrangement undertaken for the
purpose of marketing a product or service. One party (the franchiser)
provides marketing and selling expertise for a fee to another party (the
franchisee) who in turn sells the product or service in the
marketplace.
FRANCHISE FEES – the fee is usually an initial
purchase requirement plus an ongoing percentage of gross sales of the
business.
FREESTANDING RETAIL – a building which contains only
one retail business. Fast–food franchises and retail stores are often
freestanding buildings.
FREESTANDING – one commercial building meant to be
occupied by a single user.
FULL SERVICE – a
hotel definition that represents services provided to its guests outside
of lodging (i.e. room service, concierge services, and
restaurant).
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GENERAL BUSINESS – includes all of business assets and equipment, may
include property or land.
GENERAL PARTNERSHIP – in a partnership, a partner
whose liability is not limited. All partners in an ordinary partnership
are general partners. A limited partnership must have at least one general
partner.
GOOD FAITH DEPOSIT – a deposit made by a purchaser of
real estate to evidence an honesty.
GOVERNMENT SUBSIDIZED – rents that are partly paid by
the government (e.g. Section 8 residential subsidies).
GRADE LEVEL DOOR – a door at the ground level at the
foundation.
GROUND LEVEL –
existence and/or number of ground level doors.
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HIGH RISE
OFFICE – a commonly used expression
referring to an office building, that is high enough to require an
elevator
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INDEX
– an economic indicator, usually a published interest
rate.
INDUSTRIAL – property used for industrial purposes,
such as factories.
INDUSTRIAL FOR LEASE – industrial space
available.
INTEREST – the sum paid for borrowing money, which
pays the lender’s costs of doing business.
INTEREST RATE – the sum charged for borrowing money,
expressed as a percentage
INTEREST RATE
CAP – limits the interest rate or the interest rate adjustment to a
specified maximum. This protects the borrower from increasing
interest rates.
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JOINT
VENTURE – an agreement by two or more
individuals or entities to engage in a single project or undertaking.
Joint ventures are used in real estate development as a means of raising
capital and spreading risk. For all practical purposes a joint venture is
similar to a general partnership. However, once the purpose of the joint
venture has been accomplished, the entity ceases to
exist.
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LEASE ASSIGNMENT – an agreement between the commercial property owner and
the lender that assigns lease payments directly to the
lender.
LEASE TYPE – Gross, Triple Net (NNN), Net Net (NN),
Hybrid, etc.
LEASEHOLD IMPROVEMENTS – the cost of improvements for
a leased property, often paid by the tenant.
LEASING COMMISSIONS – an amount earned by a real
estate broker or leasing agent for his services.
LESSEE – tenant in a building.
LIBOR (London Interbank Offered Rate) – the rate that
the most creditworthy international banks dealing in Eurodollars charge
each other for large loans. Rates are quoted in monthly increments
out to 1 year.
LIMITED LIABILITY COMPANY (LLC) – the restriction of
one’s potential losses to the amount invested. The absence of personal
liability. Provided to stockholders in a corporation and limited partners
of a limited partnership.
LIMITED PARTNERSHIP – one in which there is at least
one partner who is passive and limits liability to the amount
invested, and at least one partner whose liability extends beyond monetary
investment.
LIMITED SERVICE – a hotel that offers lodging
services only.
LOAN PROCESSING FEE – the fee charged by a lender, to
prepare all the documents associated with your mortgage.
LOAN–TO–VALUE RATIO (LTV) – the ratio between the
principal amount of the mortgage balance, at origination or thereafter, to
the current value of the underlying real estate collateral. The ratio is
commonly expressed to a potential borrower as the percentage of value a
lending institution is willing to finance. The ratio is dynamic, and
varies by lending institution, property type, geographic location,
property size, etc.
LOCK–OUT PERIOD – a period of time after loan
origination during which a borrower cannot prepay the mortgage
loan.
LOT SIZE – total square footage of
property.
