A tenant with a top credit rating. This type of tenant is often critical to the developer’s ability to arrange both construction and permanent financing for a major commercial project, such as a shopping center or office building.
The voluntary relinquishment of rights of ownership or another interest (such as an easement) by failure to use the property, coupled with intent to abandon (give up the interest).
A reduction or decrease. Usually applies to a decrease of assessed valuation of ad valorem taxes after the assessment, and levy.
Upgraded finishes and specialized designs necessary to accommodate a tenant’s requirements.
Lease requiring tenant to pay in addition to base rent all costs associated with the operation, repair and maintenance of the building, all real estate taxes, and utilities including repair and maintenance of the building's structure and roof. Often the tenant is directly responsible both for all such costs and for the active handling of the items themselves. Distinguished from Triple Net (see below) by tenant's responsibility for maintenance and repair of the building structure and roof.
The net change in space available for lease between two dates, typically expressed as a percentage of the total square footage.
The rate (speed) at which vacant space is either leased or sold to users in the marketplace. This rate is usually expressed in square feet per year or in the case of multi-family housing, in the number of units per year. "Market Absorption".
A summary of money judgment obtained in court. (When this summary or abstract is recorded in the county recorder's office, in some states the judgment becomes a lien on the debtor's property, both presently owned and/or after-acquired.)
A summary prepared by a licensed abstractor of all documents recorded in the public records of the political subdivision where the land is located. An abstract in some states or areas is reviewed by an attorney or other experienced title examiner to determine the status of title. Virtually every abstractor today provides actual copies of the records rather than an abstract of each document.
A cause in a deed of trust or mortgage, which "accelerates," or hastens, the time when the indebtedness becomes due. For example, some deeds of trust contain a provision (an acceleration clause) stating that the note shall become due immediately upon the sale of the land or upon failure to pay interest or an installment of principal and interest.
Recording of instruments with the county recorder by a title company merely as a convenience to a customer and without assumption of responsibility for correctness or validity.
A formal declaration before a duly authorized officer (such as a notary public) by a person who has executed an instrument that such execution is his own act and deed. An acknowledgment is necessary to entitle an instrument (with certain specific exceptions) to be recorded, to impart constructive notice of its contents and to entitle the instrument to be used as evidence without further proof. The certificate of acknowledgment is attached to the instrument or incorporated therein.
Debt financing for the purchase and preparation of raw land for development. Usually a construction loan or land sale is the source of repayment.
A measure of land equal to 43,560 square feet.
The terms used in insurance appraisals for the depreciated Reproduction or Replacement Cost New. The depreciation taken is usually limited because of insurance industry guidelines and is far less than the depreciation reflected in the marketplace.
According to value. This is a tax imposed on the value of property (references a general property tax), which is typically based on the local government’s valuation of the property.
Americans With Disabilities Act passed by Congress in 1994 with intent to provide persons with disabilities accommodations and access equal to or similar to that of the general public.
Any amounts due under a lease that are in addition to base rent. Most common form is operating expense increases.
Often referred to as the Loss Factor or Rentable/Usable (R/U) Factor, it represents the tenant’s pro-rata share of the Building Common Areas, such as lobbies, public corridors and restrooms. It is usually expressed as a percentage which can then be applied to the usable square footage to determine the rentable square footage upon which the tenant will pay rent.
A method within the asset approach whereby all assets and liabilities (including off-balance sheet, intangible, and contingent) are adjusted to their fair market values. [NOTE:
In Canada on a going concern basis.]
see Adjusted Book Value Method.
Outsourced professional services provided to commercial real estate practitioners in order to assist them with areas in which they don't have the internal skill sets or where they need third party impartiality. Typical areas of service include:
Any relationship in which one party (agent) acts for or represents another (principal) under the authority of the latter. Agency involving real property should be in writing, such as listings, trusts, powers of attorney, etc.
ALC stands for Accredited Land Consultant and is a professional designation awarded by the REALTORS® Land Institute, one of nine affiliated groups of the National Association of Realtors. Members who complete a comprehensive program including required Land University courses, experience in the field, and who have displayed involvement and service to the institute, are awarded the Accredited Land Consultant (ALC) designation.
A set dollar amount provided by the Landlord under a lease to be used by the Tenant for a specific purpose. Examples include allowances for tenant improvements, moving expenses design fees, etc. If the expense exceeds the allowance amount, such excess is the Tenant's responsibility. If the expense is less than the allowance, the savings are retained by the Landlord unless their agreement specifies otherwise.
Most often used in a yet-to-be constructed property, the tenant has a blank canvas upon which to customize the interior finishes to their specifications. This arrangement caps the landlord’s expenditure at a fixed dollar amount over the negotiated price of the base building shell. This arrangement is most successful when both parties agree on a detailed definition of what construction is included and at what price.
Term embodies numerous concepts related to utilization of space including telecommuting, hotelling, office sharing and open office plans.
A change to either alter, add to, or correct part of an agreement without changing the principal idea or essence.
An association representing more than 2,100 title abstractors, title insurance companies, title insurance agents, and associate members that was founded in 1907. Members of the association use standardized title insurance forms developed by ALTA to provide uniformity within the industry. ALTA’s national headquarters is located at 1828 L Street, N.W., Suite 303, Washington, D.C. 20036; (202) 296-3671.
AMO stands for Accredited Management Organization and is a designation awarded by the Institute of Real Estate Management (IREM) to property management firms that have met IREM's standards in the areas of education, experience, integrity, insurance and financial stability.
The repayment of a mortgage debt over a period of time in a series of periodic installments. It should be noted that a portion of each payment consists of a blend of interest and amortization of principal. Specifically, this is the payback of the principal portion of the loan owed to the lender. The effect of amortization is to build up the paper value of the owner's equity while reducing the debt obligation. For your convenience, we have provided a list of most asset classes where you will see typical amortization schedules as they relate to said asset classes.
A well-known commercial retail business such as a national chain store or regional department store (AAA Tenant) strategically placed in a shopping center so as to generate the most customers for all of the stores located in the shopping center. This term usually applies in reference to a retail property. For more information on underwriting guidelines for retail loans please click here.
A shopping center with at least one anchor tenant.
The ratio of the annual debt payment on a loan to the original amount borrowed. The loan constant is also referred to as a mortgage constant.
The actual cost of borrowing money, expressed in the form of an annual interest rate. It may be higher than the note rate because it represents full disclosure of the interest rate, loan origination fees, loan discount points, and other credit costs paid to the lender.
An estimate of opinion and value based upon a factual analysis of a property by a qualified professional.
see Valuation Approach.
see Valuation Date.
see Valuation Method.
see Valuation Procedure.
An estimate of opinion and value based upon a factual analysis of a property by a qualified professional who preferably possesses an MAI designation. For more information please see our Advisory Services page.
The increased value of an asset.
A multivariate model for estimating the cost of equity capital, which incorporates several systematic risk factors.
ARM stands for Accredited Residential Manager (ARM). It is a professional designation of the Institute of Real Estate Management (IREM) and is awarded to residential property managers who demonstrate proven experience, education and ethical conduct.
The existing condition of real estate, prior to any improvements contemplated under a lease.
A fee imposed on property, usually to pay for public improvements such as water, sewers, street, improvement districts, etc.
A fee imposed on property, usually to pay for public improvements such as water, sewers, streets, improvement districts, etc.
A general way of determining a value indication of a business, business ownership interest, or security using one or more methods based on the value of the assets net of liabilities.
A transfer to another of any property, real or personal, or any rights or estates in said property. Common assignments are of leases, mortgages, deeds of trust, but the general term encompasses all transfers of title.
To turn over or transfer to another money or goods. To agree to recognize a new owner of a property and to pay him/her rent. In a lease, when the tenant agrees to attorn to the purchased, the landlord is given the power to subordinate tenant's interest to any first mortgage or deed of trust lien subsequently placed upon the leased premises.
The average rate charged by a hotel for one (1) room for one (1) day; arrived at by dividing the total room revenue by the actual rooms occupied. Please view our hospitality underwriting guidelines for more information
It is a way to look at the term of a loan or bond that accounts for principal pay downs. If a loan is interest only with a full balloon at the end, the average life will equal the maturity. If there is amortization, principal is being paid over the life of the loan, decreasing the balloon payment and the average life. This number is then used to find the treasury that has the closest remaining term, but is not shorter. For example, a 10/25 loan has an average life of 9 years. 9 years from today is October 2008. The current list of outstanding, non-callable US treasury securities with maturities in 2008 includes March 2008, June 2008, September 2008 and a December 2008. The lender would choose the December 2008 because it is longer than the actual due date.
A large principal payment that typically becomes due at the conclusion of the loan term. Generally, it reflects a loan amortized over a longer period than that of the term of the loan itself (i.e. payments based on a 25 year amortization with the principal balance due at the end of 5 years). See "Bullet Loan".
The condition or state of a person (individual, partnership, corporation, etc.) who is unable to repay it's debts as they are, or become, due.
Proceedings under federal statures to relieve a debtor who is unable or unwilling to pay its debts. After addressing certain priorities and exemptions, the bankrupt’s property and other assets are distributed by the court to creditors as full satisfaction for the debt. See also:
"Chapter 11".
The existing shell condition of a building prior to the installation of tenant improvements. This condition varies from building to building, landlord to landlord, and generally involves the level of finish above the ceiling grid.
A set amount used as a minimum rent in a lease with provisions for increasing the rent over the term of the lease. See also "Escalation Clause", "Operating Expense Escalation" and "Percentage Lease".
Actual taxes and operating expenses for a specified base year, most often the year in which the lease commences. Once the base year expenses are known, the lease essentially becomes a dollar stop lease.
One-100th of 1 percent. Used primarily to describe changes in yield or price on debt instruments including mortgages and mortgage-backed securities.
Any structure or a portion of a structure located underground or below the surface grade of the surrounding land.
A measure of systematic risk of a stock; the tendency of a stock’s price to correlate with changes in a specific index.
