A

AIF

Authorized investment funds. Tax-exempt unlisted UK funds

AIM

Alternative Investment Market of the London Stock Exchange

Absorption rate

The rate at which rentable space is filled. Absorption rate can be divided into gross …

Acceleration (relating to loan payments)

The process whereby a loan is declared due and payable prior to its scheduled repayment date, …

Amortization

Amortization refers to the spreading out of expenses over a specific period of time. In real …

Annual Percentage Rate (or APR)

The APR is the actual effective rate of interest charged on a loan expressed on a yearly basis …

Appraisal

An appraisal is the evaluation of a property to determine its price. Property is evaluated or …

Appreciation

Appreciation relates to the increase in the value of a property or an asset, such as stocks, …

Assignment

Assignment is the process by which a right or contract is transferred from one party to …

Authorized Investment Fund (AIF)

Tax-exempt unlisted UK funds

Averaging method

A technique used to forecast data by reducing or cancelling the effect of random variation in …

B

Base rate (in lease terminology)

An amount that is usually used as a minimum, or initial, rent. Depending on the lease …

Basis Point

A basis point, or bp, is a common unit of measure for interest rates and other percentages. One …

Basis

The total amount paid for a property, including equity capital and the amount of debt incurred.

Break-even point

The point at which the income from sale of a product or service equals expenditure. For real …

Bridge Loan

A bridge loan is a loan for a short duration of time. It can be used when one is purchasing one …

Buy-rent threshold

Buy/rent threshold refers to the point at which, as a result of market conditions there is a …

C

Capital Improvement

Capital improvements (or capital expenditures) are expenses which aim to add value to a …

Capital gain

An increase in the value of a capital asset. A capital loss is incurred when there is a …

Capitalization (Cap) Rate

A capitalization rate (or Cap rate) is an estimate of an investor's potential return on her …

Cash Flow

Cash flow is the income produced by an investment property after deducting operating expenses …

Cash-on-Cash Rate

It is a basic calculation to estimate the return from an asset that generates income. The …

Common Equity

Common equity refers to a measure of equity, which takes into account common stockholders and …

Comparables (Comps) or Comparative Market Analysis

Comps are used in assessing or establishing the fair market value of a property. Comps usually …

Consumer Price Index

CPI is an index indicating the change in prices of various commodities and services, providing …

Cost Approach

In real estate, it is an appraisal method for estimating the value of properties that have few, …

D

Debt

Debt refers to amount of money borrowed by one party from another, under the condition that it …

Debt-to-Equity Ratio

The debt-to-equity ratio is a measure of company's financial leverage and indicates the …

Debt-to-Income Ratio or Debt-Service Ratio

The debt-to-income ratio is the percentage of a borrower's monthly payment obligation on …

Development

In real estate, "development" refers to the building of a new structure, or improving existing …

Discount Rate

The Percentage rate at which money or cash flows are discounted. The discount rate reflects …

Distributions

Distributions of capital gains or income refer to payments made to investors periodically …

Due Diligence

Due Diligence refers to an investigation or audit of a potential investment. Due diligence …

E

EURIBOR

EURIBOR refers to the rates offered to banks on euro interbank term deposits and are considered …

Efficiency ratio

Efficiency ratios are typically used to analyze how well a company uses its resources. For real …

Electronic Signature

An Electronic Signature or e-Signature is an electronic sound, symbol, or process, attached to …

Equity

Equity represents an ownership interest in an asset. Equity investments in real estate carry …

Escrow

A state where consideration, benefits, legal rights, document, or a sum of money is held by one …

F

Fair Market Value

The fair market value is the price for property agreed upon between a buyer and seller in a …

Feasibility analysis

An analysis and evaluation of a proposed project to determine if it is technically feasible, …

Financial Conduct Authority

The FCA (Financial Conduct Authority) is the financial regulatory body in the UK. It operates …

Financial leverage

Financial leverage refers to the degree to which a company uses debt and preferred equity in …

Financial risk

Financial risk usually refers to an uncertainty in an investment's ability to return funds …

Free Cash Flow (FCF)

Free cash flow (FCF) is a measure of how much cash a business generates after accounting for …

G

Gross Lease

A gross lease is a lease in which the lessor pays all costs of operating and maintaining the …

H

Hard Asset

A tangible and physical item or object of worth that is owned by an individual or a …

I

Income capitalization approach

A method to estimate the value of an income-producing property by converting net operating …

Instalment Sale

An instalment sale is a property sale in which the purchaser pays the purchase price over a …

Internal Rate of Return (IRR)

Internal Rate of Return (IRR) measures the profitability of an investment the higher a …

L

LIBOR Index

Stands for -London Interbank Offered Rate-, and is the average yield of interbank offered rates …

Liquidation value

The likely price that a property would bring in a forced sale. Used when a sale must occur with …

Loan-to-Cost Ratio (LTC)

A ratio used in commercial real estate construction to compare the amount of the loan used to …

Loan-to-Value Ratio (LTV)

mortgage. Typically, assessments with high LTV ratios are generally seen as higher risk and, …

M

Maintenance

The monthly charged levied on owners by a cooperative corporation to cover the building's …

Market analysis

The process of examining market supply and demand conditions, demographic characteristics, and …

Market value

The most probable price that a property would bring in a competitive and open market under fair …

O

Occupancy Cost

The actual dollars paid out by the tenant to occupy the space (including rent, property taxes, …

Occupancy

In real estate, the number of units in a building that have been rented out as compared to the …

P

Passive Loss

A passive loss is a loss generated by investment real estate when real estate is not the …

Phantom Gain

A sale of real estate in which income is recognized for tax purposes but no money has been …

Potential Rental Income

The total amount of rental income for a property if it were 100% occupied and rented at …

Preferred Equity

Preferred equity is usually considered a hybrid instrument, and is a type of stock which may …

Preferred Return

Preferred return refers to a fixed payment received by holders of company's preferred stock. …

Pro-Forma

Pro-forma usually refers to projected financial statements or a financial model often based on …

Probabilities and Expected Value

A quantifiable method of risk analysis. This method assigns probabilities to specific, possible …

R

Real Estate Broker

A real estate broker is an individual employed on a fee or commission basis as an agent to …

Real Estate Investment Trust (REIT)

An investment vehicle in which investors purchase certificates of ownership in the trust, which …

Recapture

When investment real estate has been depreciated for tax purposes, the gain on the sale …

Redemption

The return of an investor's principal in a fixed income security, such as a preferred stock or …

S

Secured Position

A secured position retains the right to foreclose on a property in the event of a default, or …

Senior Debt

Loan that a company must repay first if it goes out of business. Senior debt holders are most …

Sponsor

An individual or firm in charge of finding, acquiring, and managing a piece of real estate, …

U

Underwriter

Usually refers to a party that takes on risk. For instance, a securities dealer will act as an …

Underwriting

Underwriting process involves the satisfactory review of the issuers property appraisal and …

Y

Yield

Yield refers to return on investment. The return could be in interest or dividends received …