LOW RISE OFFICE
– a commonly used expression referring to an office building that is too
low to
require an elevator.
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MALL –
(also called Super Regional Center) an enclosed shopping center with three
or more major department stores which draws from a large trade area of 12
or more miles.
MANAGEMENT FEE – the agreed–upon compensation paid to
a property management company for managing a real estate project. The
fee is usually based on a percentage of effective gross income.
MANUFACTURING – (also called Heavy Industrial) auto
making, textiles, steel, chemicals, and food processing are typical uses
of such properties. Typically zero to five percent office space.
MARGIN – the amount that is added to an index rate to
determine the total interest rate.
MARKETING EXPENSES – expenses accrued to market
commercial properties.
MAT – Monthly Average Treasury
MATURITY – 1. The termination period of a note (e.g.,
a 25–year mortgage has maturity of 25 years.) 2. In sales law, the date a
note becomes due.
MAX CONTIGUOUS SF – the amount of available connected
square feet.
MAX LEASE RATE – the highest asking lease rate.
MEDICAL OFFICE – an office space which offers medical
services.
MEZZANINE/SECOND LOAN – a loan secured by a mortgage
or trust deed, in which the lien is junior, or secondary, to another
mortgage or trust deed.
MID–RISE – a commonly used expression referring to an
office building, that is high enough to require stairs,
but too low to
require an elevator.
MILITARY CLAUSE – a clause included in a lease of
residential property, which allows the tenant to terminate
the
lease without penalty if and when the tenant is transferred to another
location.
MIN LEASE RATE – the lowest lease rate available.
MIN. DIVISIBLE SF – the smallest amount of available
square feet.
MIXED USE – a real estate development that contains
two or more different uses all intended to be
harmonious and
complementary. An example would include a high–rise building with retail
shops on the first
two floors, office space on floors three through
ten, apartments on the next ten floors, and a restaurant on the
top
floor.
MOBILE HOME PARK – a parcel of land zoned and
developed for use by occupants of mobile homes.
MONEY MARKET – the market for short–term debt
instruments.
MULTI–FAMILY PROPERTY CLASS A – properties are above
average in terms of design, construction and
finish; command the
highest rental rates; have a superior location, in terms of desirability
and/or accessibility;
generally are professionally managed by
national or large regional management companies.
MULTI–FAMILY PROPERTY CLASS B – properties frequently
do not possess design and finish reflective of
current standards
and preferences; construction is adequate; command average rental rates;
generally are well
maintained by national or regional management
companies; unit sizes are usually larger than current
standards.
MULTI–FAMILY
PROPERTY CLASS C – properties provide functional housing; exhibit some
level of deferred
maintenance; command below average rental
rates; usually located in less desirable areas; generally managed
by
smaller, local property management companies; tenants provide a less
stable income stream to property
owners than Class A and B
tenants.
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NEIGHBORHOOD CENTER – (including Community Center) a shopping center anchored
by a supermarket and/or drugstore, that provides convenience goods
and services to a neighborhood. It is usually between 30,000 –
100,000 square feet, and draws from a one to three mile
radius.
NET EFFECTIVE RENT – rental rate adjusted for lease
concessions.
NET OPERATING INCOME (NOI) – total income less
operating expenses, adjustments, etc., but before mortgage payments,
tenant improvements and leasing commissions.
NET–NET LEASE (NN) – usually requires the tenant to
pay for property taxes and insurance in addition to the rent.
NON–RECOURSE – a mortgage or deed of trust securing a
note without recourse allows the lender to look only to the security
(property) for repayment in the event of default, and not personally to
the borrower. A loan not allowing for a deficiency judgment. The lender’s
only recourse in the event of default is the security (property) and the
borrower is not personally liable.
NOTICE OF DEFAULT
(NOD) – to initiate a non–judicial foreclosure proceeding involving a
public sale of the real property securing the deed of trust. The trustee
under the deed of trust records a Notice of Default and Election to Sell
("NOD") the real property collateral in the public
records.