An amount or percentage deducted from the current market price of a publicly traded stock to reflect the decrease in the per share value of a block of stock that is of a size that could not be sold in a reasonable period of time given normal trading volume.
Building Officials Conference of America, which writes the guidelines for basic, community building codes.
Building Owners and Managers Association. BOMA publishes the definition of rentable and useable area, which is used to determine the square footage leased in most commercial office buildings.
see Net Book Value.
A loan which enables a buyer to purchase a property, then allow for time to rehab and/or increase NOI prior to placement of permanent financing or enables buyer to get financing to make a down payment and pay closing costs before selling the present property. Also called "gap" financing.
An agent who brings together a buyer and a seller, or a landlord and a tenant, in a real estate transaction. All brokers must be licensed by the state in which they work. Most brokers work on commission, and the landlord or seller usually pays the fee.
Building classifications in most markets refer to Class "A", "B", "C" and sometimes "D" properties. While the rating assigned to a particular building is very subjective, Class "A" properties are typically newer buildings with superior construction and finish in excellent locations with easy access, attractive to credit tenants, and which offer a multitude of amenities such as on-site management or covered parking. These buildings, of course, command the highest rental rates in their sub-market. As the "Class" of the building decreases (i.e. Class "B", "C" or "D") one component or another such as age, location or construction of the building becomes less desirable. Note that a Class "A" building in one sub-market might rank lower if it were located in a distinctly different sub-market just a few miles away containing a higher end product.
The various laws set forth by the ruling municipality as to the end use of a certain piece of property and that dictate the criteria for design, materials and type of improvements allowed.
Represents the percentage of Net Rentable Square Feet devoted to the building's common areas (lobbies, rest rooms, corridors, etc.). This factor can be computed for an entire building or a single floor of a building. Also known as a Loss Factor or Rentable/Usable (R/U) Factor, it is calculated by dividing the rentable square footage by the usable square footage. See also "Rentable/Usable Ratio".
The landlord lists, in detail, the building standard materials and costs necessary to make the premises suitable for occupancy. A negotiated allowance is then provided for the tenant to customize or upgrade materials. See also "Work letter".
A list of construction materials and finishes that represent what the Tenant Improvement (Finish) Allowance/Work Letter is designed to cover while also serving to establish the landlord's minimum quality standards with respect to tenant finish improvements within the building. Examples of standard building items are:
type and style of doors, lineal feet of partitions, quantity of lights, quality of floor covering, etc.
The space improvements put in place per the tenant's specifications. Takes into consideration the amount of Tenant Finish Allowance provided for in the lease agreement. See also "Tenant Improvement Allowance"
An approach taken to lease space by a property owner where a new building is designed and constructed per the tenant’s specifications.
Any short-term, generally five to seven years, financing option that requires a balloon payment at the end of the term and anticipates that the loan will be refinanced in order to meet the balloon payment obligation. Essentially, should the refinancing not be available, often due to the property not performing as anticipated, the borrower is "shot" and the property is subject to foreclosure. An example of this is when a developer borrows to cover the costs of construction and carry-costs for a new building with the expectation that it would be replaced by long-term (or "permanent") financing provided by an institutional investor once most of risk involved in construction and lease-up had been overcome resulting in an income-producing property.
A commercial, industrial, service, or investment entity (or a combination thereof) pursuing an economic activity.
The degree of uncertainty of realizing expected future returns of the business resulting from factors other than financial leverage. See Financial Risk.
The act or process of determining the value of a business enterprise or ownership interest therein.
see Business Enterprise.
Common Area Maintenance charges. Those charges levied on or the expenses incurred in maintaining the common areas of a building.
A major improvement that will have a life of more than one year. Capital expenditures are generally depreciated over their useful life, as distinguished from operational repairs, which are subtracted from income during the year in which they were expended.
A model in which the cost of capital for any stock or portfolio of stocks equals a risk-free rate plus a risk premium that is proportionate to the systematic risk of the stock or portfolio.
This type of expense is most often defined by reference to generally accepted accounting principles (GAAP), but GAAP does not provide definitive guidance on all possible expenditures. Accountants will often disagree on whether or not to include certain items.
Taxable income derived from the sale of a capital asset. It is equal to the sales price less the cost of sale, adjusted basis, suspended losses, excess cost recovery, and recapture of straight-line cost recovery.
Any tax on a change in capital value (including capital gains tax, estate tax, or inheritance tax); as distinguished from a tax on income.
A conversion of a single period of economic benefits into value.
Any multiple or divisor used to convert anticipated economic benefits of a single period into value.
A method within the income approach whereby economic benefits for a representative single period are converted to value through division by a capitalization rate.
The rate that is considered a reasonable return on investment (on the basis of both the investor's alternative investment possibilities and the risk of the investment). Used to determine and value real property through the capitalization process. Also called "free and clear return". See "Capitalization".
The composition of the invested capital of a business enterprise; the mix of debt and equity financing.
Costs incidental to property ownership, other than interest (i.e. taxes, insurance costs and maintenance expenses), that must be absorbed by the landlord during the initial lease-up of a building and thereafter during periods of vacancy.
Specific items that a Lender will require the Borrower to personally guarantee for the life of the loan. Typically include (but are not limited to) environmental, fraud, misappropriation of funds, and theft.
Cash that is generated over a period of time by an asset, group of assets, or business enterprise. It may be used in a general sense to encompass various levels of specifically defined cash flows. When the term is used, it should be supplemented by a qualifier (for example, "discretionary" or "operating") and a specific definition in the given valuation context.
CCIM stands for Certified Commercial Investment Member and is a professional designation from the Commercial Investment Real Estate Institute, one of nine affiliated groups of the National Association of Realtors. See Commercial Investment Real Estate Institute for more details.
A statement issued by a local government verifying that a newly constructed building is in compliance with all codes and may be occupied.
Formula to dertermind cash flow after taxes.
That portion of the Federal Bankruptcy code that deals with business reorganizations. Chapter 7 is that part of the Federal Bankruptcy code that deals with business liquidations.
That portion of the Federal Bankruptcy code that deals with business liquidations. Chapter 11 is that part of the Federal Bankruptcy code that deals with business reorganizations.
Moving people from one workspace to another within the leased premises. Usually involves relocation of furniture, phones, and the like and can be very expensive and time consuming. A high churn rate is to be avoided.
Those areas (hallways, corridors, etc.) in an office space that are used to travel between offices, cubicles and the like.
Interior space required for internal office circulation not accounted for in the Net Square Footage. Based upon our experience, we use a Circulation Factor of 1.35 x the Net Square Footage for office and fixed drywall areas and a Circulation Factor of 1.45 x the Net Square Footage for open area workstations. See also "Net Square Footage" and "Usable Square Footage."
Stands for Commercial Investment Real Estate Institute and is one of nine affiliated groups of the National Association of Realtors. For a further explanation, see Commercial Investment Real Estate Institute.
Class is usually used in conjuction with an office property and refers to the quality of property. Class definitions fall with the following guidelines. Class A+:
Landmark quality, high-rise building with prime central business district location (the best of the Class A buildings). Class A:
Generally 100,000 sf or larger (five or more floors), concrete and steel construction, built since 1980, business/support amenities, strong identifiable location/access. Class B:
Renovated and in good locations. Newer building are smaller in size, wood frame construction, and/or in non-prime location. Class C:
Older, unrenovated of any size in average to fair condition.
A building, most often a warehouse or parking garage, with vertical columns on the outside edges of the structure and a clear span between columns.
Various fees and expenses payable by the seller and buyer at the time of a real estate closing, (also termed transaction costs). These costs include brokerage commissions, lender fees, title insurance, recording fees, prepayment penalty, inspection and appraisal fees, and attorney’s fees.
The date on which a lease begins. This is typically but not always the day on which the tenant takes possession of the leased space, which usually occurs upon substantial completion of the tenant improvements. (See occupancy Date).
A financial institution authorized to provide a variety of financial services, including consumer and business loans (generally short-term with full recourse to the Borrower). Commercial banks may be members of the Federal Reserve System.
The Commercial Investment Real Estate Institute is one of nine affiliated groups of the National Association of Realtors. Through an extensive education curriculum, programs, and publications, CIREI enhances the professional development of those engaged in commercial-investment real estate. The institute confers the Certified Commercial Investment Member (CCIM) designation. CCIMs are recognized for an expertise of commercial real estate brokerage, leasing, asset management, valuation and investment analysis, and uphold the industry's highest professional and ethical standards. Membership consists of 5,000 candidates and nearly 5,000 designees throughout North America. Regions and chapters provide designees and candidates the opportunities to promote business and education goals through local and regional forums and meetings. The CCIM network includes brokers, leasing professionals, investment counselors, property managers, appraisers, corporate real estate executives, developers, attorneys, asset managers, bankers, and other allied professionals.
Other than residential. Owned or leased property such as office, research, retail and industrial properties.
The fee paid to a real estate broker as procuring cause and/or for his or her services rendered in a real estate transaction. May be paid by either party in a transaction; it is usually governed by a prior written agreement.
A charge required by a lender to lock in specific terms on a loan at the time of Commitment.
An official notification from a Lender to a Borrower indicating that the Borrower's loan application has been approved. It will state in detail the terms and conditions of the prospective loan.
There are two components of the term "common area". If referred to in association with the Rentable/Usable or Load Factor calculation, the common areas are those areas within a building that are available for common use by all tenants or groups of tenants and their invitees (i.e. lobbies, corridors, restrooms, etc.). On the other hand, the cost of maintaining parking facilities, malls, sidewalks, landscaped areas, public toilets, truck and service facilities, and the like are included in the term "common area" when calculating the tenant's pro-rata share of building operating expenses.
This is the amount of Additional Rent charged to the tenant, in addition to the Base Rent, to maintain the common areas of the property shared by the tenants and from which all tenants benefit. Examples include:
snow removal, outdoor lighting, parking lot sweeping, insurance, property taxes, etc. Most often, this does not include any capital improvements (see "Capital Expenses") that are made to the property.
