Class A, B, and C Office Buildings in Commercial Real Estate
Explore the different office asset classes and how properties are classified into each category.
Commercial Property Loans in the Commercial Real Estate Glossary
Everything tagged Commercial Property Loans in the Commercial Real Estate Glossary.
Articles
ARV: After-Repair Value in Commercial Real Estate
An after-repair value of a property is simply the property's market value after any repairs, renovations, or improvements have taken place.
1031 Exchanges in Commercial Real Estate
A 1031 exchange allows a commercial property seller to defer taxes from the sale of a property if they acquire another, similar property within 180 days.
The Importance of Debt Yield in Commercial Property Loans
Debt yield is a measure of risk for commercial mortgage lenders. It takes into account the net operating income of a commercial property to determine how…
DSCR: Debt Service Coverage Ratio
Debt service coverage ratio or DSCR, is a comparison between net operating income and debt service on an annual basis and is generally one of the most…
Interest-Only Loans in Commercial Real Estate
An interest-only loan is a type of loan in which the borrower only needs to pay the interest, not the principal, for a specific amount of time. This period…
Securitization in Commercial Real Estate
Securitization is the process in which commercial or residential real estate loans are pooled together, packaged into a financial product, and sold to…
Debt Coverage Ratio in Commercial Real Estate
Debt Coverage Ratio (DCR), is a measurement of a property’s net operating income divided by its debt service. A property’s Debt Coverage Ratio, which is also…
Commercial Equity Lines of Credit in Commercial Real Estate
Commercial equity lines of credit, also known as CELOCs, involve a commercial real estate owner being given a line of credit that allows them to borrower…
Earnest Money in Commercial Real Estate
Earnest money is a deposit made by a buyer to demonstrate their serious intent to purchase a commercial property. This money is usually held in escrow until…
Subletting in Commercial Real Estate
A sublease, or sublet, occurs when a tenant assigns part or all of their lease to a new tenant. In general, most commercial leases permit subletting, but not…
Loan Seasoning in Commercial Real Estate
In commercial real estate finance, seasoning refers to the amount of time that a borrower has held a specific loan. Therefore, a seasoned loan is a one that…
Return on Investment in Commercial Real Estate
In commercial real estate, return on investment (also known as ROI), is a measurement of how much money an investor receives from an investment after all…
Investment Variables in Commercial Real Estate
When it comes to making a decision on whether to invest in a commercial property, there are a variety of variables that an investor can take into account…
Appraisals in Commercial Real Estate
A commercial property appraiser conducts an appraisal, which provides a market value of a commercial real estate asset. This is essential when seeking…
Waterfall and Promote Structures in Commercial Real Estate
A waterfall and promote structure, also known as a waterfall model, is a method for distributing the profits from a real estate investment in an uneven way…
Break-even Ratio in Commercial Real Estate
The break-even ratio for a property is the percentage of its gross operating income that the property needs to break even, i.e. for costs to equal expenses…
Floor Plate in Commercial Real Estate
In commercial real estate, the floor plate is the amount of leasable square footage on an individual floor of a building.
RevPar: Revenue Per Available Room in Commercial Real Estate (+ Calculator)
RevPar, or revenue per available room, is a measure of a hotel's financial performance, which can be calculated by dividing a hotel's total room revenue by the…
Power Centers in Commercial Real Estate
A power center is an outdoor shopping center with multiple big-box retailers, as well as an array of smaller retailers, restaurants, and other kinds of…
Clear Height in Commercial Real Estate
In industrial real estate, a property's clear height is the height to which product can safely be stored on racking. Clear height can also be defined as the…
Restrictive Covenants in Commercial Real Estate
Restrictive covenants are restrictions placed on the use of a property. In commercial real estate, restrictive covenants may be placed on a property by a…
Anchor Tenants in Commercial Real Estate
An anchor tenant is the largest or most prominent store in a retail commercial real estate development, intended to help draw customers into the area. In strip…
Operating Expense Ratio in Commercial Real Estate
An operating expense ratio, or OER, sometimes simply known as an expense ratio, is a metric comparing a property's operating expenses to the amount of income…
Amortization in Commercial Real Estate
Amortization is the process of spreading a loan into payments that consist of both principal and interest over a set timeline, called an amortization schedule.
Equity Multiple in Commercial Real Estate
Use our calculator to find your equity multiple, comparing the cash an investor has put into an investment to the amount of cash the investment has generated…
Prepayment Penalties in Commercial Real Estate
In commercial real estate loans, a prepayment penalty is a fee charged to borrower if they attempt to repay their loan early. When a lender issues a loan, they…
Discounted Cash Flow Analysis in Commercial Real Estate
Discounted Cash Flow Analysis, or DCF analysis, is a method used to determine the current value of a set of cash flows using a predetermined discount rate. In…
Assumable Loans in Commercial Real Estate
In commercial real estate, an assumable loan is a loan that can be taken over by a buyer when the owner of the property sells. Determining whether or not a…
The 1% and 2% Rules in Commercial Real Estate
The 1% rule states that a property's monthly rent must be at least 1% of its purchase price in order for the owner to break even. The 2% rule states that a…
Load Factor in Commercial Real Estate
A load factor, also known as a loss factor, is a metric that compares the amount of space a tenant has to pay for in a commercial lease, versus the amount of…
Occupancy Rate in Commercial Real Estate
Occupancy rate is an important metric for temporary housing, and can be measured by dividing the number of occupied units by the number of available units.