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OFFICE
– a structure used primarily for the carrying on of
business.
100% PRIVATE PAY – assisted living designation where
senior housing residents pay 100% of the rent versus by welfare or
government subsidies.
OPERATING EXPENSE – periodic expenses necessary to
the operation and maintenance of an
enterprise (e.g., taxes,
salaries, insurance, maintenance). Often used as a basis for rent
increases.
ORIGINATION –
securing a completed mortgage application from a commercial or residential
borrower.
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PERCENTAGE LEASE – commonly used for large retail stores. Rent payments
include a minimum or "base rent" plus a percentage of the gross sales
"overage." Percentages generally vary from 1% to 6% of the gross sales
depending on the type of store and sales volume.
PHASE I – an assessment and report prepared by a
professional environmental consultant who reviews the property – both
land and improvements – to ascertain the presence or potential presence of
environmental hazards at the property, such as underground water
contamination, PCB’s, abandoned disposal of paints and other
chemicals, asbestos and a wide range of other potentially damaging
materials. This Environmental Site Assessment (ESA) provides a review
and makes a recommendation as to whether further investigation is
warranted (a Phase II Environmental Site Assessment). This latter report
would confirm or disavow the presence of an environmental hazard and,
should one be found, will recommend additional review and/or
mitigation efforts that should be undertaken.
POINTS (LOAN DISCOUNT POINTS) – each point is equal
to 1% of the total amount of a mortgage.
POTENTIAL GROSS RENT – gross income of a building if
fully rented.
PRE–LEASED % – to obtain lease commitments in a
building or complex prior to its being available for occupancy.
PREPAYMENT PENALTY – fees paid by borrowers for the
privilege of retiring a loan early.
PRIME RATE – the rate at which banks lend to their
most creditworthy customers.
PRINCIPAL – 1. The amount of debt, not including
interest, left on a loan. 2. The face amount of the mortgage.
PRO FORMA – (from Latin pro forma, "according to
form"). financial statements showing what is expected to occur.
PROPERTY ADMINISTRATOR – person in broker's employ
who is responsible for updating and
renewing a property listing,
if it is different from the contact name.
PROPERTY GRADE – a stratification of property type
that is indicative of the property’s ability to
command rental
rates.
PROPERTY SUBTYPE – a property description that
provides additional information to the lender.
PROPERTY TAX –
taxes based on the market value of a property. Property taxes vary from
state to state.
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R & D – these facilities are generally used in high technology
markets and are broadly defined to include wide variations in markets
across the country. R & D properties could have lab facilities,
offices, warehouse facilities, or services such as carpentry or machine
repair. Typically, each property allows a variable combination of
office and other uses. The percentage of office space ranges from 20 to
100 percent, depending on the market and individual needs of the
user.
RAIL SERVED – whether the building is served by
railroad.
RANCH – land devoted to raising livestock under range
conditions with forage grass as main source of feed.
RATE INDEX – an index used to adjust the interest
rate of an adjustable mortgage loan (e.g., the change in U.S.
Treasury securities (T–Bills) with 1–year maturity. The weekly average
yield on said securities, adjusted to a constant maturity of 1 year, which
is the result of weekly sales, may be obtained weekly from the Federal
Reserve Statistical Release H.15 (519). This change in interest rates is
the "index" for the change in a specific Adjustable Mortgage Loan).
RECOURSE – personal liability.
RECREATIONAL LAND – land devoted to commercial
outdoor sporting activity and relaxation.
REFINANCE – to replace an old loan(s) with a new
loan(s).
REGIONAL CENTER – a shopping center with one or two
department stores and a variety of smaller stores. It is larger than
300,000 square feet and draws from an eight mile radius or more.
RENT ROLL – a list of tenants leasing a property,
which details terms of lease, area leased, and the
amount of rent
being paid.