Financial statements in which each line is expressed as a percentage of the total. On the balance sheet, each line item is shown as a percentage of total assets, and on the income statement, each item is expressed as a percentage of sales.
Lease rates and terms of properties similar in size, construction quality, age, use, and typically located within the same sub-market and used as comparison properties to determine the fair market lease rate for another property with similar characteristics.
Cash or cash equivalents expended by the landlord in the form of rental abatement, additional tenant finish allowance, moving expenses, cabling expenses or other monies expended to influence or persuade the tenant to sign a lease.
The process of taking private property, without the consent of the owner, by a governmental agency for public use through the power of eminent domain. See also "Eminent Domain".
An entity which issues mortgage- backed securities backed by mortgages which were originated by other lenders.
Percentage of the original loan paid in equal annual payments that provides principal reduction and interest payments over the life of the loan.
A short-term, interim loan for financing the cost of construction. The lender advances funds to the builder at periodic intervals as work progresses. Typically a recourse loan to the borrower.
The actual construction process is overseen by a qualified construction manager who ensures that the various stages of the construction process are completed in a timely and seamless fashion, from getting the construction permit to completion of the construction to the final walk-through of the completed leased premises with the tenant.
Measures inflation in relation to the change in the price of a fixed market basket of goods and services purchased by a specified population during a "base" period of time. It is not a true "cost of living" factor and bears little direct relation to actual costs of building operation or the value of real estate. The CPI is commonly used to increase the base rental periodically as a means of protecting the landlord's rental stream against inflation or to provide a cushion for operating expense increases for a landlord unwilling to undertake the record keeping necessary for operating expense escalations.
(1) Multiple suites/spaces within the same building and on the same floor which can be combined and rented to a single tenant. (2) A block of space located on multiple adjoining floors in a building (i.e., a tenant leases floors 6 through 12 in a building).
Attorneys (especially in negligence cases) paid based on winning the suit and collecting damages; and a broker's commission paid only upon closing the sale of a piece of property.
The complete set of design plans and specifications for the construction of a building or of a building’s interior improvements. Working Drawings specify for the contractor the precise manner in which a project is to be constructed. See also "Specifications" and "Working Drawings".
The power to direct the management and policies of a business enterprise.
An amount or a percentage by which the pro rata value of a controlling interest exceeds the pro rata value of a non-controlling interest in a business enterprise, to reflect the power of control.
Most commonly refers to the transfer of title to property between parties by deed. The term may also include most of the instruments by which an interest in real estate is created, mortgaged or assigned.
Represents the percentage of Net Rentable Square Feet devoted to the building’s common areas (lobbies, rest rooms, corridors, etc.). This factor can be computed for an entire building or a single floor of a building. Also known as a Loss Factor or Rentable/Usable (R/U) Factor, it is calculated by dividing the rentable square footage by the usable square footage."
A specialized type of mortgage banker whose function is limited to the origination of mortgage loans which are sold to other mortgage bankers or investment bankers under a specific commitment.
A method of appraising real property whereby the replacement cost of a structure is calculated using current costs of construction.
The expected rate of return that the market requires in order to attract funds to a particular investment.
Counselors of Real Estate is one of nine affiliated groups of the National Association of Realtors. See CRE
A written agreement inserted into deeds or other legal instruments stipulating performance or non-performance of certain acts or, uses or non-use of a property and/or land.
The old "quiet enjoyment" paragraph, now more commonly referred to as "Warranty of Possession", had nothing to do with noise in and around the leased premises. It provides a warranty by Landlord that it has the legal ability to convey the possession of the premises to Tenant; the Landlord does not warrant that he owns the land. This is the essence of the landlord's agreement and the tenant's obligation to pay rent. This means that if the landlord breaches this warranty, it constitutes an actual or constructive eviction.
(Consumer Price Index) A measure of inflation as determined by the US federal government by using a "basket of goods". Used in leases as an impartial benchmark for the calculation of escalations.
CPM is a professional designation that stands for Certified Property Manager (CPM) and is awarded by the Institute of Real Estate Management. Today, nearly 9,000 property managers and real estate asset managers hold this designation.
CRB stands for Certified Real Estate Brokerage Manager and is a professional designation of the Real Estate Brokerage Managers Council, one of nine affiliated groups of the National Association of Realtors. Recognized industry-wide as the symbol of excellence, the CRB designation confers upon those who have earned it the highest level of professional achievement and recognition in the specialized field of brokerage management.
CRE stands for Counselor of Real Estate and is a professional designation from the Counselors of Real Estate, one of nine affiliated groups of the National Association of Realtors. Members of the Counselors of Real Estate are recognized problem solvers who provide counseling services, including asset and portfolio management, debt restructuring, best use of land studies, and economic and market analyses. The organization's CRE designation is awarded to all members and attests to the practitioner's expertise, reputation and adherence to a strict Code of Ethics. CREs encompass practicing counselors or prominent real estate, financial, legal and accounting firms as well as leaders of government and academia. Membership is selective, extended by invitation on either a self-initiated or sponsored basis.
Net income shortfalls on one property are offset by excess cash flow from other properties in a pool of "crossed" loans. Significantly enhances a transaction from the viewpoint of investors and rating agencies.
CRS stands for Certified Residential Specialist and is a professional designation of the Residential Sales Council, one of nine affiliated groups of the National Association of Realtors. CRS designees are recognized experts in listing, selling and real estate investment.
The interest rate used in finding present values that when applied to the rental rate takes into account all landlord lease concessions and then expressed as a percentage of base rent.
The abbreviation for "doing business as".
The state of agreement both parties are looking for.
A long-term bond or note issued by governments and/or corporations and not secured by a mortgage or lien on any specific property. Since there is no specific property securing the debenture, the ability to repay the debt is based solely on the financial strength of the issuer.
The relationship between the annual net operating income (NOI) of a property and the annual debt service of the mortgage loan on the property. Both Lenders and Investors calculate this ratio to assist them in determining the likelihood of the property generating enough income to pay the mortgage payments. From the lender's viewpoint, the higher the ratio, the better.
The periodic payment (monthly, quarterly, or annually) necessary to pay the interest and principal on a loan which is being amortized over a longer term (usually 25-30 years).
We discourage the use of this term. See invested Capital.
To appropriate private property to public ownership for a public use.
A legal instrument transferring title to real property from the seller to the buyer upon the sale of such property.
A deed given by an owner/borrower to a lender to satisfy a mortgage debt and avoid foreclosure. See also "Foreclosure".
An instrument used in many states in place of a mortgage by which real property is transferred to a trustee by the borrower (trustor), in favor of the lender (beneficiary), to secure repayment of a debt.
The general failure to perform a legal or contractual duty or to discharge an obligation when due. Some specific examples are:
1) Failure to make a payment of rent when due. 2) The breach or failure to perform any of the terms of a lease agreement.
In defeasance, the lender replaces the cash flows of the original loan with actual Treasury Securities. The borrower pays the lender enough money to buy these securities and the lender goes out in the bond market and buys the right combination of bonds. After this is done, and the lender has a security interest in the treasuries, the property is released as collateral for the loan and the treasuries become the new loan collateral.
Imposition of personal liability on a borrower for the unpaid balance of mortgage debt after a foreclosure has failed to yield the full amount of the debt.
The walled off and secured area of a leased space, separated from spaces leased to others (by a "demising" wall). Also measured as useable area. Discount Rate - The rate of interest used in a present value analysis representing the "time value of money".
The partition wall that separates one tenant’s space from another or from the building’s common area such as a public corridor.
Spreading out the cost of a capital asset over its estimated useful life or a decrease in the usefulness, and therefore value, of real property improvements or other assets caused by deterioration or obsolescence.
A system in which a single entity is responsible for both the design and construction. The term can apply to an entire facility or to individual components of the construction to be performed by a subcontractor; also referred to as "design/construct".
An amount or percentage deducted from the pro rata share of value of 100% of an equity interest in a business to reflect the absence of some or all of the powers of control.
An amount or percentage deducted from the value of an ownership interest to reflect the relative absence of marketability.
An amount or percentage deducted from the per share value of a minority interest voting share to reflect the absence of voting rights.
The rate of interest charged to banks who buy money from the Federal Reserve System. An increase in the rate not only discourages the banks from borrowing, but it also serves as a signal that interest rates are probably going to increase. Also, a compound interest rate used to convert expected future income into a present value income.
A method within the income approach whereby the present value of future expected net cash flows is calculated using a discount rate.
A method within the income approach whereby the present value of future expected economic benefits is calculated using a discount rate.
The act of seizing (legally or illegally) personal property based on the right and interest which a landlord has in the property of a tenant in default.
An agreed dollar amount of taxes and operating expense (expressed for the building as a whole or on a square foot basis) over which the tenant will pay its prorated share of increases. May be applied to specific expenses (e.g., property taxes or insurance).
The monetary advance by a buyer of part of the purchase price to indicate the intention and ability of the buyer to carry out the contract.
A right of use over the property of another created by grant, reservation, agreement, prescription or necessary implication. It is either for the benefit of adjoining land ("appurtenant"), such as the right to cross A to get to B., or for the benefit of a specific individual ("in gross"), such as a public utility easement.
Inflows such as revenues, net income, net cash flows, etc.
A building or project’s feasibility in terms of costs and revenue, with excess revenue establishing the degree of viability.
The period of time over which property may generate economic benefits.
The market rental value of a property at a given point in time, even though the actual rent may be different.
see Valuation Date.
Term used for an income-producing property, derived from the potential gross income, less a vacancy factor and a collection loss amount.
The actual rental rate to be achieved by the landlord after deducting the value of concessions from the base rental rate paid by a tenant, usually expressed as an average rate over the term of the lease.
Excludes those areas within the Useable Space (see below) that the tenant pays rent on but effectively cannot use such as columns and sharply angled spaces.
