Capital Gains Taxes in Commercial Real Estate
For commercial real estate investors, understanding the impact of capital gains taxes - and how to minimize that impact - is essential to maximizing returns.
Commercial Real Estate category in the Commercial Real Estate Glossary
Everything in Commercial Real Estate in the Commercial Real Estate Glossary.
Articles
EGI: Effective Gross Income
Effective gross income, or EGI, is a forecast of an asset’s income. It isn’t strictly limited to rental payments - any other revenue-generating services at a…
Stacking Plans in Commercial Real Estate
A stacking plan is a visual representation of a commercial structure that shows the tenants on each floor, the square footage of each floor, when each tenant’s…
Holding Companies in Commercial Real Estate
Holding companies help reduce a commercial real estate investor’s risk profile and the potential liabilities they could incur as a result of owning an…
Joint Ventures in Commercial Real Estate
Many sizable commercial real estate projects are not simply purchased and developed by one firm; instead, they are structured as joint ventures (JVs), in which…
Arm's Length Transactions in Commercial Real Estate
In an arm’s length transaction, the buyer of a product does not have a preexisting familial or business relationship with the seller. For instance, if an…
Real Estate Limited Partnerships in Commercial Real Estate
In many cases, commercial real estate investments are structured as real estate limited partnerships (RELPs). A RELP will generally consist of a general…
Built to Suit in Commercial Real Estate
In a built to suit lease, a developer builds a property specifically for the use of one tenant. Generally, a tenant will locate a developer who is willing to…
Demolition Costs in Commercial Real Estate
Right now, commercial demolition costs between $4 to $8 per square foot, with the average per-building demolition cost in the U.S. currently sitting at $30,500.
Property Management vs. Asset Management in Commercial Real Estate
When it comes to commercial real estate investing, property managers and asset managers may have similar titles, but they have distinctly different roles. A…
Commercial Real Estate Price Index in Commercial Real Estate
In commercial real estate, price indices are designed to show the current strength of the commercial real estate market across the United States.
Merchant Builders in Commercial Real Estate
Merchant builders, also referred to as merchant developers, are those developers that build properties and sell them, rather than holding onto them for longer…
Shadow Space in Commercial Real Estate
In commercial real estate, shadow space is any space that is being leased, but that a tenant is not currently utilizing. In many cases, it is a result of…
Blend and Extend Amendments in Commercial Real Estate
In commercial leasing, a blend and extend amendment is allows a tenant to extend their lease and negotiate a new rate, merging, or “blending” the new and old…
Real Estate Debt Funds in Commercial Real Estate
For commercial real estate borrowers, debt funds often offer loans that banks can’t-- or won’t offer, including commercial construction loans, bridge…
Dark Shell in Commercial Real Estate
A dark shell refers to a commercial property that is leased to a tenant without interior improvements, such as heating, lighting, interior walls, plumbing, or…
Accredited Investors in Commercial Real Estate
When a commercial real estate investment is solicited to investors, they must typically be accredited investors. According to the Securities and Exchange…
Equity Kicker in Commercial Real Estate
If a commercial real estate borrower seeks out a mezzanine loan, but does not want to pay an extremely high interest rate, the lender may agree to reduce the…
Adaptive Reuse in Commercial Real Estate
In commercial real estate, adaptive reuse occurs when an older building is adapted for a different use than it was originally designed for.
Intercreditor Agreement in Commercial Real Estate
In commercial real estate, an intercreditor agreement is an agreement between two lenders that stipulates the rights and responsibilities of each party…
Recapture Clause in Commercial Real Estate
In commercial leasing, a recapture clause permits a landlord to terminate a lease early, and may also allow them to demand all or part of the remaining lease…
Infill Development in Commercial Real Estate
In commercial real estate, infill is defined as the development of unused land in urban areas. This commonly takes the form of developing an empty lot of land…
Capital Stack in Commercial Real Estate
In commercial real estate finance, the capital stack is the legal organization of all the layers of debt that are used to purchase, build, or renovate a piece…
Submarkets in Commercial Real Estate
In commercial real estate, a submarket is a smaller part of a larger market. While a market may be a city or MSA, such as New York City, or the Dallas-Fort…
UBP: Unpaid Principal Balance in Commercial Real Estate
In commercial real estate finance, unpaid principal balance, or UPB, is the amount of a loan’s principal balance that has not yet been paid back to a lender…
BOMA: Building Owners and Managers Association in Commercial Real Estate
BOMA, or the Building Owners and Managers Association, is an international trade association for commercial real estate professionals. The organization, which…
Usable Square Feet vs. Rentable Square Feet in Commercial Real Estate
In commercial real estate, there are two major ways to evaluate a property’s size; usable square feet (USF) and rentable square feet (RSF). In general, this…
Syndication in Commercial Real Estate
Real estate syndication is the process in which multiple investors pool their money together to purchase a commercial property. Learn what you need to know.
Physical vs. Economic Vacancy in Commercial Real Estate
In real estate, the vacancy rate is the amount of units that are unoccupied over a specific time period. It is usually referred to as a percentage. However…
Acceleration Clauses in Commercial Real Estate
In real estate, an acceleration clause is a loan provision that permits a lender to force a a borrower to pay off the remaining balance of a loan if the…
Absolute Net Lease in Commercial Real Estate
An absolute net lease, or absolute NNN lease, is one of the strictest forms of commercial leases. In an absolute net lease, a tenant is generally responsible…
Gross Scheduled Income in Commercial Real Estate
Gross scheduled income (GSI), sometimes referred to as gross potential income (GPI), is the amount of money a commercial property can generate, assuming 100%…
Highest and Best Use in Commercial Real Estate
In commercial real estate investing, the highest and best use typically means the use that results in the highest risk-adjusted returns for the asset’s…
MIRR: Modified Internal Rate of Return in Commercial Real Estate
IRR, or internal rate of return, is one of the most important financial metrics in commercial real estate investing. However, in many cases, a variation of…
RUBS Income in Commercial Real Estate
In many older multifamily properties, units are not individually metered for utilities, so owners/landlords use RUBS (Ratio Utility Billing System), a method…
Full Service Lease in Commercial Real Estate
A full service lease is a lease in which a tenant pays only a base rate, and the landlord is responsible for paying all other expenses. Full service leases…
Residual Land Value in Commercial Real Estate
Residual land value is a metric that equals the value of the land, after all costs of developing have been subtracted.
Pari Passu in Commercial Real Estate
In commercial real estate, pari passu simply means that two investors, creditors, or assets are on equal footing - that is, without preference to one or the…
MSA: Metropolitan Statistical Area in Commercial Real Estate
Metropolitan Statistical Areas, or MSAs, are U.S. government designations for specific urban areas. MSAs are defined by the U.S. Office of Management and…
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