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Tracy Kaye


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Often referred to as free rent or early occupancy and may occur outside or in addition to the primary term of the lease.

Above building standard
Upgraded finishes and specialized designs necessary to accommodate a tenant’s requirements.

Absorption rate
The rate at which rentable space is filled. Gross absorption is a measure of the total square feet leased over a specified period with no consideration given to space vacated in the same geographic area during the same time period. Net absorption is equal to the amount occupied at the end of a period minus the amount occupied at the beginning of a period and takes into consideration space vacated during the period.

Ad valorem
Meaning “according to value,” this is a tax imposed on the value of property that is typically based on the local government’s valuation of the property.

Adjusted funds from operations (AFFO)
A measure of REIT performance or ability to pay dividends used by many analysts with concerns about quality of earnings as measured by funds from operations (FFO). The most common adjustment to FFO is an estimate of certain recurring capital expenditures needed to keep the property portfolio competitive in its marketplace.

Administrative fee
Usually stated as a percentage of assets under management or as a fixed annual dollar amount.

Payments made by the servicer when the borrower fails to make a payment.

A broker, consultant or investment banker who represents an investor in a transaction. Advisers may be paid a retainer and/or a performance fee upon the close of a financing or sales transaction.

Aggregation risk
Risk associated with warehousing mortgages during the pooling process for future securitization.

Alpha is a risk adjusted statistical measure of performance. Alpha takes the volatility (price risk) of a managed portfolio of equities or alternative assets and compares its risk-adjusted performance to a benchmark index. The excess return of the fund relative to the return of the benchmark index is a fund’s alpha. Alpha can be thought of as the abnormal rate of return on a security or portfolio in excess of what would be predicted by an equilibrium model like the capital asset pricing model (CAPM). It typically is thought of as a measure of the “value added” (or subtracted) by the portfolio manager in selecting the individual components of and engineering the interplay between components when constructing the portfolio. A positive alpha of 1.0 means the fund has outperformed its benchmark index by 1%. Correspondingly, a similar negative alpha would indicate an underperformance of 1%. If a CAPM analysis estimates that a portfolio should earn 12% based on the risk of the portfolio, for example, but the portfolio actually earns 14%, the portfolio’s alpha would be 2%. This 2% is the excess return over what would have been predicted using the same original inputs by the CAPM model.

Alternative or specialty investments
Property types that are not considered conventional institutional-grade real estate investments. Examples include congregate care facilities, self-storage facilities, mobile homes, timber, agriculture and parking lots.

The liquidation of a financial debt through regular periodic installment payments. For tax purposes, the periodic deduction of capitalized expenses such as organization costs.

The tenant that serves as the predominant draw to a commercial property, usually the largest tenant in a shopping center.

Annual percentage rate (APR)
The actual cost of borrowing money. 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 a property’s fair market value that is typically based on replacement cost, discounted cash flow analysis and/or comparable sales price.

An increase in the value or price of an asset.

Appreciation return
The portion of the total return generated by the change in the value of the real estate assets during the current quarter, as measured by both appraisals and sales of assets.

Buying securities in one market and then selling them immediately in another market to make a profit on the price discrepancy.

As-is condition
The acceptance by the tenant of the existing condition of the premises at the time a lease is consummated, including any physical defects.

A fee imposed on property, usually to pay for public improvements such as water, sewers, streets, improvement districts, etc.

Asset management
The various disciplines involved with managing real property assets from the time of investment through the time of disposition, including acquisition, management, leasing, operational/financial reporting, appraisals, audits, market review and asset disposition plans.

Asset management fee
A fee charged to investors based on the amount invested into real estate assets for the fund or account.

Asset turnover
Calculated as total revenues for the trailing 12 months divided by the average total assets.

Assets under management
The current market value of real estate assets for which a manager has investment and asset management responsibilities.

Assignee name
The individual or entity to which the obligations of a lease, mortgage or other contract have been transferred.

A transfer of the lessee’s entire stake in the property. It is distinguishable from a sublease where the sublessee acquires something less than the lessee’s entire interest.

To agree to recognize a new owner of a property and to pay him/her rent.

Average common equity
Calculated by adding the common equity for the five most recent quarters and dividing by five.

Average downtime
Expressed in months, the amount of time expected between the expiration of a lease and the commencement of a replacement lease under current market conditions.

Average free rent
Expressed in months, the rent abatement concession expected to be granted to a tenant as part of a lease incentive under current market conditions.

Average occupancy
The average occupancy rate of each of the preceding 12 months.

Average total assets
Calculated by adding the total assets of a company for the five most recent quarters and dividing by five.