Represents the percentage of Net Rentable Square Feet devoted to the building’s common areas (lobbies, rest rooms, corridors, etc.). This factor can be computed for an entire building or a single floor of a building. Also known as a Core Factor or Rentable/Usable (R/U) Factor, it is calculated by dividing the rentable square footage by the usable square footage.
A power of the state, municipalities, and private persons or corporations authorized to exercise functions of public character to acquire private property for public use by condemnation, in return for just compensation. See also "Condemnation".
The intrusion of a structure which extends, without permission, over a property line, easement boundary or building setback line.
Any right to, or interest in, real property held by someone other than the owner, but which will not prevent the transfer of fee title (i.e. a claim, lien, charge or liability attached to and binding real property)..
see Business Enterprise.
Documents which are required by federal and state laws to accompany proposals for major projects and programs that will likely have an impact on the surrounding environment.
(1) A legal doctrine based on fairness, rather than strict interpretation of the letter of the law. (2) The market value of real property, less the amount of existing liens. (3) Any ownership investment (stocks, real estate, etc.) as opposed to investing as a lender (bonds, mortgages, etc.).
(2) The owner’s interest in property after deduction of all liabilities.
Those cash flows available to pay out to equity holders (in the form of dividends) after funding operations of the business enterprise, making necessary capital investments, and increasing or decreasing debt financing.
The right of a Lender to a share in the gross profits, net profits or net proceeds in the event of a sale or refinance of a property on which the Lender has made a loan. Also known as an "equity kicker."
A rate of return added to a risk-free rate to reflect the additional risk of equity instruments over risk free instruments (a component of the cost of equity capital or equity discount rate).
The ELR is the flat rate per square foot that, if paid each year in nominal dollars, will equal the same total present value as a proposed lease's variable cash flows. The ELR is calculated by discounting all cash flows to a net present value per square foot and then amortizing this lump sum amount evenly over the term of the lease on a cost per square foot basis.
A clause in a lease providing for an increased rental at a future time. May be accomplished by several types of clauses, such as:
(1) fixed increases -- a clause which calls for a definite, periodic rental increase; (2) cost of living -- a clause which ties the rent to a government cost of living index, with periodic adjustments as the index changes; (3) direct expense -- the rent adjusted according to changes in the expenses of the property paid by the lessor, such as tax increases, increased maintenance costs, etc.
A clause in a lease which provides for the rent to be increased to reflect changes in expenses paid by the landlord such as real estate taxes, operating costs, etc. This may be accomplished by several means such as fixed periodic increases, increases tied to the Consumer Price Index or adjustments based on changes in expenses paid by the landlord in relation to a dollar stop or base year reference.
The mechanism in a lease which increases the rent, usually annually. May be set forth in fixed steps, tied to increases in operating expense, or to increases in the Consumer Price Index (CPI).
A written agreement made between the parties to a contract and an escrow agent. The escrow agreement sets for the basic obligations of the parties, describes the monies (or other things of value) to be deposited in escrow, and instructs the escrow agent concerning the disposition of the monies deposited.
A signed statement certifying that certain statements of fact are correct as of the date of the statement and can be relied upon by a third party, including a prospective lender or purchaser. In the context of a lease, a statement by a tenant identifying that the lease is in effect and certifying that no rent has been prepaid and that there are no known outstanding defaults by the landlord (except those specified).
A statement concerning the status of an agreement, (usually a lease) and the performance of obligations under the agreement. A third party such as a lender, relies on the statement (which is usually unilaterally executed by the tenant) for such things as making a loan on property.
That amount of anticipated economic benefits that exceeds an appropriate rate of return on the value of a selected asset base (often net tangible assets) used to generate those anticipated economic benefits.
A specific way of determining a value indication of a business, business ownership interest, or security determined as the sum of (a) the value of the assets derived by capitalizing excess earnings and (b) the value of the selected asset base. Also frequently used to value intangible assets. See Excess Earnings.
A written agreement between a real estate broker and a property owner in which the owner promises to pay a fee or commission to the broker if specified real property is leased during the listing period. The broker need not be the procuring cause of the lease.
Any property where the owner has signed an agreement with a real estate broker to lease and/or sell their property. That broker has an "exclusive listing" on the owner's property.
A right granted by the landlord to the tenant whereby the tenant has the option(s) to add more space to its premises pursuant to the terms of the option(s).
A comparison of the operating expenses to potential gross income. This ratio can be compared over time and with that of other properties to determine the relative operating efficiency of the property considered.
An agreed dollar amount of taxes and operating expense (expressed for the building as a whole or on a square foot basis) over which the tenant will pay its prorated share of increases. May be applied to specific expenses (e.g., property taxes or insurance).
An agreed continuation of occupancy under the same conditions, as opposed to a renewal, which implies new terms or conditions. In a lease, it is a right granted by the landlord to the tenant whereby the tenant has the option to extend the lease for an ad.
The "asking" rental rate published by the landlord.
The rent which would be normally agreed upon by a willing landlord and tenant in an "arm's length transaction" for a specific property at a given time, even though the actual rent may be different. In a lease, the term "fair market rent" is defined in a number of different ways and is subject to extensive negotiation and interpretation.
The sale price at which a property would change hands between a willing buyer and willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of the relevant facts. Also known as FMV.
"Fair value" is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
An opinion as to whether or not the consideration in a transaction is fair from a financial point of view.
Commonly known as "Fannie Mae", the FNMA is the largest buyer of existing mortgages. The Federal National Mortgage Association was originally organized by the federal government in 1938 to purchase FHA-insured mortgages. The association was reorganized in 1968 as a quasi-private corporation whose entire ownership is private. Fannie Mae raises capital by issuing corporate stock which is actively traded on the New York Stock Exchange and by selling mortgages out of its portfolio to various investors.
An estate under which the owner is entitled to unrestricted powers to dispose of the property, and which can be left by will or inherited. Commonly, a synonym for ownership.
The amount paid for the privilege deferring payment of goods or services purchased, including any charges payable by the purchaser as a condition of the loan.
The degree of uncertainty of realizing expected future returns of the business resulting from financial leverage. See Business Risk.
Generally refers to new space that is currently available for lease and has never before been occupied by a tenant. See also "Second Generation Space."
The senior mortgage which, by reason of its position, has priority over all junior encumbrances. The holder of the first or senior mortgage has a priority right to payment in the event of default.
A lease clause giving a tenant the first opportunity to lease additional space that might become available in a property at the same price and on the same terms and conditions as those contained in a third party offer that the owner has expressed a willingness to accept. This right is often restricted to specific areas of the building such as adjacent suites or other suites on the same floor.
A lease clause giving a tenant the first opportunity to buy a property at the same price and on the same terms and conditions as those contained in a third party offer that the owner has expressed a willingness to accept.
Costs, such as rent, which do not fluctuate in proportion to the level of sales or production.
Expenditures such as property taxes, license fees, and property insurance that are not directly affected, by the occupancy of the property. Fixed expenses along with operating expenses are subtracted from effective gross income to determine the net operating income of property.
A building providing its occupants the flexibility of utilizing the space. Usually provides a configuration allowing a flexible amount of office or showroom space in combination with manufacturing, laboratory, warehouse distribution, etc. Typically also provides the flexibility to relocate overhead doors. Generally constructed with little or no common areas, load-bearing floors, loading dock facilities and high ceilings.
The ratio of the gross square footage of a building to the land on which it is situated. Calculated by dividing the total square footage in the building by the square footage of land area.
A force that cannot be controlled by the parties to a contract and prevents said parties from complying with the provisions of the contract. This includes acts of God such as a flood or a hurricane or, acts of man such as a strike, fire or war.
Liquidation value, at which the asset or assets are sold as quickly as possible, such as at an auction.
A procedure by which the mortgagee ("lender") either takes title to or forces the sale of the mortgagor’s ("borrower") property in satisfaction of a debt. See also "Deed In Lieu Of Foreclosure".
An agreement between a permanent lender and an interim (typically construction) lender wherein the permanent lender issues a conditional commitment that will replace the construction loan once a given set of terms and conditions have been achieved.
see Net Cash Flow.
A concession granted by a landlord to a tenant whereby the tenant is excused from paying rent for a stated period during the lease term.
A loan on which an endorser or guarantor is liable in the event of default by the borrower.
An all-inclusive rental rate that includes operating expenses and real estate taxes for the first year. The tenant is generally still responsible for any increase in operating expenses over the base year amount. See also "Pass Throughs".
A loan that is fully repaid at maturity by periodic (monthly) reductions of the principal. The first part of each monthly payment covers interest on the outstanding debt as of the payment due date and the remainder of the payment goes to reduce the outstanding debt.
A lease in which the stated rent includes the operating expenses and taxes for the building. Same as Gross Lease. Opposite of Net Lease.
Space in a proposed commercial development which is not yet under construction or where no construction start date has been set. Future Proposed projects include all those projects waiting for a lead tenant, financing, zoning, approvals or any other event necessary to begin construction. Also may refer to the future phases of a multi-phase project not yet built.
The prime contractor who contracts for the construction of an entire building or project, rather than just a portion of the work. The general contractor hires subcontractors, (e.g., plumbing, electrical, etc.), coordinates all work, and is responsible for payment to subcontractors.
A member of a partnership who has authority to bind the partnership. A general partner also shares in the profits and losses of the partnership. See also "Limited Partnership".
The condition that results from a tenant's closing its business, even though the lease is still in effect. Lease language may provide a means for a landlord to void a lease and take back the leased premises if the tenant ceases to operate its business at that location.
The value of a business enterprise that is expected to continue to operate into the future. The intangible elements of going concern value result from factors such as having a trained work force, an operational plant, and the necessary licenses, systems, and procedures in place.
An ongoing operating business enterprise.
That intangible asset arising as a result of name, reputation, customer loyalty, location, products, and similar factors not separately identified.
The value attributable to goodwill.
A lease, generally long term in nature, which provides that the rent will vary depending upon future contingencies, such as a periodic appraisal, the tenant’s gross income or simply the passage of time.