Multifamily Property Classes in Commercial Real Estate
Much like office properties are classified by quality as either "A", "B", or "C" properties, multifamily properties such as apartments can also be classified…
CTL: Credit Tenant Leases in Commercial Real Estate
A credit tenant lease (CTL) is a form of commercial real estate financing in which a loan is given for a property with a long-term lease (usually 10+ years)…
Parking Ratio in Commercial Real Estate
A parking ratio is a statistic that takes the number of available parking spaces in commercial property and divides it by the property's entire gross leasable…
FAR: Floor Area Ratio in Commercial Real Estate
This metric, particularly important for developers, is the ratio of a building's size compared to the land, and many zoning commissions place limitations on…
Breakeven Occupancy in Commercial Real Estate
Breakeven occupancy is the occupancy at which a commercial real estate property goes from having an operating deficit to an operating surplus. It can also be…
Expense Stops in Commercial Real Estate
In a full service gross lease, the tenant pays a base rental rate, and landlord is typically responsible for paying any additional expenses (such as CAM fees)…
ADR: Average Daily Rate in Commercial Real Estate
Average Daily Rate, or ADR, is one of the most important metrics that hotels use in order to determine the income and profitability of a property. ADR can be…
GRM: Gross Rent Multiplier in Commercial Real Estate
When it comes to determining whether a commercial or multifamily real estate project is a good investment, there are a variety of methods you can use-- and one…
LIHTC: Low Income Housing Tax Credits in Commercial Real Estate
Low Income Housing Tax Credits, or LIHTC credits, are federal tax credits designed to encourage private businesses to invest in affordable housing. LIHTCs…
NPV: Net Present Value in Commercial Real Estate
Net present value, or NPV, is a financial metric that can help commercial real estate investors determine whether they're getting a certain return-- a 'target…
GSF: Gross Square Feet in Commercial Real Estate
Gross square feet, or GSF, is the entire square footage of a building. GSF typically includes areas such as the building core, maintenance and operations…
PSF: Per Square Foot in Commercial Real Estate
PSF, or per square foot, is the way that many commercial real estate rental and sale transactions are calculated. Most commercial leases are set at a specific…
GLA: Gross Leasable Area in Commercial Real Estate
Gross leasable area (GLA) is the amount of space in a commercial building that can be rented by a tenant, including basements, mezzanines, or upper floors.
Percentage Leases in Commercial Real Estate
In commercial real estate, a percentage lease is a form of lease that requires a tenant to pay a percentage of their revenues in addition to a base rent, which…
Sale Leaseback in Commercial Real Estate
In commercial real estate, a sale leaseback is a transaction in which one party sells a piece of real estate, and then leases that real estate back from the…
TTM: Trailing Twelve Months in Commercial Real Estate
TTM, or trailing twelve months, is measurement of a project's financial data for the last 12 months. TTM figures do not always represent the last fiscal year…
BPO/BOV: Broker Price Opinions in Commercial Real Estate
A BPO, or broker price opinion, also known as a BOV, or broker opinion of value, is an estimate provided by a real estate broker to help a potential investor…
FNMA: Fannie Mae Mortgage Association in Commercial Real Estate
FNMA, or Fannie Mae Mortgage Association, is a U.S. government sponsored enterprise that focuses on expanding housing opportunities across the United States…
R&M: Repairs and Maintenance in Commercial Real Estate
R&M, or repairs and maintenance, refers to work done on a commercial property that is designed simply to maintain the property’s current condition. This…
T3: Trailing Three Months in Commercial Real Estate
T3, or trailing three months, is measurement of a commercial real estate project's finances for the last 3 months. T3 can be a great tool for investors, since…
CMBS: Commercial Mortgage Backed Securities in Commercial Real Estate
A Commercial Mortgage Backed Security (CMBS) loan is a fixed income security backed by a commercial mortgage. These loans are for commercial property such as…
Interest Rate Caps in Commercial Property Loans
An interest rate cap is used to limit the risk on a floating rate commercial property loan. A floating rate property loan has a variable interest rate…
Earnouts in Commercial Real Estate Loans
An earn out is an agreement by the lender to increase the loan amount at the advent of a certain event. Earn outs are structured such that the additional money…
Holdbacks in Relation to Commercial Property Loans
A holdback is a clause in the commercial property loan that seeks to put aside a certain portion of the loan until an objective has been accomplished…
AMI: Area Median Income in Commercial Real Estate
AMI stands for Area Median Income and is a statistic published by HUD. It is the household income of the median (middle) household in an area. HUD releases…
HUD in Relation to Commercial Real Estate?
HUD is the term used to describe The United States Housing and Urban DevelopmentDepartment, which is the federal department tasked with creating decent housing…
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