RENT STEP–UP – a lease agreement in which the rent
increases every period for a fixed amount of time or for the life of the
lease.
RENTABLE SQUARE FEET (same as Net Leasable Area) – in
a building or project, floor space that may be rented to tenants. The area
upon which rental payments are based. Generally excludes common areas and
space devoted to the heating, cooling, and other equipment of a
building.
REPLACEMENT RESERVES – an amount set aside from net
operating income to pay for the eventual wearing out of short–lived
assets. Monthly deposits that a lender may require a borrower to a reserve
in an account, along with principal and interest payments for future
capital improvements of major building systems; i.e., HVAC, parking lot,
carpets, roof, etc.
RESERVE FUNDS – in CMBS, portion of the bond proceeds
that are retained to cover losses on the mortgage pool. A form of credit
enhancement (also referred to as "reserve accounts").
RETAIL – a property type which sells goods to
consumers.
RV (REVERSIONARY
VALUE) – the value of property at the expiration of a certain time
period.
In transportation, recreational
vehicle.
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SALES BROKER – commercial real estate broker that represents client in
the sale or purchase of commercial real estate property.
SECOND MORTGAGE – a mortgage that is second in
priority because of the time of recording the mortgage or of the
subordination of the mortgage.
SECONDARY MORTGAGE MARKET – the buying and selling of
first mortgages or trust deeds by banks, insurance companies,
government agencies, and other mortgagees. This enables lenders to keep
anadequate supply of money for new loans. The mortgages may be sold at
full value ("par") or above, but are usually sold at a discount. Not
to be confused with a "second mortgage."
SELF–STORAGE – (also called Mini–Storage) provides
personal storage for lease by consumers.
SELF–AMORTIZING MORTGAGE – one that will retire
itself through regular principal and interest payments. Contrast with
balloon mortgage or interest–only loan.
SENIOR HOUSING – (includes Assisted Listing,
Congregate Care, Senior Apartments and Skilled Nursing Centers)
multi–residential property specifically designed for care of senior
citizens and/or physically disabled persons.
SHADOW ANCHORED – a unanchored shopping center
located near an anchored shopping center.
SINGLE WIDE – a mobile home consisting of one
unit.
SITE WORK – the location or place of a plot of ground
set aside for a particular type of land use.
SKILLED NURSING – a type of senior housing which
offers on–site medical care.
SOLE PROPRIETORSHIP – ownership of a business, with
no formal entity as a vehicle or structure.
SPREAD – number of basis points over a base rate
index.
SPRINKLER – existence of fire suppression systems in
the building.
STABILIZED OPERATING PROPERTY – the income generated
on an annual basis from the
commercial property is stable,
consistent and reliable.
STRIP CENTER – a string of stores in a commercial
area, totaling less than 30,000 square feet,
without central leasing,
management, or theme.
STRUCTURAL/ENGINEERING REPORT – a property Condition
Report that outlines the current
structural stability or
instability of a property. The report will outline immediate costs needed
to repair the property, as well as a maintenance program to maintain
the property at its current status.
SUBURBAN –
describes a town or unincorporated developed area in a close proximity to
a city.
Suburbs, largely residential, are often dependent on the city
for employment and support services;
generally characterized by
low–density development relative to the city.
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TAX & INSURANCE
IMPOUND – monthly deposits that a lender
may require to be included with principal and interest payments for the
payment of taxes and insurance.
TENANT – one who is given possession of real estate
for a fixed period or at will.
TENANT IMPROVEMENTS (TI) – the expense to physically
improve the property to attract new tenants to new or vacated space which
may include new improvements or remodeling. May be paid by
tenant, landlord, or both. Typically, tenants are provided with a
market rate TI allowance ($/sq. ft.) that the owner will contribute
towards improvements. The tenant must pay for amounts above the TI
allowance desired by the tenant.
TERM – the length of a mortgage.
THIRD PARTY COSTS – costs resulting from third party
reports, whether it be appraisal reports,
environmental reports or
structural engineering reports.