To bestow or transfer an interest in real property by deed or other instrument; either the fee or a lesser interest, such as an easement.
One to whom a grant is made.
The person making the grant.
A measure of the total square feet leased over a specified period of time with no consideration given to space vacated in the same geographic area during the same time period. See also "Net Absorption".
The total floor area of the building measuring from the outer surface of exterior walls and windows and including all vertical penetrations (e.g. elevator shafts, etc.) and basement space.
A lease in which the tenant pays a flat sum for rent out of which the landlord must pay all expenses such as taxes, insurance, maintenance, utilities, etc.
Usually refers to gross area of a building by measuring from the outside of its exterior walls and including all vertical penetrations, such as elevator shafts. Also includes basement space.
An adjustment made to operating expenses to account for the occupancy level in a building. When operating expenses are "grossed up", it means that the building's variable expenses have been adjusted upwards to the level that those expenses would be incurred if the building was fully occupied (typically 95%).
A lease of land only, (either vacant or exclusive of any buildings on it). Usually a net lease on a long term basis (30 years+). Ground rent should not be charged back to the tenant as an operating expense.
Rent paid to the owner for use of land, normally on which to build a building. Generally, the arrangement is that of a long-term lease (e.g. 99 years) with the lessor retaining title to the land.
One who makes a guaranty. See also "Guaranty".
Agreement whereby the guarantor undertakes collaterally to assure satisfaction of the debt of another or perform the obligation of another if and when the debtor fails to do so. Differs from a surety agreement in that there is a separate and distinct contract rather than a joint undertaking with the principal. See also "Guarantor".
Method within the market approach whereby market multiples are derived from market prices of stocks of companies that are engaged in the same or similar lines of business, and that are actively traded on a free and open market.
The cost of actually constructing the improvements (i.e. construction costs). See also "Soft Cost".
In the Central Business District, this could mean a building higher than 25 stories above ground level but in suburban sub-markets, it generally refers to buildings higher than 7 or 8 stories.
The use of land or buildings which will bring the greatest economic return over a given time which is physically possible, appropriately supported, financially feasible.
Is the initial (new) capitalized cost of an item at the time it was first placed in service.
A tenant retaining possession of the leased premises after the expiration of a lease.
The condition that results when a tenancy exists beyond the end of the term of a lease.
An alternative workspace concept where rather than having an assigned exclusive workspace, an employee accesses one space, perhaps being one of many such spaces in common with others on an as needed basis, and otherwise works outside of the office.
The acronym for "Heating, Ventilating and Air-Conditioning".
In the context of leasing, the term typically refers to the improvements made to or inside a building but may include any permanent structure or other development, such as a street, sidewalks, utilities, etc. See also "Leasehold Improvements". See also "Leasehold Improvements" and "Tenant Improvements".
A general way of determining a value indication of a business, business ownership interest, security, or intangible asset using one or more methods that convert anticipated economic benefits into a present single amount.
Development costs, other than material and labor costs which are directly related to the construction of improvements, including administrative and office expenses, commissions, architectural, engineering and financing costs.
The Institute of Real Estate Management is one of nine affiliated groups of the National Association of Realtors. IREM is committed to enhancing the knowledge and professionalism of the real estate management industry. It does this primarily through the Certified Property Manager (CPM) designation program. Today, nearly 9,000 property managers and real estate asset managers hold this designation. IREM's special recognition programs extends to management firms and site managers specializing in residential real estate. The Accredited Management Organization (AMO) designation is awarded to property management firms that have met IREM's standards in the areas of education, experience, integrity, insurance and financial stability. The Accredited Residential Manager (ARM) award may be earned by residential property managers who demonstrate proven experience, education and ethical conduct.
Equipment that is equal to the RCN less the portion excluded from insurance coverage. The typical exclusions are:
excavation and fill, machine foundations, underground piping or wiring, wastewater treatment ponds, etc. Policies can be written for either Reproduction Cost New or Replacement Cost New.
Non-physical assets such as franchises, trademarks, patents, copyrights, goodwill, equities, mineral rights, securities and contracts (as distinguished from physical assets) that grant rights and privileges, and have value for the owner.
The true annual rate of earnings on an investment. Equates the value of cash invested with cash returns. Considers the application of compound interest factors.
The value that an investor considers, on the basis of an evaluation or available facts, to be the "true" or "real" value that will become the market value when other investors reach the same conclusion. When the term applies to options, it is the difference between the exercise price or strike price of an option and the market value of the underlying security.
The total amount of rentable square feet of existing and any forthcoming space (whether it be a tenant vacating space or new buildings coming on the market), in a given category, for example, all warehouse space in a specified submarket. Inventory refers to all space within a certain proscribed market without regard to its availability or condition, and categories can include all types of leased space such as office, flex, retail and warehouse space.
The sum of equity and debt in a business enterprise. Debt is typically (a) all interest bearing debt or (b) long-term interest-bearing debt. When the term is used, it should be supplemented by a specific definition in the given valuation context.
Those cash flows available to pay out to equity holders (in the form of dividends) and debt investors (in the form of principal and interest) after funding operations of the business enterprise and making necessary capital investments.
A lending institution that is both a direct lender as well as an intermediary.
The degree of uncertainty as to the realization of expected returns.
The value to a particular investor based on individual investment requirements and expectations. [Note:
in Canada, the term used is "Value to the Owner."]
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.
An encumbrance that arises by law when a judgment for the recovery of money attaches to the debtor’s real estate. See also "Lien".
The final decision of a court resolving a dispute and determining the rights and obligations of the parties. Money judgments, when recorded, become a lien on real property of the defendant.
Compensation which is fair to both the owner and the public when property is taken for public use through condemnation (eminent domain). The theory is that in order to be "just", the property owner should be no richer or poorer than before the taking.
An amount or percentage deducted from the value of an ownership interest to reflect the reduction in value resulting from the actual or potential loss of a key person in a business enterprise.
The party (usually the owner) who gives the lease (right to possession) in return for a consideration (rent).
A warrant from a landlord to levy upon a tenant’s personal property (e.g., furniture, etc.) and to sell this property at a public sale to compel payment of the rent or the observance of some other stipulation in the lease.
A type of lien that can be created by contract or by operation of law. Some examples are:
(1) a contractual landlord’s lien as might be found in a lease agreement; (2) a statutory landlord’s lien; and (3) landlord’s remedy of distress (or right of distraint), which in not truly a lien but has a similar effect. See also "Lien".
An agreement whereby the owner of real property (i.e., landlord/lessor) gives the right to possession to another (i.e., tenant/lessee) for a specified period of time (i.e., term) and for a specified consideration (i.e., rent).
The formal legal document entered into between a Landlord and a Tenant to reflect the terms of the negotiations between them; that is, the lease terms have been negotiated and agreed upon, and the agreement has been reduced to writing. It constitutes the entire agreement between the parties and sets forth their basic legal rights.
The date usually constitutes the commencement of the term of the Lease for all purposes, whether or not the tenant has actually taken possession so long as beneficial occupancy is possible. In reality, there could be other agreements, such as an Early Occupancy Agreement, which have an impact on this strict definition.
The specific period of time in which the Landlord grants to the tenant the right to possession of real estate.
Improvements made to the leased premises by or for a tenant. Generally, especially in new space, part of the negotiations will include in some detail the improvements to be made in the leased premises by Landlord. See also "Tenant Improvements".
A geographical description identifying a parcel of land by government survey, metes and bounds, or lot numbers of a recorded plat including a description of any portion thereof that is subject to an easement or reservation.
The term is in technical contrast to equitable owner. The legal owner has title to the property, although the title may actually carry no rights to the property other than as a lien. See also "Lien".
The party to whom a lease (the right to possession) is given in return for a consideration (rent).
The party (usually the owner) who gives the lease (right to possession) in return for a consideration (rent).
A letter from the grantor to a tenant, stating that a property has been sold, and directing rent to be paid to the grantee (buyer). See also "Attorn".
A commitment by a bank or other person, made at the request of a customer, that the issuer will honor drafts or other demands for payment upon full compliance with the conditions specified in the letter of credit. Letters of credit are often used in place of cash deposited with the landlord in satisfying the security deposit provisions of a lease.
A preliminary agreement stating the proposed terms for a final contract. They can be "binding" or "non-binding". This is the threshold issue in most litigation concerning letters of intent. The parties should always consult their respective legal counsel before signing any Letter of Intent.
The beta reflecting a capital structure that includes debt.
A claim or encumbrance against property used to secure a debt, charge or the performance of some act. Includes liens acquired by contract or by operation of law. Note that all liens are encumbrances but all encumbrances are not liens.
A waiver of mechanic’s lien rights, signed by a general contractor and his subcontractors, that is often required before the general contractor can receive a draw under the payment provisions of a construction contract. May also be required before the owner can receive a draw on a construction loan.
A term used in an exchange of property held for productive use in a trade or business or for investment. Unless cash is received, the tax consequences of the exchange are postponed pursuant to Section 1031 of the Internal Revenue Code.
The act or process of determining the value of a business, business ownership interest, security, or intangible asset with limitations in analyses, procedures, or scope.
A type of partnership, created under state law, comprised of one or more general partners who manage the business and who are personally liable for partnership debts, and one or more special or limited partners who contribute capital and share in profits but who take no part in running the business and incur no liability over and above the amount contributed. See also "General Partner".
The net amount that would be realized if the business is terminated and the assets are sold piecemeal. Liquidation can be either "orderly" or "forced."
The ability to quickly convert property to cash or pay a liability.
The amount expressed in terms of gross proceeds which is projected to be obtainable considering the present marketplace, assuming that an entire facility would be sold intact along with all related equipment necessary to make it viable. It further considers that Fair Market Value, as normally defined, could not be obtained due to restrictions of time and probable condition of the business under forced sale conditions. A reasonable period of time is expected to find a purchaser, the seller being compelled to sell and the buyer being willing but not compelled to buy. The value considers a complete sale of the entire property, with the sale made free and clear of all liens and encumbrances
The real estate agent hired by the property owner to lease a property on their behalf. The agent obtains a listing agreement, which calls for that agent to act on the owner's behalf as a fiduciary in leasing the property.
