Commercial Real Estate Finance

DSCR: Debt Service Coverage Ratio In Commercial Property Loans

DSCR: Debt Service Coverage Ratio In Commercial Property Loans

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 important considerations when a commercial mortgage broker, lender or bank is underwriting a loan.

Due Diligence in Commercial Real Estate

Due Diligence in Commercial Real Estate

Due Diligence refers to the practice of investigating or auditing a prospective investment in order to confirm facts. The audit includes analyzing different aspects of the investment like reviewing financial records, going over all legal documentation, etc. Due diligence is effectively the care any reasonable party should take before entering into any legal agreement or financial transaction

Conduit Loan in Commercial Real Estate

Conduit Loan in Commercial Real Estate

A conduit loan, also known as a CMBS loan, is a commercial real estate loan which is secured by a mortgage on a commercial property. These loans are structured by conduit lenders, commercial or investment banks.

CMBS: Commercial Mortgage Backed Securities in Commercial Real Estate

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 malls, apartments, office buildings and factories.

Holdbacks in Relation to Commercial Property Loans

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. Holdbacks account for any issue that has not been resolved before closing the contract and can be solved soon after. The holdback is held in the lender’s escrow account.

CapEx: Capital Expenditure in Commercial Real Estate

CapEx: Capital Expenditure in Commercial Real Estate

Capital expenditure or "CapEx" are the funds used to acquire, upgrade or repair the property . It also includes the acquisition of equipment for said property. An expenditure is considered a CapEx if it is a new purchase or extends the life of the property. For example, fixing the roof, installing a furnace or painting the building.

CFR: Code of Federal Regulations in Commercial Real Estate

CFR: Code of Federal Regulations in Commercial Real Estate

CFR stands for Code of Federal Regulations. The CFR is the codification of the general and
permanent rules and regulations published in the Federal Register by the executive departments and agencies of the federal government of the United States.

NOFA: Notice of Funding Availability in Commercial Real Estate

NOFA: Notice of Funding Availability in Commercial Real Estate

NOFA or Notice of Funding Availability is a statement issued by the GRRHP  (under the USDA) in the Federal Register. The statement will contain information on the amount of funding to develop homes available for each area along with the period for which the funds will be available for.

GRRHP: Guaranteed Rural Rental Housing Program in Commercial Real Estate

GRRHP: Guaranteed Rural Rental Housing Program in Commercial Real Estate

The GRRHP or Guaranteed Rural Rental Housing Program is a federal government initiative which backs loans made by private lenders to developers of rural homes. The GRRHP program enables lenders to offer permanent loan option for the construction, acquisition or rehabilitation of rural multifamily properties through the United States Department of Agriculture’s (USDA) RD 538 program.

FHLB: Federal Home Loan Banks in Commercial Real Estate

FHLB: Federal Home Loan Banks in Commercial Real Estate

An FHLB (sometimes referred to as an FHLBank) or Federal Home Loan Bank is a region based bank that is part of a federally backed group of banks who provide housing finance and community investment loans. There are 11 FHLBs in total that provide reliable liquidity to financial institutions that are members of the program in order to support community investment and housing finance in the country.

HUD in Relation to Commercial Real Estate?

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 for citizens. The government agency was founded in 1965 to support community development and home ownership. 

AMI: Area Median Income in Commercial Real Estate

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 the AMI for areas across the USA every year. AMI is used as a measure to determine who qualifies for its federal housing programs.