TIMBERLAND – land used for production of forest
stands for commercial use.
TITLE – the actual legal document conferring
ownership of a piece of real estate.
TITLE INSURANCE – an insurance policy that insures
you against errors in the title search – essentially guaranteeing your,
and your lender’s, financial interest in the property.
TOTAL ANNUAL OPERATING INCOME – total yearly income
less operating expenses, adjustments, etc., but before mortgage
payments, tenant improvements and leasing commissions.
TOTAL ANNUAL ROOM INCOME – a hotel definition that
represent the gross annual receipts from room revenue.
TRAFFIC COUNT – the amount of incoming and outgoing
traffic a retailer or self–storage building
generates over a fixed
period of time.
TRIPLE–NET LEASE (NNN) – a lease that requires the
tenant to pay for property taxes, insurance and maintenance in addition to
the rent (also referred to as "Net Net Net Lease").
TRIPLE–WIDE – a
mobile home consisting of three units which have been fastened together
along their length.
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U.S. TREASURY BILL – Treasury Bills, or T–Bills, are short term securities
with maturities of up to one year. They are issued by the U.S.
Government at a discount from face value. The price is quoted in yield,
not dollars. At maturity, T–Bills are redeemed for full face value.
T–bills are issued in three month, six month and 1 year maturities and are
backed by the full faith and credit of the U.S.
Government.
U.S. TREASURY BOND – Treasury Bonds are long–term
securities with maturities greater than 10 years. Treasury bonds are
coupon bearing securities that pay interest on a semiannual basis.
Treasury bonds are backed by the full faith and credit of the U.S.
Government.
U.S. TREASURY NOTE – Treasury Notes are intermediate
term securities issued with 2, 3, 5, and 10 year maturities. Treasury
notes are coupon bearing securities that pay interest on a semiannual
basis. Treasury notes are backed by the full faith and credit of the
U.S. Government.
UNANCHORED – a tenant in a shopping center, which
doesn’t have an anchored tenant.
UNDERWRITING – the process of deciding whether to
make a loan based on property cash flow, credit, and/or other
factors.
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VACANCY PERCENT – the percentage of all units or space that is unoccupied
or not rented. On a pro–forma income statement a projected vacancy
rate is used to estimate the vacancy allowance, which is deducted
from potential gross income to derive effective gross
income.
VACANCY –
unoccupied units as a percentage of the total number.
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YIELD
– the rate of return on a security, taking into consideration annual
interest payments, purchase price, redemption value, and the time
remaining until maturity.
YIELD MAINTENANCE – a prepayment premium that allows
investors to attain the same yield as if the borrower made all
scheduled mortgage payments until maturity. Yield maintenance premiums are
designed to make investors indifferent to prepayments and to make
refinancing unattractive and uneconomical to borrowers.
YIELD TO AVERAGE LIFE – yield calculation used, in
lieu of "Yield to Maturity" or "Yield to Call," where books are retired
systematically during the life of the issue, as in the case of a "Sinking
Fund," with contractual requirements. Because the issuer will buy its own
bonds on the open market to satisfy its sinking fund requirements if
the bonds are trading below Par, there is, to that extent, automatic price
support for such bonds; they therefore tend to trade on a
yield–to–average–life basis.
YIELD TO MATURITY
(YTM) – concepts used to determine the rate of return an investor will
receive if a long–term, interest–bearing investment, such as a bond, is
held to its maturity date. It takes into account purchase price,
redemption value, time to maturity, coupon yield and the time between
interest payments. Recognizing time value of money, it is the discount
rate at which the present value of all future payments would equal the
present price of the bond (also referred to as "internal rate of return").
It is implicitly assumed that coupons are reinvested at the YTM rate. YTM
can be approximated using a bond value table (also referred to as a "bond
yield table") or can be determined using a programmable calculator
equipped for bond mathematics calculations.
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