An agreement between the owner of a property and a real estate broker giving the broker the authorization to attempt to sell or lease the property at a certain price and terms in return for a commission, set fee or other form of compensation. See also "Exclusive Listing Agreement".
The amount of square footage is a lease, in addition to a tenant's usable square footage, which represents tenant's pro rata share of the building's common area/s. May also be referred to as a percentage of building's rentable square feet.
In most markets, this refers to a lease whose term is at least three years from initial signing until the date of expiration or renewal option.
Generally, one of several contiguous parcels of land making up a fractional part or subdivision of a block, the boundaries of which are shown on recorded maps and "plats".
A building with fewer than 4 stories above ground level.
A type of construction contract requiring the general contractor to complete a building or project for a fixed cost normally established by competitive bidding. The contractor absorbs any loss or retains any profit.
The degree of control provided by a majority position.
An ownership interest greater than 50% of the voting interest in a business enterprise.
One who creates or executes a promissory note and promises to pay the note when it becomes due.
A general way of determining a value indication of a business, business ownership interest, security, or intangible asset by using one or more methods that compare the subject to similar businesses, business ownership interests, securities, or intangible assets that have been sold.
The share price of a publicly traded stock multiplied by the number of shares outstanding.
The market capitalization of equity plus the market value of the debt component of invested capital.
The market value of a company’s stock or invested capital divided by a company measure (such as economic benefits, number of customers).
The rental income that a property would command on the open market with a landlord and a tenant ready and willing to consummate a lease in the ordinary course of business; indicated by the rents that landlords were willing to accept and tenants were willing to pay in recent lease transactions for comparable space.
A forecast of future demand for a certain type of real estate project that includes an estimate of the square footage that can be absorbed and the rents that can be charged. Also called "Marketability Study".
The highest price a property would command in a competitive and open market under all conditions requisite to a fair sale with the buyer and seller each acting prudently and knowledgeably in the ordinary course of trade.
A value of a property based on a specific use. This may differ from typical Market Values when the use is specialized and there is a limited market for the property based on that use. It is further clarified as the value of assets installed and in use as an integrated part of an operating enterprise with consideration given to the age, condition and utility, and the used market insofar as applicable. Consideration is also given as to whether the earnings of the business justify an investment in the assets at this amount.
An equipment item includes installation and the contribution of the item to the operating facility. This value presupposes the continued utilization of the item in connection with all other installed items. It is also the value of a turnkey facility that is enhanced in value via its instant ability to produce a product or perform a service. Machinery and equipment is made up of marketable and non marketable special purpose items, and the terms are self-descriptive. For marketable equipment, it is equal to the Used Market Value plus layout, delivery and installation costs. The ability of the facility to make or lose money is not an issue in the common use of this value relative to marketable items. The productive utility is an important consideration in non marketable special purpose equipment when estimating the Fair Market Value and this equipment must meet a residual earnings test. When it does not pass the test, the Fair Market Value may be reduced down to a point no less than the Forced Liquidation or Auction Value.
The ability to quickly convert property to cash at minimal cost.
see Discount for Lack of Marketability.
A title which is free from encumbrances and could be readily marketed (i.e., sold) to a reasonably intelligent purchaser who is well informed of the facts and willing to accept such title while exercising ordinary business prudence. See also "Encumbrance".
A primary lease that controls subsequent leases and which may cover more property than subsequent leases. An Executive Suite operation is a good example in that a primary lease is signed with the landlord and then individual offices within the leased premises are leased to other individuals or companies.
A claim created by state statutes for the purpose of securing priority of payment of the price and value of work performed and materials furnished in constructing, repairing or improving a building or other structure, and which attaches to the land as well as to the buildings and improvements thereon.
A method within the market approach whereby pricing multiples are derived from transactions of significant interests in companies engaged in the same or similar lines of business.
The boundary lines of land, with their terminal points and angles, described by listing the compass directions and distances of the boundaries. Originally, metes referred to distance and bounds referred to direction.
A building with between four and eight stories above ground level although in a Central Business District, this might extend to buildings up to twenty-five stories.
A convention used in the Discounted Future Earnings Method that reflects economic benefits being generated at midyear, approximating the effect of economic benefits being generated evenly throughout the year.
A discount for lack of control applicable to a minority interest.
An ownership interest less than 50% of the voting interest in a business enterprise.
Space within a building or project providing for more than one use (i.e., a loft or apartment project with retail, an apartment building with office space, an office building with retail space).
A lease for a specific period of time, usually one month, which automatically renews itself for the same period of time, unless landlord or tenant provide notice to terminate.
A written instrument creating an interest in real estate and that provides security for the performance of a duty or the payment of a debt. The borrower (i.e., mortgagor) retains possession and use of the property.
The inverse of the capitalization rate.
The square feet leased in a specific geographic area over a fixed period-of-time after deducting space vacated in the same area during the same period. See also "Gross Absorption".
With respect to a business enterprise, the difference between total assets (net of accumulated depreciation, depletion, and amortization) and total liabilities as they appear on the balance sheet (synonymous with Shareholder’s Equity). With respect to a specific asset, the capitalized cost less accumulated amortization or depreciation as it appears on the books of account of the business enterprise.
When the term is used, it should be supplemented by a qualifier. See Equity Net Cash Flows and Invested Capital Net Cash Flows.
A lease in which there is a provision for the tenant to pay, in addition to rent, certain costs associated with the operation of the property. These costs may include property taxes, insurance, repairs, utilities, and maintenance. There are also "NN" (double net) and "NNN" (triple net) leases. The difference between the three is the degree to which the tenant is responsible for operating costs. See also "Gross Lease".
The value, as of a specified date, of future cash inflows less all cash outflows (including the cost of investment) calculated using an appropriate discount rate.
The floor area of a building that remains after the square footage represented by vertical penetrations, such as elevator shafts, etc., has been deducted. Common areas and mechanical rooms are included and there are no deductions made for necessary columns and projections of the building. (This is by the Building Owner and Manager Association - BOMA, Standard).
The space required for a function or staff position. Also see "Circulation Factor " and "Usable Square Footage".
The value of the business enterprise’s tangible assets (excluding excess assets and non-operating assets) minus the value of its liabilities.
see Triple-net.
A clause that can be inserted into a lease specifying that the business of the tenant is exclusive in the property and that no other tenant operating the same or similar type of business can occupy space in the building. This clause benefits service-oriented businesses desiring exclusive access to the building’s population (i.e. travel agent, deli, etc.).
So long as lease is not in default, its rights to occupancy under the lease will not be disturbed by the lessor or it's successors or assigns.
Assets not necessary to ongoing operations of the business enterprise. [Note:
in Canada, the term used is "Redundant Assets."]
A loan which bars a lender from seeking a deficiency judgment against a borrower in the event of default. The borrower is not personally liable if the value of the collateral for the loan falls below the amount required to repay the loan.
The deterioration or loss in value caused by the tenant’s normal and reasonable use. In many leases the tenant is not responsible for "normal wear and tear".
Economic benefits adjusted for nonrecurring, non-economic, or other unusual items to eliminate anomalies and/or facilitate comparisons.
Financial statements adjusted for non-operating assets and liabilities and/or for nonrecurring, non-economic, or other unusual items to eliminate anomalies and/or facilitate comparisons.
Legal notice to the county's register of deeds that remodeling/improvements will be undertaken at an address.
Legal notice by a subcontractor or supplier that it furnished labor or materials, subsequent to the notice of commencement, thereby establishing the legal right to be paid for the services rendered.
Any cost or charge incurred by a tenant pursuant to its lease, such as rent, operating expense increases, parking charges, moving expenses, remodeling costs, etc.
Unless specifically stated otherwise in the lease, it is the date on which the tenant takes possession of its leased premises. (See also "Commencement Date").
Any property that is leased directly by the owner. Sometimes, the owner will employ an in-house leasing agent. Typically, these are called open listings, where the owner will pay a full commission to any broker who brings a tenant to the property.
An unimproved area of land or water, or containing only such improvements as are appropriate to the use and enjoyment of the open area, and dedicated for public or private use or enjoyment or for the use and enjoyment of owners and occupants of land adjoining or neighboring such open spaces.
Although there are many variations of escalation clauses, all are intended to adjust rents by reference to external standards such as published indexes, negotiated wage levels, or expenses related to the ownership and operation of buildings. During the past thirty years, Landlords have developed the custom of separating the base rent for the occupancy of the leased premises from escalation rent. This technique enables the landlord to better ensure that the "net" rent to be received under the lease will not be reduced by the normal costs of operating and maintaining the property. The landlord’s definition of Operating Expenses is likely to be broad, covering most costs of operation of the building. Most landlords pass through proper and customary charges, but in the hands of an overly aggressive landlord, these clauses can operate to impose obligations which the tenant would not willingly or knowingly accept.
The actual costs associated with operating a property including maintenance, repairs, management, utilities, taxes and insurance. A landlord’s definition of operating expenses is likely to be quite broad, covering most aspects of operating the building.
Although there are many variations of operating expense escalation clauses, all are intended to adjust rents by reference to external standards such as published indexes, negotiated wage levels, or expenses related to the ownership and operation of buildings.
A term in a lease for the rights either tenant or landlord may have with respect to one another, usually with stipulations regarding timing of those rights.
The amount expressed in terms of gross proceeds which could be expected from the sale of the machinery and equipment under forced orderly sale conditions, given a reasonable period of time to find a purchaser, the seller being compelled to sell and the buyer being willing but not compelled to buy. The value considers a sale of the machinery and equipment sold "as is, where is", separate and severed from the real estate. All sales are made free and clear of all liens and encumbrances.
