Abandonment - The voluntary relinquishment of an interest, claim, privilege or possession of property.
Abatement - A period of time when a renter takes possession of property prior to or outside the time period of the primary term of the lease, also referred to as free rent or early occupancy.
Above building standard - Necessary specialized designs or upgraded finishes required by a tenant.
Absorption rate - Used by lenders and developers to describe the rate at which rentable space is filled.
- Gross absorption is a measure of the total square footage leased over a specified time period without consideration for space vacated in the measured area during that same period.
- Net absorption is the amount of rentable space occupied at the rental period's end minus the amount occupied at the rental period's beginning. It also considers the space vacated during the rental period.
Accessions - Items which are a part of another item, but are identified and tracked separately. For example, the heating plant of an apartment building.
Acreage - A dimensional measure of land equaling 160 square rods, 10 square chains or 4,840 square yards.
Ad valorem - From the Latin "according to value." A tax imposed on a property as a percentage of the property's value, usually based on the valuation of the property by the local government.
Adjusted funds from operations (AFFO) - A measure of an REIT's performance or its ability to pay dividends. Many financial analysts use AFFO with concerns about quality of earnings as measured by Funds From Operations (FFO). A common adjustment to FFO is an estimate of what certain recurring capital expenditures needed to keep the property portfolio competitive in its marketplace.
Adjusted Gross Income - Gross income of a building if fully rented, minus a percentage for estimated vacancies.
Administrative fee - A managerial fee usually stated as a fixed annual dollar amount or percentage of assets to be managed or under management.
Advances - Payments made by the loan servicer after the borrower fails to make their loan payment.
Adviser - An owner's representative in a real estate transaction. An adviser may be a real estate broker, consultant or investment banker. 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 the warehousing of mortgages during the pooling and securitizing process for future sale of the package of mortgages.
Alternative or specialty investment - Unconventional property type that is not considered a standard institutional-grade real estate investment, such as self-storage units, mobile home parks, agricultural land, and parking lots.
Amortization - The reduction and dissolution of a financial debt through regular periodic payments. For tax deductions, the periodic deduction of capitalized expenses such as computers or building costs over a standard period or the item's estimated useful life.
Anchor - A long-term, credit worthy, well-known commercial retail business that is a tenant in a commercial property serving as the major attraction, usually a shopping center's biggest tenant and strategically placed to attract the most customers for the other stores located in the center.
Annual percentage rate (APR) - A loan rate adjusted to reflect actual costs such as mortgage insurance and processing fees figured on a yearly basis. The Truth-in-Lending Act has specific requirements that dictate how to calculate and disclose APRs.
Apartment Conversion - When an apartment building is converted to individually owned units, such as a condominium.
Apartment Rehabilitation - The extensive renovation of an aging apartment building.
Appraisal - A statement or estimate of the fair market value of a property based on replacement cost, discounted cash flow analysis and/or comparable sales price. A complete appraisal is defined by Federal appraisal regulations as an appraisal that meets five specific standards.
Appreciation - An asset's increase in market value.
Appreciation return - The portion of the total investment return caused by the real estate assets' appreciation during a current quarter, calculated by both market appraisals and sales of assets.
Arbitrage - Buying securities or commodities in one market and selling them simultaneously or immediately thereafter in another market to take advantage of the price difference. In real estate, the buying and immediate offer of sale of buildings or contracts.
As-is condition - A tenant's acceptance of a property's existing condition, including and regardless of any physical defects, at the time a lease is contracted.
Assessment -
- A fee imposed on property owners, usually to pay for public improvements such as water, sewers, streets, or curb and sidewalk installations.
- A real estate property's estimated value.
Asset management - The various disciplines involved with managing real property assets from the time of investment through the time of disposition. Asset management includes appraising, acquisition, and financing; managing and leasing; operational and financial reporting; audits, market review and, ultimately, asset disposition. AKA Property Management.
Asset management fee - Fee charged for the management of a real estate investment, based on the amount invested into real estate assets for the fund or account, to the investors.
Asset turnover - Calculated as annual total revenues from assets for the trailing 12 months divided by the total assets.
Assets under management - The total market value of real estate assets for which an asset manager has investment and asset management responsibility.
Assignee name - Party or legal entity to which an asset, including any obligations attached to it such as leases, mortgages or other contracts, has been transferred.
Assignment - Transfer of the lessee's entire stake in a property, including all of its obligations, as opposed to a sublease where the lessee transfers less than the lessee's entire interest to the subletting party.
Attorn - Agreement to recognize a new property owner and to transfer payment of debts or obligations to the new owner.
Average common equity - Calculation of total equity of a property by adding five most recent quarters and dividing by five.
Average downtime - The average monthly time expected between the end of a lease and the beginning of the next lease under current market conditions.
Average free rent - The average monthly rent abatement allowed to a tenant as part of a lease incentive due to current market conditions. An incentive used in hard-to-rent areas or as a concession for tenant improvements.
Average occupancy - The percentage of a property occupied over the preceding twelve months divided by twelve. High occupancy rates are desired.
Average total assets - Assets of a company calculated by dividing the sum of its total assets for the five most recent quarters by five.