Is the capitalized cost of the item in the hands of the present owner. This may be a new or used cost, or it might be the portion of a lump sum purchase price attributed to an asset in an allocation. Trending an Original Cost can be a meaningless exercise.
An agent who is an advocate for the owner and/or landlord.
The intent of this ratio is to provide a uniform method of expressing the amount of parking that is available at a given building. Dividing the total rentable square footage of a building by the building’s total number of parking spaces provides the amount of rentable square feet per each individual parking space (expressed as 1/xxx or 1 per xxx). Dividing 1000 by the previous result provides the ratio of parking spaces available per each 1000 rentable square feet (expressed as x per 1000).
The taking of part (a portion) of an owner’s property under the laws of eminent domain.
A wall constructed to create work areas such as offices or conference rooms. Depending on security needs, a partition wall may not be constructed to the roof or floor decking, but may terminate at lower point such as a suspended ceiling.
Refers to the tenant's pro rata share of operating expenses (i.e. taxes, utilities, repairs) paid in addition to the base rent.
An expense associated with tenancy in which landlord "passes through" to tenant certain increases in building operating expenses occurring after a base year in the lease.
Refers to a provision of the lease calling for the landlord to be paid a percentage of the tenant's gross sales as a component of rent. There is usually a base rent amount to which "percentage" rent is then added. This type of clause is most often found in retail leases.
Provides for a rent to be paid as a percentage of retail sales, usually quarterly or annually. Often coupled with a base rent.
A surety bond posted by a contractor guaranteeing full performance of a contract with the proceeds to be used to complete the contract or compensate for the owner’s loss in the event of nonperformance.
A zoning category in which each of the proposed buildings or uses are approved in advance as a part of a parcel's overall use. Usually preserves large common or open areas on a site.
Map of a specific area, such as a subdivision, which shows the boundaries of individual parcels of land (e.g. lots) together with streets and easements.
An amount or percentage deducted from the value of a business enterprise to reflect the fact that it owns dissimilar operations or assets that do not fit well together.
Clause inserted in a mortgage or deed of trust giving the mortgagee (or trustee) the right and power, on default in the payment of the debt secured, to advertise and sell the property at public auction.
Concrete components (i.e. walls) of a building which are fabricated at a plant site and then shipped to the site of construction.
Refers to space in a proposed building that has been leased before the start of construction or in advance of the issuance of a Certificate of Occupancy.
An assumption regarding the most likely set of transactional circumstances that may be applicable to the subject valuation; e.g., going concern, liquidation.
Typically the entire rentable area leased by lessee. Sometimes used to designate solely the useable area leased by lessee, i.e. that for which the lessee has exclusive occupancy as opposed to the common areas.
In commercial real estate, the description of the leasehold and the specific square footage for which the parties enter into a lease.
An assumption regarding the most likely set of transactional circumstances that may be applicable to the subject valuation; e.g., going concern, liquidation.
The value, as of a specified date, of future economic benefits and/or proceeds from sale, calculated using an appropriate discount rate.
The price of a share of stock divided by its earnings per share.
This typically refers to first generation (new) space that is currently available for lease and which has never before been occupied by a tenant.
The major tenant in a building or, the major or anchor tenant in a shopping center serving to attract other, smaller tenants into adjacent space because of the customer traffic generated.
Proportionately; according to measure, interest, or liability. In the case of a tenant, the proportionate share of expenses for the maintenance and operation of the property. See also "Common Area" and "Operating Expenses".
An itemized list, typically prepared by the architect or construction manager, documenting incomplete or unsatisfactory items after the contractor has notified the owner that the tenant space is substantially complete.
A deed operating as a release that is intended to pass any title, interest, or claim that the grantor may have in the property, but not containing any warranty or professing that such title is valid.
An amount of income (loss) and/or change in value realized or anticipated on an investment, expressed as a percentage of that investment.
Unimproved land that remains in its natural state.
Unimproved "shell space" in a building.
A person licensed to act as an agent for another person or business to negotiate a lease or purchase of a leasehold or property, respectively, for a fee.
The Real Estate Brokerage Managers Council is one of nine affiliated groups of the National Association of Realtors. It is recognized throughout the industry as the professional peer organization for brokerage owners and managers. The council, dedicated to providing its members with quality education, benefit-oriented services, and products and information, was created to significantly improve management and leadership skills. The council offers the CRB (Certified Real Estate Brokerage Manager) designation, recognized industry-wide as the symbol of excellence. The CRB designation confers upon those who have earned it the highest level of professional achievement and recognition in the specialized field of brokerage management.
The Wall Street Journal’s online real estate news and information portal.
Land, and generally what ever is erected or affixed to the land, such as buildings, fences and including light fixtures, plumbing and heating fixtures or other items which would be personal property if not attached.
The REALTORS® National Marketing Institute is one of nine affiliated groups of the National Association of Realtors. Through its two specialized councils and their extensive education and training programs, RNMI promotes professional competence in real estate sales and brokerage, and real estate brokerage management. The following professional designations are offered:
Certified Real Estate Brokerage Manager (CRB) and Certified Residential Specialist (CRS). See also the Real Estate Brokerage Managers Council and the Residential Sales Council for more information on these designations.
The REALTORS® Land Institute is one of nine affiliated groups of the National Association of Realtors. Its main objective is to bring together real estate professionals interested in the improvement of their professional competence in activities related to land; including, land brokerage, agri-business, land management, planning and developing, appraising, acquisition, and any other land specialty areas. This goal is carried out through various programs. As a leading land education source, the REALTORS® Land Institute has joined forces with Texas A&M University to offer the only university program for the professional who deals in land. Members who complete a comprehensive program including required Land University courses, experience in the field, and who have displayed involvement and service to the institute, are awarded the Accredited Land Consultant (ALC) designation.
A standard applied in a lease (most often in a sublease clause) which limits the landlord's ability to withhold consent in its sole discretion. If a reasonable person would give consent to an action given the circumstances, so must the landlord.
(1) When the IRS recovers the tax benefit of a deduction or a credit previously taken by a taxpayer, which is often a factor in foreclosure since there is a forgiveness of debt. (2) As used in leases, a clause giving the lessor a percentage of profits above a fixed amount of rent; or in a percentage lease, a clause granting the landlord a right to terminate the lease if the tenant fails to realize minimum sales.
The right of a lender, in the event of a default by the borrower, to recover against the personal assets of a party who is secondarily liable for the debt (e.g. endorser or guarantor).
see Non-Operating Assets.
An extensive renovation of a building or project which is intended to cure obsolescence of such building or project.
A clause giving a tenant the right to extend the term of a lease, usually for a stated period of time and at a rent amount as provided for in the option language.
Consideration paid for the occupancy and use of real property. Also a general term covering any consideration (not only money).
The date on which a tenant begins paying rent. The dynamics of a marketplace will dictate whether this date coincides with the lease commencement date or if it commences months later (i.e., in a weak market, the tenant may be granted several months free rent). It will never begin before the lease commencement date.
The (square footage) for which rent can be charged. Generally it is the gross area of the full floor less the area of all vertical penetrations (elevator shafts, stairwells, mechanical shafts etc.) Rentable area can be measured in many ways, but the most common measurement for office buildings is according to BOMA standards.
Rentable Square Footage equals the Usable Square Footage plus the tenant’s pro rata share of the Building Common Areas, such as lobbies, public corridors and restrooms. The pro-rata share, often referred to as the Rentable/Usable (R/U) Factor, will typically fall in a range of 1.10 to 1.16, depending on the particular building. Typically, a full floor occupancy will have an R/U Factor of 1.10 while a partial floor occupancy will have an R/U Factor of 1.12 to 1.16 times the Usable Area.
That number obtained when the Total Rentable Area in a building is divided by the Usable Area in the building. The inverse of this ratio describes the proportion of space that an occupant can expect to actually utilize/physically occupy.
Concessions a landlord may offer a tenant in order to secure their tenancy. While rental abatement is one form of a concession, there are many others such as:
increased tenant improvement allowance, signage, lower than market rental rates and moving allowances are only a few of the many. See also "Abatement".
The amount of Rent paid for the occupancy and use of real property. Typically stated on a per square foot per month or per year basis.
That period of time, following construction of a new building, when tenants are actively being sought and the project is approaching its stabilized occupancy.
Real estate that has come to be owned by a lender, including real estate taken to satisfy a debt. Includes real estate acquired by lenders through foreclosure or, in settlement of some other obligation.
The current cost of a similar new property having the nearest equivalent utility to the property being valued.
The date conclusions are transmitted to the client.
An agreement between the owner of a property and a real estate broker giving the broker the authorization to attempt to sell or lease the property at a certain price and terms in return for a commission, set fee or other form of compensation. See also "Exclusive Listing Agreement".
The current cost of an identical new property.
Either value is an important ingredient in appraisals for insurance purposes or they are an initial point of reference in appraisals for other purposes. The differential in dollars widens with age, and one can be higher or lower than the other. One should use the lower of the two to avoid having to reduce the higher starting point for obvious deficiencies, superadequacies or incurable obsolescence that are the usual differences between the two values. The Replacement Coat New of machinery and equipment may he higher or lower than its Reproduction Cost New. When the Replacement Cost New relates to a cur-rent model of older marketable machines, there is a vast difference between the two values. The new machine will usually out per-form the older machine and has innovations included that the old machine does not possess. Otherwise, to repro-duce the old machine by trending the Historical Cost to today's price levels would indicate a lesser cost than to replace that machine with a modern counterpart. This fact is sometimes reversed in the case of non marketable special purpose items, and their Reproduction Cost is usually a higher cost than their Replacement Cost.
The formalized Request for Proposal represents a compilation of the many considerations that a tenant might have and should be customized to reflect their specific needs. Just as the building’s standard form lease document represents the landlord’s "wish list", the RFP serves in that same capacity for the tenant.
The minimum rate of return acceptable by investors before they will commit money to an investment at a given level of risk.
The Residential Sales Council serves the real estate industry's top producing residential specialists. By offering state-of-the-art education courses leading to the Certified Residential Specialist (CRS) designation, the council strengthens its members' ability to operate a "business within a business" successfully and profitably. Approximately 30,000 of the council's 35,000 members have earned the right to use the prestigious CRS designation. Designees are recognized experts in listing, selling, and real estate investment.
The value as of the end of the discrete projection period in a discounted future earnings model.
>The amount, expressed as a percentage, earned on a company’s common equity for a given period.
see Return on Invested Capital and Return on Equity.
The amount, expressed as a percentage, earned on a company’s total capital for a given period.
A right, usually given by an owner to a tenant, which gives the tenant a first chance to buy the property or lease a portion of the property if the owner decides to sell or lease. Unlike under a Right of First Refusal, the owner is not required to have a legitimate offer which the tenant can then match or refuse. If the tenant refuses to make an offer or if the parties cannot agree on terms, the property can then be sold or leased to a third party.
A right, usually given by an owner to a tenant, which gives the tenant a first chance to buy the property or lease a portion of the property if the owner decides to sell or lease. The owner must have a legitimate offer which the tenant can match or refuse. If the tenant refuses, the property can then be sold or leased to the offeror.
A specific clause in a lease where the tenant has the right to deduct from the rent certain costs which are due to the tenant from the landlord. Included may be the costs incurred by tenant to cure defaults of the landlord, after notice and failure by landlord to cure the defaults. These are called "self help".
rate of return added to a risk-free rate to reflect risk.
he rate of return available in the market on an investment free of default risk.
See REALTORS® Land Institute.
A mathematical formula developed from the relationship between price and certain variables based on experience, observation, hearsay, or a combination of these; usually industry specific.
An arrangement by which the owner occupant of a property agrees to sell all or part of the property to an investor and then lease it back and continue to occupy space as a tenant. Although the lease technically follows the sale, both will have been agreed to as part of the same transaction.
Is the amount realizable upon the sale or other disposition of an asset after it is no longer useful to the owner and is to be retired from service. This could be equal to its Forced Liquidation Value or its Scrap Value, whichever is higher.
Is the amount realized for property if it were sold for its material content on an "as is, where is" basis to a dealer.
Refers to previously occupied space that becomes available for lease, either directly from the landlord or as sublease space. See also "First Generation Space".
A mortgage on property that ranks below a first mortgage in priority. Properties may have two, three, or more mortgages, deeds of trust, or land contracts as liens at the same time. Legal sequence priority, indicated by the date of recording, determines the designation first, second, third, etc.
A deposit of money by a tenant to a landlord to secure performance of a lease. This deposit can also take the form of a Letter of Credit or other financial instrument.
Possession of real property under claim of freehold estate. This term originally referred to the completion of feudal investiture by which a tenant was admitted into the feud and performed the rights of homage and fealty. Presently it has come to mean possession under a legal right (usually a fee interest). As the old doctrine of corporeal investiture is no longer in force, the delivery of a deed gives seisin in law.
Zoning requirement that requires a building or an improvement to be set back a certain number of feet from the property line.
Setback requirements are normally provided for by ordinances or building codes. Provisions of a zoning ordinance regulate the distance from the lot line to the point where improvements may be constructed.
The interior condition of the tenant's usable square footage when it is without improvements or finishes. While existing improvements and finishes can be removed, thus returning space in an older building to its "shell" condition, the term most commonly refers to the condition of the usable square footage after completion of the building's "shell" construction but prior to the build out of the tenant's space. Shell construction typically denotes the floor, windows, walls and roof of an enclosed premises and may include some HVAC, electrical or plumbing improvements but not demising walls or interior space partitioning. In a new multi-tenant building, the common area improvements, such as lobbies, restrooms and exit corridors may also be included in the shell construction. With a newly constructed office building, there will often be a distinction between improvements above and below the ceiling grid. In a retail project, all or a portion of the floor slab is often installed along with the tenant improvements so as to better accommodate tenant specific under-floor plumbing requirements.
Stands for Society of Industrial and Office Realtors. See Society of Industrial and Office Realtors for more details.
The study of a specific parcel of land which takes into account the surrounding area and is meant to determine its suitability for a specific use or purpose.
The installation of all necessary improvements, (i.e. installment of utilities, grading, etc.), made to a site before a building or project can be constructed upon such site.
A detailed plan which depicts the location of improvements on a parcel of land which also contains all the information required by the zoning ordinance.
The exposed wearing surface laid over the structural support beams of a building to form the floor(s) of the building or laid slab-on-grade in the case of a non-structural, ground level concrete slab.
The Society of Industrial and Office REALTORS® is an international organization whose 1,700 members specialize in a variety of commercial real estate activities, including the marketing of industrial and office properties. SIOR is dedicated to maintaining high professional standards in the fields of industrial and office real estate. SIOR is one of nine affiliated groups of the National Association of Realtors.
That portion of an equity investment other than the actual cost of the improvements themselves (i.e. architectural and engineering fees, commissions, etc.) and which may be tax-deductible in the first year. See also "Hard Cost".
A graphic representation of a tenant’s space requirements, showing wall and door locations, room sizes, and sometimes includes furniture layouts. A preliminary space plan will be prepared for a prospective tenant at any number of different properties and this serves as a "test-fit" to help the tenant determine which property will best meet its requirements. When the tenant has selected a building of choice, a final space plan is prepared which speaks to all of the landlord and tenant objectives and then approved by both parties. It must be sufficiently detailed to allow an accurate estimate of the construction costs. This final space plan will often become an exhibit to any lease negotiated between the parties.
Term is often loosely used. Most often it is the planning of the layout of the interior space of a building to meet the needs of the user. Can also include detailed interior design and preparation of construction drawings. Space planning and interior design only need not be licensed architects. Preparation of construction drawings for permit have to be prepared by architects licensed in the jurisdiction.
A portion of a leased premises that is set aside to accommodate future growth on the part of the tenant. The space pocket is typically fully improved at the commencement of the lease and no rent is due on the pocketed area until the earlier of "actual use" or a specified future date.
Any special charge levied against real property for public improvements (e.g., sidewalks, streets, water and sewer, etc.) that benefit the assessed property.
Acquirers who believe they can enjoy post-acquisition economies of scale, synergies, or strategic advantages by combining the acquired business interest with their own.
A requirement compelling one of the parties to perform or carry out the provisions of a contract into which he has entered.
Any tenant space that has not been leased before the start of construction on a new building. See also "First Generation Space".
The identification of the type of value being utilized in a specific engagement; e.g., fair market value, fair value, investment value.
A lease specifying set increases in rent at set intervals during the term of the lease.
A lease specifying the same, a fixed amount, of rent that is to be paid periodically during the entire term of the lease. This is typically paid out in monthly installments.
Any shopping area, generally with common parking, comprised of a row of stores but smaller than the neighborhood center anchored by a grocery store.
A contractor working under and being paid by the general contractor. Often a specialist in nature, such as an electrical contractor, cement contractor, etc.
A detailed drawing which depicts the manner in which a parcel of land has been divided into two or more lots. It contains engineering considerations and other information required by the local authority.
A lease, under which the lessor is the lessee of a prior lease of the same property. The sublease may be different in terms from the original lease, but cannot contain a greater property interest. Example:
"A" leases to "B" for five years. "B" may sublease to "C" for three years, but not for six years. (Rent can be greater or less than that in the prior lease.)
As used in a lease, the tenant generally accepts the leased premises subject to any recorded mortgage or deed of trust lien and all existing recorded restrictions, and the landlord is often given the power to subordinate the tenant's interest to any first mortgage or deed of trust lien subsequently placed upon the leased premises.
Generally used in reference to the construction of tenant improvements (TIs). The tenant's premises is typically deemed to be substantially completed when all of the TIs for the premises have been completed in accordance with plans and specifications previously approved by the tenant. Sometimes used to define the commencement date of a lease.
One who at the request of another, and for the purpose of securing to him a benefit, voluntarily binds himself to be obligated for the debt or obligation of another. Although the term includes guarantor and the terms are commonly, though mistakenly, used interchangeably, surety differs from guarantor in a variety of respects.
A right or easement granted with mineral rights, enabling the possessor of the mineral rights to drill or mine through the surface.
The process by which a parcel of land is measured and its boundaries and contents ascertained.
The periodic capital outlay required to maintain operations at existing levels, net of the tax shield available from such outlays.
The risk that is common to all risky securities and cannot be eliminated through diversification. The measure of systematic risk in stocks is the beta coefficient.
A common synonym for condemnation or any actual or material interference with private property rights but it is not essential that there be physical seizure or appropriation.
Physical assets (such as cash, accounts receivable, inventory, property, plant and equipment, etc.).
The assessed valuation of all the real property that lies within the jurisdiction of a taxing authority, which is then multiplied by the tax rate or mill levy to determine the amount of tax due.
A statutory lien, existing in favor of the state or municipality, for nonpayment of property taxes which attaches only to the property upon which the taxes are unpaid.
A list or record containing the descriptions of all land parcels located within the county, the names of the owners or those receiving the tax bill, assessed values and tax amounts.
A holder of an interest in property for a specific term under a lease or other rental agreement (generally a right to occupancy and use).
One who rents real estate from another and holds an estate by virtue of a lease.
One who holds possession of premises by permission of the owner or landlord, the characteristics of which are an uncertain duration (i.e. without a fixed term) and the right of either party to terminate on proper notice.
Defines the fixed amount of money contributed by the landlord toward tenant improvements. The tenant pays any of the costs that exceed this amount. Also commonly referred to as "Tenant Finish Allowance.
Improvements to land or buildings to meet the needs of tenants. May be new improvements or remodeling, and be paid for by the landlord, tenant or part by each.
Arrangement whereby a prospective tenant engages a real estate broker as its exclusive agent in negotiating a lease for commercial space. Also know as a "buyer's broker."
An agent who is an advocate for the tenant. The relationship is most often the product of